Forex Knowledge 1 APRIL 2014 currency Report.
EQUITIES
While the global markets may feel assured by the US Fed Chief Janet Yellen's remark on how the US economy still requires more help indicating further easy money policies in the horizon, the domestic focus is concentrated on the RBI policy today with the broad consensus of no change in rates.
The Dow (16457.66, +0.82%) is testing the upper end of the 6-week long 500 points band of 16000-16500. This range is contracting and a major move may come sooner than later but this sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.
The Shanghai (2040.50, +0.35%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only. Not falling anymore nowadays on any bad news like today's disappointing PMI data and all the hoopla about it entering a new bear market invites the suspicion if the already established 6 year long bear market is coming to a close.
The Dax (9555.91, -0.33%) is facing rejection from our interim resistance zone of 9600-9650 before it can reach 9700-9900. A failure to firmly break above 9650 may generate weakness and it may return 9400-9350 levels.
Nikkei (14785.67, -0.28%) has broken above the range of 14200-14700 but the downtrend remains in force till 15000. We look for a break of 14200 to confirm the bearish momentum.
Nifty (6695.90, +0.82%) continues its rally with no weakness visible yet. We keep watching the supports of 6660 and 6645-20 but the rally may reach our next targets of 6750-60 and 6810 now. The RBI policy today may dictate the short term direction and price action.
COMMODITIES
Metals look bearish in the near term while the oil market may rally upwards.
Gold (1283.439) continues its fall breaking below 1285 and may now target 1274-1260 levels. We could expect a bounce from those levels but a failure could take it lower to 1230.
Silver (19.693) is consolidating sideways just above crucial support near 19.6. If this holds, we may see a rise to 20.3 else it may fall to 19-18.5 levels. Possibility of being ranged within 19.5-20.5 regions until we see some sharp movement.
Copper (3.0217) seems to be rising, targeting 3.10 in the medium term after its bounce from support at 2.9 over the the last two weeks Overall near term looks bullish.
Brent (107.64) is pausing near crucial resistance zone of 107.5-108.5. While that holds, we may see short sideways movement extending to 107-106 on the downside. A sustained break above 108.5 is needed to confirm a rise towards 109-110.
Nymex WTI (101.35) is also stable and testing 102 levels for now. A break above 102 and it may rise towards 104. Overall trend remains up.
CURRENCIES
Dollar Index (80.12) keeps trading in the tight range of 79.90-80.35 even after Yellen's remark of US economy requiring more help yet but remains firmly on course to its way to 80.50-75 after this correction ends. Staying above 79.70-65, the strength remains intact.
The Euro (1.3771) has faced rejection from our resistance zone of 1.3810-50 and the bearish momentum may intensify on a break below 1.37. The next important support comes at 1.3650.
In Dollar-Yen (102.85) the 10-week long sideways action in the range of 101-104 may continue for some more time before a decisive move emerges. It is trading above 103.25 but needs to break above 103.75 now to increase the possibility of a rise to105.
The Euro-Yen Cross (142.28) has broken above 142 and looks on its way to 144-145 now keeping in line with our bullish stance.
Pound (1.6660) has achieved our initial target of 1.6650 after resuming the medium term uptrend. Now a further rise to 1.67-1.6750 may be expected with the major support coming at 1.6520-1.6500.
Aussie (0.9284) have broken above 0.92 to signal a medium term rise to 0.9380-0.94. Any correction now should be limited to 0.9150-0.91.
Dollar-Rupee (59.91) falls to 59.70 where a short term bottom may be formed pending confirmation yet. It remains to be seen this week if the weekly low of 59.70 holds or not as a break below 59.70 may open further downside to 59-58.80. Our bias remains negative till Dollar Rupee manages to break above 60.50-55.
INTEREST RATES
Important: The US 10-5 Yr Spread (0.97%) which has been falling since 1.39% (22-Nov-13) is testing a trendline Support near current level, which is coming up from the 0.54% low of June-08. If this Support holds and a bounce is seen, the Yield Curve could start steepening again a bit after having flattened for the past several days. The 30-10 Spread (0.84%) also has Support coming up at 0.75% and could bounce from there.
