Forex Knowledge 3 FEB 2014 currency Report.
EQUITIES
It is a crucial time for Dow (15698.85, -0.94%) as it gets closer to the major support cluster of 15300-450. If it doesn’t go much lower than the Friday low of 15600, it may bounce back to break above 15950 and go higher. Otherwise it may test the final support of 15300-450 before giving the first sign of weakening momentum.
Nikkei (14673.42, -1.62%) has signaled the end of its bull market from late 2011 which is yet to be confirmed by Yen. It has failed to break above 15600-700 and testing the final support of 14650-900, below which it may target 13700 and 13200.
Shanghai (2033.08, -0.27%) 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 (9306.48, -0.71%) is in a firm downtrend but some buying is visible in the lower levels which may take it to 9500-50 before the next phase of the fall resumes towards 8950-8850.
Nifty (6089.50, +0.26%) got rejected from our initial resistance zone of 6100-10 twice during the day but managed to trade in a narrow band of 30 points. Even if it manages to break above 6100-10, the bulls may have to handle the strong supply zone of 6160-90 giving no peace of mind to the bulls. The targets of 5970 and 5920 remain open.
COMMODITIES
Gold (1245.07) is trading low on decrease in physical purchases. While below 1250 we may expect a fall to 1235 from where it may bounce back to 1250 and above.
Silver (19.138) is also trading low and may test crucial support in the 19-18.5 region from where it may bounce back towards 20.
Copper (3.1950) fell below 3.20, further stretching its downfall as manufacturing slowed in China. It is testing crucial support at current levels from where it may bounce back to 3.25-3.35. Failure to bounce would push prices to 3.10.
Brent (106.30) is ranged with no major movement and may continue so in the 106-108 regions. Overall it remains in a long term uptrend.
Nymex WTI (97.11) fell as manufacturing declined to six-month low in China. But we may see an eventual rise to 98.76-99 in the near term while the long term uptrend continues.
CURRENCIES
The Dollar Index (81.3130) is testing the higher end of the 3 month long range of 79.70-81.50 for the third time. A successful break above 81.50 may take it to 81.85-90 and then 82.50-60. A failure once more would keep it range bound.
The Euro (1.3550) signaled a move towards 1.33 and even 1.31 as it has broken the important support zone of 1.35-1.3540 after failing to break above the major trend decider level of 1.3750 in line with our expectation. The bearish momentum may increase below 1.3450 while any possible bounce may face good selling pressure.
Dollar-Yen (102.37) is consolidating near the bull market defining 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 (138.03) achieved our first target of 138.45 and made a low very close to our second target of 137. Holding this low of 137.45, it may try to bounce towards 139.50 but all rallies are expected to be sold into.
The Pound (1.6424) remains in its own world as a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8746) has bounced from the major support of 0.87 but must go above 0.8830 and then 0.89 to make it meaningful. Otherwise, it could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (62.68) finished the week where it began it, indicating uncertainty over the medium term course. It may trade in the range of 62-63 for a couple of sessions more. 62.90-63.05 will continue to be a major resistance and support may be expected near 62.45-40 initially and then in the 62-61.75 band.
INTEREST RATES
The US 10Yr (2.66%) saw a drop after rising to 2.70%. Falling to sustain itself above the support at 2.70% it may now come to test support at 2.50% before rising back to 2.70% again.
The German 10Yr (1.66%) dropped and is trading above the support at current levels. A bounce from the support and we may see it going up to 1.75%-1.80%. The German-US 10Yr spread (-1.00%) is just at our target as mentioned on Friday.
The Japan 10Yr (0.61%) remained stable, consolidating in the range of 0.60%-0.65% for the last few sessions. It can drop to target support near 0.50%. The US-Japan 10Yr yield spread (2.05%) has also remained stable. We may see a bounce towards 2.15% if it is able to recover from here or else a drop to 1.95%.
The Indian 10Yr GOI yield (8.77%) fell below 8.80% after seeing an unexpected rise to 8.82%. With no confirmed direction of movement, we can say that it may remain ranged between 8.70% - 8.90%.
