Forex Knowledge 23 APRIL 2014 currency Report.
STOCKS
The Chinese PMI data from HSBC has come at 48.3, still below 50, which is not taken as a very encouraging sign for the Asian markets even when the US and the European markets are rising strongly.
The Dow (16514.37, +0.40%) has reached close to 16600 levels after bouncing back from 16000 levels for the third time in the last 9 weeks. But the bulls still need a new high above 16630 to confirm the resumption of the uptrend.
The Dax (9600.09, +2.02%) crossed the resistance of 9450 in the strongest rally in quite a while. Now a break above 9720 may set it up for a target of 9970-10000.
In the Asia-pac, Shanghai (2068.93, -0.19%) has found support in 2050-35 as expected and now may move sideways between 2050-35 on the downside and 2100-15 on the upside for the next few sessions.
The Nikkei (14470.54, +0.57%) is facing selling pressure from the strong resistance of 14675-700 with the Yen weakening a bit more. The trend remains weak below 14675-700 and we may see 14200 again.
The Nifty (6815.35, -0.03%) has signaled its intention to go higher towards 6950-7000. Any correction on the way to the higher levels should be limited to 6745-20 now. A sharper correction would bring the possibility of a sideways move between 6650-6850 for the next few days, which can’t be ruled out in the light of the upcoming General Election result. Our bias remains bullish for now.
COMMODITIES
Gold and Silver potentially weak while Copper can rise. Crude and Brent have paused but may resume its uptrend in the coming sessions.
Gold (1284.195) continues to fall targeting 1275-1270 while Silver (19.469) is stable at lower levels below 19.66. Gold may slightly bounce from 1277-1275 levels but overall the near term looks bearish. Silver if falls further may test support near long term support in the 19.00-18.5 zone.
Copper (3.047) has been consolidating since the beginning of Apr’14 and may continue so for some more sessions gearing up for further upmove. A rise towards 3.15 could only be confirmed above 3.07-3.08.
Brent (109.41) has paused in the last 2-3 sessions but while above 109, it may target 112. Overall longterm uptrend persists. WTI Crude (101.68) has fallen sharply but while it trades above 100.76 it may target 104-105 again. Crude-Gold ratio (0.792) has come off slightly from resistance and may fall a little towards 0.07 before rising further to 0.081-0.083.
FOREX
Absolutely no change is visible in most of the currencies except Aussie as they trade in a very narrow range for the last 2-3 sessions.
Dollar Index (79.84) has been struggling near 80.00-80.10 as expected and it may face more selling from 80.30 as well. The broad range of 79.25-80.50 may remain in force for some more time. Only on a break above 80.55-60, the trend will reverse from down to up.
The Euro (1.3818) is trying to bounce from our support zone of 1.3790-60 and rally higher. From the broader perspective, for major gain it has to break above 1.40 and simultaneously Dollar Index must break below 79.
Dollar-Yen (102.51) has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. Now it is testing the resistance at 102.75-103.00 as expected and this resistance zone may push it down once again. We keep watching the long term support at 100.75-50 for major moves.
The Euro-Yen Cross (141.65) is testing our resistance of 141.65-90 after finding buying support from 140.50-139.50 as expected. Now a break above 141.65-90 may take it higher towards the major resistance of 143.50.
Pound (1.6834) has finished the small correction and resumed its major uptrend in line with our expectation. It may reach 1.7000-50 in the next 1-2 weeks as the short term momentum remains intact above 1.6730-10.
Aussie (0.9312) is testing the lower end of the range of 0.93-0.94 it has been trading in for the last two weeks after the inflation rose less than expected. The bulls must respond right now from 0.93 levels, otherwise it may drop to 0.92. Our bias is neutral for the moment.
Dollar-Rupee (60.76) chose the bullish possibility and reached 60.89. Now the overall target is 61.20-35 but it may take a pause before reaching there. The short term bullish momentum remains intact above 60.60-40.
INTEREST RATES
The US 10Yr yield (2.71%) and the 5Yr yield (1.73%) remained stable and are trading just below resistance at current levels. A break above 2.75% and 1.75% i.e. the respective resistances, we may see the yields rising further towards 2.85% and 1.85% in the near term. The US 10-5Yr yield spread (0.98%) has dipped a little as expected and may come down further to test support near 0.95%-0.96% before we see a bounce.
The German-US 2Yr spread (-0.27%) dropped below the immediate support at -0.25% and may now test the support near -0.32%. The German-US 10Yr spread (-1.18%) on the other hand saw a bounce from -1.23% (18-Apr-14) levels along with Euro (1.3818) which bounced from the 8-MA support on the 3 Day line charts. The German 10Yr yield (1.53%) saw a bounce from near the support at 1.50%. A break beyond 1.55% and the 10Yr can target 1.60%.
The US-Japan 10Yr spread (2.10%) remained unchanged as Dollar-Yen (102.51) remained stable. The Japan 10-5Yr yield differential (0.42%) is unchanged and near the support zone of 0.40%-0.41%. The Japan 10Yr yield (0.61%) can target 0.65% on a bounce of the yield differential.
The Indo- US 10Yr spread (6.15%) remained stable. The Indian 10 Yr GOI yields (8.86%) were unchanged and can drop further to test the support near 8.75% before a bounce back to 9.00% and beyond.