The German-US Yield Spread (2Yr -0.28%, 10Yr -1.18%) continue to fall targeting -0.35% and -1.25% respectively. This can keep the Euro (1.3771) capped below 1.3850. The ECB Meeting is due on Thursday.
The US-Japan 10Yr spread (2.10%) continues to consolidate between 2.00-2.20%, with a bullish bias. The very close correlation with Dollar-Yen (103.28) can pull it higher. The Japan 10Yr (0.64%) remained unchanged and is trading near our resistance zone of 0.65%-0.67%. The Japan 10-5Yr yield differential (0.44%) has bounced from the support near 0.40% suggesting a further rise in the 10Yr yields. We may see the 10yr go up to 0.70% on a break beyond the resistance zone.
In India, the Indo-US 10Yr Spread (6.08%) can move up slightly to test strong Resistance at 6.25%, but might not be able to break through. We see chances of a fall back from 6.25% in the coming days. While the RBI is expected to maintain status quo today, there are chances that US Yields can start rising again in the coming days.
Over in Australia, the RBA is also expected to keep rates unchanged. Decision at 9.00 AM (IST).
EURUSD: 1.3815-1.3830 on the upside, 1.3690-1.3705 on the downside.
AUDUSD: 0.9330-0.9345 on the upside, 0.9170-0.9185 on the downside.
USDJPY: 103.65-103.80 on the upside, 102.25-102.40 on the downside.
GBPUSD: 1.6700-1.6715 on the upside, 1.6555-1.6570 on the downside.
USDCAD: 1.1095-1.1110 on the upside, 1.0930-1.0945 on the downside.
NZDUSD: 0.8715-0.8730 on the upside, 0.8580-0.8595 on the downside.
EURJPY: 143.05-143.20 on the upside, 139.95-140.10 on the downside.
EURGBP: 0.8310-0.8325 on the upside, 0.8175-0.8190 on the downside.
XAUUSD: 1305.00-1315.00 on the upside, 1260.00-1270.00 on the downside.
BRENT: 109.00-110.00 on the upside, 105.00-106.00 on the downside.
SP500: 1900.00-1910.00 on the upside, 1825.00-1835.00 on the downside.
EQUITIES
While the global markets may feel assured by the US Fed Chief Janet Yellen's remark on how the US economy still requires more help indicating further easy money policies in the horizon, the domestic focus is concentrated on the RBI policy today with the broad consensus of no change in rates.
The Dow (16457.66, +0.82%) is testing the upper end of the 6-week long 500 points band of 16000-16500. This range is contracting and a major move may come sooner than later but this sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.
The Shanghai (2040.50, +0.35%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only. Not falling anymore nowadays on any bad news like today's disappointing PMI data and all the hoopla about it entering a new bear market invites the suspicion if the already established 6 year long bear market is coming to a close.
The Dax (9555.91, -0.33%) is facing rejection from our interim resistance zone of 9600-9650 before it can reach 9700-9900. A failure to firmly break above 9650 may generate weakness and it may return 9400-9350 levels.
Nikkei (14785.67, -0.28%) has broken above the range of 14200-14700 but the downtrend remains in force till 15000. We look for a break of 14200 to confirm the bearish momentum.
Nifty (6695.90, +0.82%) continues its rally with no weakness visible yet. We keep watching the supports of 6660 and 6645-20 but the rally may reach our next targets of 6750-60 and 6810 now. The RBI policy today may dictate the short term direction and price action.
COMMODITIES
Metals look bearish in the near term while the oil market may rally upwards.
Gold (1283.439) continues its fall breaking below 1285 and may now target 1274-1260 levels. We could expect a bounce from those levels but a failure could take it lower to 1230.
Silver (19.693) is consolidating sideways just above crucial support near 19.6. If this holds, we may see a rise to 20.3 else it may fall to 19-18.5 levels. Possibility of being ranged within 19.5-20.5 regions until we see some sharp movement.
Copper (3.0217) seems to be rising, targeting 3.10 in the medium term after its bounce from support at 2.9 over the the last two weeks Overall near term looks bullish.
Brent (107.64) is pausing near crucial resistance zone of 107.5-108.5. While that holds, we may see short sideways movement extending to 107-106 on the downside. A sustained break above 108.5 is needed to confirm a rise towards 109-110.
