Forex Knowledge 29 JAN 2014 currency Report.
EQUITIES
All the global markets are in a corrective bounce after the vicious fall of 2-3 days.
Dow (15928.56, +0.57%) spent another day consolidating near the major support zone of 15500-700 below which we may see the fall extend to 14700-800. Any rally may face resistance at 16200-300.
Nikkei (15240.28, +1.74%) is bouncing from the lower boundary of a big channel but must break above 15600-700 for the strength to return. Below 14700-900, it may target 13700 and 13200.
Shanghai (2048.27, +0.48%) is among the better performers in this turmoil as it has already been in a major bear market for while now and has been beaten a lot already much before the other markets came under bear grip. That said, it needs to rise past 2080-90 and then 2150 to break the longer term downtrend it is trapped in.
Dax (9406.91, +0.62%) is testing the channel containing the entire rally for the last 6 months at the major support zone of 9300-9350 below which the fall is expected to extend to 9000 or even 8700.
Nifty (6126.25, -0.16%) has multiple resistances overhead at 6165-80 and no sign of strength is visible till now. From the broader perspective, the targets of 5970-5920 remain open as long as Nifty stays below 6200-50.
COMMODITIES
Commodities are overall down. Precious metals await the FED decision on monetary policy while the oil market sees an increase in stockpile inventory.
Gold (1253.114) fell from the 100-day MA resistance and on speculation that the US FED would further cut stimulus. It may see 1235 in the next few sessions if it does not sustain above 1250. However, a break above 1272-1274 (if at all seen) would take it higher to 1280-1300.
Silver (19.572) continues to fall as the 13-day MA and trend resistance holds well. Movement within 19-20 levels could be seen for 2-3 sessions after which we may see a rise to 20.5.
Copper (3.2600) has fallen. Either it may rise from 3.25 or take a bounce from lower support at 3.20 targeting 3.30-3.35 in the coming weeks.
Brent (107.39) came off from just below the resistance near 108. Movements in the 106-108.5 regions may continue for some more sessions before a rise past 108.5, taking prices towards 110-112.5.
Overall the long term uptrend continues.
Nymex WTI (97.19) is testing resistance at current levels which if breaks could take it to 98.76-99. Else prices may be pushed to 95. Bulls seem to be dominating for now but cannot be ensured until a rise to 97.80 is seen.
CURRENCIES
The Dollar Index (80.4740) remains in a contracting mode as it keeps making higher lows and lower highs. It may attempt going higher as long as it stays above 80 and 79.70. Any major move would be expected only beyond the broader range of 79.70-81.50;
The Euro (1.3663) is not doing much after testing the major trend decider level of 1.3750. It must break above 1.3750 to extend the rally or else the bears may come down heavily once again. Major move is expected only beyond the broader range of 1.3500-1.3750.
Dollar-Yen (103.13) has bounced from the major support level of 101.50-101.90 but for the strength to return, it must break above 103.70-90 and 105.
The Euro-Yen Cross (140.87) is close to the resistance of 141.50 above which the major supply zone of 142.25-50 is waiting. It may extend the weakness further to the major demand zone of 138.60-139 as long as it stays below 142.50.The bounce doesn’t look very strong structurally.
The Pound (1.6580) is a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8806) has bounced from the major support of 0.87 but must go above 0.89 to make it meaningful. Otherwise, it could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (62.52) may open flat to positive near 62.60. Clear 5 waves visible in the fall from 62.18 hint to a bounce towards 62.70 and 63 if it manages to hold above 62.40-45. On the other hand, a break below 62.40 would weaken it considerably for a probable move towards 62 once again.
INTEREST RATES
The US 10Yr (2.79%) saw a further rise yesterday. Bouncing from the immediate support near 2.70%, it may go up to 2.85% or even higher or we may see a drop towards 2.50%. A lot depends on the FOMC Meeting deciding to continue tapering or not, tonight.
The German 10Yr (1.68%) rose from near the support at 1.65%. A further rise to 1.75%-1.80% can be expected if the support holds. The German-US 10Yr spread (-1.12%) has dropped further and is near our target of -1.15%.
The Japan 10Yr (0.63%) is up. But we still see it trading in our range of 0.60%-0.70% before dropping further to target support near 0.50%. The US-Japan 10Yr yield spread (2.13%) has remained unchanged and is testing the support at current level. We may see a bounce towards 2.25% if the support holds.