DATA TODAY22:30 GMT or 4:00 IST AU PMI
... Previous 47.60 ...Actual 46.7
5:00 GMT or 10:30 IST IN Manufacturing PMI
... Previous - 50.70
9:00 GMT or 14:30 IST EU PMI
... Previous - 52.70
9:30 GMT or 15:00 IST UK PMI
... Previous - 57.30
9:30 GMT or 15:00 IST CH PMI
...Previous - 53.90 -
15:00 GMT or 20:30 IST US Manufacturing ISM
...Previous - 57.00
FRIDAY'S DATA
JP PMI
...Previous 55.20 ...Actual 56.6
JP Unemp
...Expected 3.90 % ...Previous 4.00 % ...Actual 3.70%
UK Cons Conf
...Expected -10 ...Previous -13 ...Actual -7
AU PPI
...Expected 0.70 % ...Previous 1.30 % ...Actual 0.2%
US Personal Income
...Expected 0.20 % ...Previous 0.21 % ...Actual 0.02 %
US PCE Price Index M/M
...Expected 0.20 % ...Previous 0.65 % ...Actual 0.38 %
CA GDP
...Expected 0.20 % ...Previous 0.30 % ...Actual 0.20%
EUR/USD
Trading range: 1.3510 – 1.3435
Trend: Down
Sell at 1.3499 SL 1.3531 TP 1.3448
GBP/USD
Trading range: 1.6450 – 1.6360
Trend: Strong Down
Sell at 1.6437 SL 1.6469 TP 1.6370
USD/CHF
Trading range: 0.9035 – 0.9115
Trend: Up
Buy at 0.9049 SL 0.9017 TP 0.9101
USD/JPY
Trading range: 102.50 – 101.80
Trend: Down
Sell at 102.36 SL 102.68 TP 101.87
The current support/resistance levels are:
EUR/USD 1.3438, 1.3419, 1.3387 – 1.3560, 1.3579, 1.3611
USD/JPY 101.79, 101.60, 101.30 – 102.93, 103.12, 103.42
GBP/USD 1.6362, 1.6336, 1.6295 – 1.6512, 1.6538, 1.6579
USD/CHF 0.8985, 0.8965, 0.8933 – 0.9113, 0.9133, 0.9165
EURUSD: 1.3715-1.3730 on the upside, 1.3390-1.3405 on the downside.
AUDUSD: 0.8825-0.8840 on the upside, 0.8660-0.8675 on the downside.
USDJPY: 103.15-103.30 on the upside, 101.50-101.65 on the downside.
GBPUSD: 1.6580-1.6595 on the upside, 1.6350-1.6365 on the downside.
USDCAD: 1.1260-1.1275 on the upside, 1.0100-1.0115 on the downside.
NZDUSD: 0.8330-0.8345 on the upside, 0.8020-0.8035 on the downside.
EURJPY: 140.70-140.85 on the upside, 136.70-136.85 on the downside.
EURGBP: 0.8270-0.8285 on the upside, 0.8160-0.8175 on the downside.
EQUITIES
It is a crucial time for Dow (15698.85, -0.94%) as it gets closer to the major support cluster of 15300-450. If it doesn’t go much lower than the Friday low of 15600, it may bounce back to break above 15950 and go higher. Otherwise it may test the final support of 15300-450 before giving the first sign of weakening momentum.
Nikkei (14673.42, -1.62%) has signaled the end of its bull market from late 2011 which is yet to be confirmed by Yen. It has failed to break above 15600-700 and testing the final support of 14650-900, below which it may target 13700 and 13200.
Shanghai (2033.08, -0.27%) 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 (9306.48, -0.71%) is in a firm downtrend but some buying is visible in the lower levels which may take it to 9500-50 before the next phase of the fall resumes towards 8950-8850.
Nifty (6089.50, +0.26%) got rejected from our initial resistance zone of 6100-10 twice during the day but managed to trade in a narrow band of 30 points. Even if it manages to break above 6100-10, the bulls may have to handle the strong supply zone of 6160-90 giving no peace of mind to the bulls. The targets of 5970 and 5920 remain open.
COMMODITIES
Gold (1245.07) is trading low on decrease in physical purchases. While below 1250 we may expect a fall to 1235 from where it may bounce back to 1250 and above.
Silver (19.138) is also trading low and may test crucial support in the 19-18.5 region from where it may bounce back towards 20.
Copper (3.1950) fell below 3.20, further stretching its downfall as manufacturing slowed in China. It is testing crucial support at current levels from where it may bounce back to 3.25-3.35. Failure to bounce would push prices to 3.10.
Brent (106.30) is ranged with no major movement and may continue so in the 106-108 regions. Overall it remains in a long term uptrend.
Nymex WTI (97.11) fell as manufacturing declined to six-month low in China. But we may see an eventual rise to 98.76-99 in the near term while the long term uptrend continues.
CURRENCIES
The Dollar Index (81.3130) is testing the higher end of the 3 month long range of 79.70-81.50 for the third time. A successful break above 81.50 may take it to 81.85-90 and then 82.50-60. A failure once more would keep it range bound.
The Euro (1.3550) signaled a move towards 1.33 and even 1.31 as it has broken the important support zone of 1.35-1.3540 after failing to break above the major trend decider level of 1.3750 in line with our expectation. The bearish momentum may increase below 1.3450 while any possible bounce may face good selling pressure.