Nymex WTI (101.35) is also stable and testing 102 levels for now. A break above 102 and it may rise towards 104. Overall trend remains up.
CURRENCIES
Dollar Index (80.12) keeps trading in the tight range of 79.90-80.35 even after Yellen's remark of US economy requiring more help yet but remains firmly on course to its way to 80.50-75 after this correction ends. Staying above 79.70-65, the strength remains intact.
The Euro (1.3771) has faced rejection from our resistance zone of 1.3810-50 and the bearish momentum may intensify on a break below 1.37. The next important support comes at 1.3650.
In Dollar-Yen (102.85) the 10-week long sideways action in the range of 101-104 may continue for some more time before a decisive move emerges. It is trading above 103.25 but needs to break above 103.75 now to increase the possibility of a rise to105.
The Euro-Yen Cross (142.28) has broken above 142 and looks on its way to 144-145 now keeping in line with our bullish stance.
Pound (1.6660) has achieved our initial target of 1.6650 after resuming the medium term uptrend. Now a further rise to 1.67-1.6750 may be expected with the major support coming at 1.6520-1.6500.
Aussie (0.9284) have broken above 0.92 to signal a medium term rise to 0.9380-0.94. Any correction now should be limited to 0.9150-0.91.
Dollar-Rupee (59.91) falls to 59.70 where a short term bottom may be formed pending confirmation yet. It remains to be seen this week if the weekly low of 59.70 holds or not as a break below 59.70 may open further downside to 59-58.80. Our bias remains negative till Dollar Rupee manages to break above 60.50-55.
INTEREST RATES
Important: The US 10-5 Yr Spread (0.97%) which has been falling since 1.39% (22-Nov-13) is testing a trendline Support near current level, which is coming up from the 0.54% low of June-08. If this Support holds and a bounce is seen, the Yield Curve could start steepening again a bit after having flattened for the past several days. The 30-10 Spread (0.84%) also has Support coming up at 0.75% and could bounce from there.
The German-US Yield Spread (2Yr -0.28%, 10Yr -1.18%) continue to fall targeting -0.35% and -1.25% respectively. This can keep the Euro (1.3771) capped below 1.3850. The ECB Meeting is due on Thursday.
The US-Japan 10Yr spread (2.10%) continues to consolidate between 2.00-2.20%, with a bullish bias. The very close correlation with Dollar-Yen (103.28) can pull it higher. The Japan 10Yr (0.64%) remained unchanged and is trading near our resistance zone of 0.65%-0.67%. The Japan 10-5Yr yield differential (0.44%) has bounced from the support near 0.40% suggesting a further rise in the 10Yr yields. We may see the 10yr go up to 0.70% on a break beyond the resistance zone.
In India, the Indo-US 10Yr Spread (6.08%) can move up slightly to test strong Resistance at 6.25%, but might not be able to break through. We see chances of a fall back from 6.25% in the coming days. While the RBI is expected to maintain status quo today, there are chances that US Yields can start rising again in the coming days.
Over in Australia, the RBA is also expected to keep rates unchanged. Decision at 9.00 AM (IST).
EURUSD: 1.3815-1.3830 on the upside, 1.3690-1.3705 on the downside.
AUDUSD: 0.9330-0.9345 on the upside, 0.9170-0.9185 on the downside.
USDJPY: 103.65-103.80 on the upside, 102.25-102.40 on the downside.
GBPUSD: 1.6700-1.6715 on the upside, 1.6555-1.6570 on the downside.
USDCAD: 1.1095-1.1110 on the upside, 1.0930-1.0945 on the downside.
NZDUSD: 0.8715-0.8730 on the upside, 0.8580-0.8595 on the downside.
EURJPY: 143.05-143.20 on the upside, 139.95-140.10 on the downside.
EURGBP: 0.8310-0.8325 on the upside, 0.8175-0.8190 on the downside.
XAUUSD: 1305.00-1315.00 on the upside, 1260.00-1270.00 on the downside.
BRENT: 109.00-110.00 on the upside, 105.00-106.00 on the downside.
SP500: 1900.00-1910.00 on the upside, 1825.00-1835.00 on the downside.
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