The Indian 10Yr GOI yield (8.75%) dropped after the RBI Policy meeting yesterday. Governor Rajan surprised the market by increasing the Repo rate and the MSF rate by 25bp. The Rupee responded by closing sharply lower (62.52). We can expect the yield to be ranged between 8.65% - 8.80% for the next few days.
DATA TODAYNo major data release today.
DATA YESTERDAY
RBI Repo Rate
...Previous 7.75 % ...Actual 8.00 %
RBI Reverse Repo Rate
...Previous 6.75 % ...Actual 7.00 %
RBI CRR
...Previous 4.00 % ...Actual 4.00 %
RBI MSF
...Previous 8.75 % ...Actual 9.00 %
UK GDP
...Expected 0.80 % ...Previous 0.78 % ...Actual 0.68 %
US Durable Goods Orders
...Expected 2.00 % ...Previous 2.60 % ... Actual -4.30 %
US Case Schiller
...Expected 13.70 % ...Previous 13.62 % ...Actual 13.71 %
US Cons Conf
...Expected 78.10 ...Previous 77.50 ...Actual 80.70
EUR/JPY
EUR/USD
Trading range: 1.3640 – 1.3715
Trend: Up
Buy at 1.3650 SL 1.3618 TP 1.3703
GBP/USD
Trading range: 1.6555 – 1.6635
Trend: Up
Buy at 1.6566 SL 1.6534 TP 1.6624
USD/CHF
Trading range: 0.9020 – 0.8940
Trend: Down
Sell at 0.9007 SL 0.9039 TP 0.8950
USD/JPY
Trading range: 103.50 – 102.65
Trend: Down
Sell at 103.36 SL 103.68 TP 102.74
The current support/resistance levels are:
EUR/USD 1.3588, 1.3568, 1.3535 – 1.3712, 1.3732, 1.3765
USD/JPY 102.71, 102.47, 102.09 – 104.01, 104.25, 104.63
GBP/USD 1.6496, 1.6474, 1.6438 – 1.6636, 1.6658, 1.6694
USD/CHF 0.8940, 0.8918, 0.8883 – 0.9010, 0.9032, 0.9067
EQUITIES
All the global markets are in a corrective bounce after the vicious fall of 2-3 days.
Dow (15928.56, +0.57%) spent another day consolidating near the major support zone of 15500-700 below which we may see the fall extend to 14700-800. Any rally may face resistance at 16200-300.
Nikkei (15240.28, +1.74%) is bouncing from the lower boundary of a big channel but must break above 15600-700 for the strength to return. Below 14700-900, it may target 13700 and 13200.
Shanghai (2048.27, +0.48%) is among the better performers in this turmoil as it has already been in a major bear market for while now and has been beaten a lot already much before the other markets came under bear grip. That said, it needs to rise past 2080-90 and then 2150 to break the longer term downtrend it is trapped in.
Dax (9406.91, +0.62%) is testing the channel containing the entire rally for the last 6 months at the major support zone of 9300-9350 below which the fall is expected to extend to 9000 or even 8700.
Nifty (6126.25, -0.16%) has multiple resistances overhead at 6165-80 and no sign of strength is visible till now. From the broader perspective, the targets of 5970-5920 remain open as long as Nifty stays below 6200-50.
COMMODITIES
Commodities are overall down. Precious metals await the FED decision on monetary policy while the oil market sees an increase in stockpile inventory.
Gold (1253.114) fell from the 100-day MA resistance and on speculation that the US FED would further cut stimulus. It may see 1235 in the next few sessions if it does not sustain above 1250. However, a break above 1272-1274 (if at all seen) would take it higher to 1280-1300.
Silver (19.572) continues to fall as the 13-day MA and trend resistance holds well. Movement within 19-20 levels could be seen for 2-3 sessions after which we may see a rise to 20.5.
Copper (3.2600) has fallen. Either it may rise from 3.25 or take a bounce from lower support at 3.20 targeting 3.30-3.35 in the coming weeks.
Brent (107.39) came off from just below the resistance near 108. Movements in the 106-108.5 regions may continue for some more sessions before a rise past 108.5, taking prices towards 110-112.5.
Overall the long term uptrend continues.