Dollar-Yen (102.37) is consolidating near the bull market defining 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 (138.03) achieved our first target of 138.45 and made a low very close to our second target of 137. Holding this low of 137.45, it may try to bounce towards 139.50 but all rallies are expected to be sold into.
The Pound (1.6424) remains in its own world as a comparative outperformer and may trade in the range of 1.6350-1.67 for some time more.
The Aussie (0.8746) has bounced from the major support of 0.87 but must go above 0.8830 and then 0.89 to make it meaningful. Otherwise, it could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (62.68) finished the week where it began it, indicating uncertainty over the medium term course. It may trade in the range of 62-63 for a couple of sessions more. 62.90-63.05 will continue to be a major resistance and support may be expected near 62.45-40 initially and then in the 62-61.75 band.
INTEREST RATES
The US 10Yr (2.66%) saw a drop after rising to 2.70%. Falling to sustain itself above the support at 2.70% it may now come to test support at 2.50% before rising back to 2.70% again.
The German 10Yr (1.66%) dropped and is trading above the support at current levels. A bounce from the support and we may see it going up to 1.75%-1.80%. The German-US 10Yr spread (-1.00%) is just at our target as mentioned on Friday.
The Japan 10Yr (0.61%) remained stable, consolidating in the range of 0.60%-0.65% for the last few sessions. It can drop to target support near 0.50%. The US-Japan 10Yr yield spread (2.05%) has also remained stable. We may see a bounce towards 2.15% if it is able to recover from here or else a drop to 1.95%.
The Indian 10Yr GOI yield (8.77%) fell below 8.80% after seeing an unexpected rise to 8.82%. With no confirmed direction of movement, we can say that it may remain ranged between 8.70% - 8.90%.
DATA TODAY22:30 GMT or 4:00 IST AU PMI
... Previous 47.60 ...Actual 46.7
5:00 GMT or 10:30 IST IN Manufacturing PMI
... Previous - 50.70
9:00 GMT or 14:30 IST EU PMI
... Previous - 52.70
9:30 GMT or 15:00 IST UK PMI
... Previous - 57.30
9:30 GMT or 15:00 IST CH PMI
...Previous - 53.90 -
15:00 GMT or 20:30 IST US Manufacturing ISM
...Previous - 57.00
FRIDAY'S DATA
JP PMI
...Previous 55.20 ...Actual 56.6
JP Unemp
...Expected 3.90 % ...Previous 4.00 % ...Actual 3.70%
UK Cons Conf
...Expected -10 ...Previous -13 ...Actual -7
AU PPI
...Expected 0.70 % ...Previous 1.30 % ...Actual 0.2%
US Personal Income
...Expected 0.20 % ...Previous 0.21 % ...Actual 0.02 %
US PCE Price Index M/M
...Expected 0.20 % ...Previous 0.65 % ...Actual 0.38 %
CA GDP
...Expected 0.20 % ...Previous 0.30 % ...Actual 0.20%
EUR/USD
Trading range: 1.3510 – 1.3435
Trend: Down
Sell at 1.3499 SL 1.3531 TP 1.3448
GBP/USD
Trading range: 1.6450 – 1.6360
Trend: Strong Down
Sell at 1.6437 SL 1.6469 TP 1.6370
USD/CHF
Trading range: 0.9035 – 0.9115
Trend: Up
Buy at 0.9049 SL 0.9017 TP 0.9101
USD/JPY
Trading range: 102.50 – 101.80
Trend: Down
Sell at 102.36 SL 102.68 TP 101.87
EUR/USD 1.3438, 1.3419, 1.3387 – 1.3560, 1.3579, 1.3611
USD/JPY 101.79, 101.60, 101.30 – 102.93, 103.12, 103.42
GBP/USD 1.6362, 1.6336, 1.6295 – 1.6512, 1.6538, 1.6579
USD/CHF 0.8985, 0.8965, 0.8933 – 0.9113, 0.9133, 0.9165
EURUSD: 1.3715-1.3730 on the upside, 1.3390-1.3405 on the downside.
AUDUSD: 0.8825-0.8840 on the upside, 0.8660-0.8675 on the downside.
USDJPY: 103.15-103.30 on the upside, 101.50-101.65 on the downside.
GBPUSD: 1.6580-1.6595 on the upside, 1.6350-1.6365 on the downside.
USDCAD: 1.1260-1.1275 on the upside, 1.0100-1.0115 on the downside.
NZDUSD: 0.8330-0.8345 on the upside, 0.8020-0.8035 on the downside.
EURJPY: 140.70-140.85 on the upside, 136.70-136.85 on the downside.
EURGBP: 0.8270-0.8285 on the upside, 0.8160-0.8175 on the downside.
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