Nymex WTI (97.19) is testing resistance at current levels which if breaks could take it to 98.76-99. Else prices may be pushed to 95. Bulls seem to be dominating for now but cannot be ensured until a rise to 97.80 is seen.
CURRENCIES
The Dollar Index (80.4740) remains in a contracting mode as it keeps making higher lows and lower highs. It may attempt going higher as long as it stays above 80 and 79.70. Any major move would be expected only beyond the broader range of 79.70-81.50;
The Euro (1.3663) is not doing much after testing the major trend decider level of 1.3750. It must break above 1.3750 to extend the rally or else the bears may come down heavily once again. Major move is expected only beyond the broader range of 1.3500-1.3750.
Dollar-Yen (103.13) has bounced from the major support level of 101.50-101.90 but for the strength to return, it must break above 103.70-90 and 105.
The Euro-Yen Cross (140.87) is close to the resistance of 141.50 above which the major supply zone of 142.25-50 is waiting. It may extend the weakness further to the major demand zone of 138.60-139 as long as it stays below 142.50.The bounce doesn’t look very strong structurally.
The Pound (1.6580) is a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8806) has bounced from the major support of 0.87 but must go above 0.89 to make it meaningful. Otherwise, it could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (62.52) may open flat to positive near 62.60. Clear 5 waves visible in the fall from 62.18 hint to a bounce towards 62.70 and 63 if it manages to hold above 62.40-45. On the other hand, a break below 62.40 would weaken it considerably for a probable move towards 62 once again.
INTEREST RATES
The US 10Yr (2.79%) saw a further rise yesterday. Bouncing from the immediate support near 2.70%, it may go up to 2.85% or even higher or we may see a drop towards 2.50%. A lot depends on the FOMC Meeting deciding to continue tapering or not, tonight.
The German 10Yr (1.68%) rose from near the support at 1.65%. A further rise to 1.75%-1.80% can be expected if the support holds. The German-US 10Yr spread (-1.12%) has dropped further and is near our target of -1.15%.
The Japan 10Yr (0.63%) is up. But we still see it trading in our range of 0.60%-0.70% before dropping further to target support near 0.50%. The US-Japan 10Yr yield spread (2.13%) has remained unchanged and is testing the support at current level. We may see a bounce towards 2.25% if the support holds.
The Indian 10Yr GOI yield (8.75%) dropped after the RBI Policy meeting yesterday. Governor Rajan surprised the market by increasing the Repo rate and the MSF rate by 25bp. The Rupee responded by closing sharply lower (62.52). We can expect the yield to be ranged between 8.65% - 8.80% for the next few days.
DATA TODAYNo major data release today.
DATA YESTERDAY
RBI Repo Rate
...Previous 7.75 % ...Actual 8.00 %
RBI Reverse Repo Rate
...Previous 6.75 % ...Actual 7.00 %
RBI CRR
...Previous 4.00 % ...Actual 4.00 %
RBI MSF
...Previous 8.75 % ...Actual 9.00 %
UK GDP
...Expected 0.80 % ...Previous 0.78 % ...Actual 0.68 %
US Durable Goods Orders
...Expected 2.00 % ...Previous 2.60 % ... Actual -4.30 %
US Case Schiller
...Expected 13.70 % ...Previous 13.62 % ...Actual 13.71 %
US Cons Conf
...Expected 78.10 ...Previous 77.50 ...Actual 80.70
EUR/JPY
EUR/USD
Trading range: 1.3640 – 1.3715
Trend: Up
Buy at 1.3650 SL 1.3618 TP 1.3703
GBP/USD
Trading range: 1.6555 – 1.6635
Trend: Up
Buy at 1.6566 SL 1.6534 TP 1.6624
USD/CHF
Trading range: 0.9020 – 0.8940
Trend: Down
Sell at 0.9007 SL 0.9039 TP 0.8950
USD/JPY
Trading range: 103.50 – 102.65
Trend: Down
Sell at 103.36 SL 103.68 TP 102.74
The current support/resistance levels are:
EUR/USD 1.3588, 1.3568, 1.3535 – 1.3712, 1.3732, 1.3765
USD/JPY 102.71, 102.47, 102.09 – 104.01, 104.25, 104.63
GBP/USD 1.6496, 1.6474, 1.6438 – 1.6636, 1.6658, 1.6694
USD/CHF 0.8940, 0.8918, 0.8883 – 0.9010, 0.9032, 0.9067
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