DATA TODAY
1:30 GMT or 7:00 IST AU CPI
...Expected 0.80 % ...Previous 0.80 % ...Actual 0.6 %
9:30 GMT or 15:00 IST UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 %
14:00 GMT or 19:30 IST US New Home Sales
...Expected 451 K ...Previous 440 K
DATA YESTERDAY
US Existing Home Sales
...Expected 4570 K ...Previous 4600 K ...Actual 4590 K
STOCKS
The Chinese PMI data from HSBC has come at 48.3, still below 50, which is not taken as a very encouraging sign for the Asian markets even when the US and the European markets are rising strongly.
The Dow (16514.37, +0.40%) has reached close to 16600 levels after bouncing back from 16000 levels for the third time in the last 9 weeks. But the bulls still need a new high above 16630 to confirm the resumption of the uptrend.
The Dax (9600.09, +2.02%) crossed the resistance of 9450 in the strongest rally in quite a while. Now a break above 9720 may set it up for a target of 9970-10000.
In the Asia-pac, Shanghai (2068.93, -0.19%) has found support in 2050-35 as expected and now may move sideways between 2050-35 on the downside and 2100-15 on the upside for the next few sessions.
The Nikkei (14470.54, +0.57%) is facing selling pressure from the strong resistance of 14675-700 with the Yen weakening a bit more. The trend remains weak below 14675-700 and we may see 14200 again.
The Nifty (6815.35, -0.03%) has signaled its intention to go higher towards 6950-7000. Any correction on the way to the higher levels should be limited to 6745-20 now. A sharper correction would bring the possibility of a sideways move between 6650-6850 for the next few days, which can’t be ruled out in the light of the upcoming General Election result. Our bias remains bullish for now.
COMMODITIES
Gold and Silver potentially weak while Copper can rise. Crude and Brent have paused but may resume its uptrend in the coming sessions.
Gold (1284.195) continues to fall targeting 1275-1270 while Silver (19.469) is stable at lower levels below 19.66. Gold may slightly bounce from 1277-1275 levels but overall the near term looks bearish. Silver if falls further may test support near long term support in the 19.00-18.5 zone.
Copper (3.047) has been consolidating since the beginning of Apr’14 and may continue so for some more sessions gearing up for further upmove. A rise towards 3.15 could only be confirmed above 3.07-3.08.
Brent (109.41) has paused in the last 2-3 sessions but while above 109, it may target 112. Overall longterm uptrend persists. WTI Crude (101.68) has fallen sharply but while it trades above 100.76 it may target 104-105 again. Crude-Gold ratio (0.792) has come off slightly from resistance and may fall a little towards 0.07 before rising further to 0.081-0.083.
FOREX
Absolutely no change is visible in most of the currencies except Aussie as they trade in a very narrow range for the last 2-3 sessions.
Dollar Index (79.84) has been struggling near 80.00-80.10 as expected and it may face more selling from 80.30 as well. The broad range of 79.25-80.50 may remain in force for some more time. Only on a break above 80.55-60, the trend will reverse from down to up.
The Euro (1.3818) is trying to bounce from our support zone of 1.3790-60 and rally higher. From the broader perspective, for major gain it has to break above 1.40 and simultaneously Dollar Index must break below 79.
Dollar-Yen (102.51) has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. Now it is testing the resistance at 102.75-103.00 as expected and this resistance zone may push it down once again. We keep watching the long term support at 100.75-50 for major moves.
The Euro-Yen Cross (141.65) is testing our resistance of 141.65-90 after finding buying support from 140.50-139.50 as expected. Now a break above 141.65-90 may take it higher towards the major resistance of 143.50.
Pound (1.6834) has finished the small correction and resumed its major uptrend in line with our expectation. It may reach 1.7000-50 in the next 1-2 weeks as the short term momentum remains intact above 1.6730-10.
Aussie (0.9312) is testing the lower end of the range of 0.93-0.94 it has been trading in for the last two weeks after the inflation rose less than expected. The bulls must respond right now from 0.93 levels, otherwise it may drop to 0.92. Our bias is neutral for the moment.
Dollar-Rupee (60.76) chose the bullish possibility and reached 60.89. Now the overall target is 61.20-35 but it may take a pause before reaching there. The short term bullish momentum remains intact above 60.60-40.
INTEREST RATES
The US 10Yr yield (2.71%) and the 5Yr yield (1.73%) remained stable and are trading just below resistance at current levels. A break above 2.75% and 1.75% i.e. the respective resistances, we may see the yields rising further towards 2.85% and 1.85% in the near term. The US 10-5Yr yield spread (0.98%) has dipped a little as expected and may come down further to test support near 0.95%-0.96% before we see a bounce.
The German-US 2Yr spread (-0.27%) dropped below the immediate support at -0.25% and may now test the support near -0.32%. The German-US 10Yr spread (-1.18%) on the other hand saw a bounce from -1.23% (18-Apr-14) levels along with Euro (1.3818) which bounced from the 8-MA support on the 3 Day line charts. The German 10Yr yield (1.53%) saw a bounce from near the support at 1.50%. A break beyond 1.55% and the 10Yr can target 1.60%.
The US-Japan 10Yr spread (2.10%) remained unchanged as Dollar-Yen (102.51) remained stable. The Japan 10-5Yr yield differential (0.42%) is unchanged and near the support zone of 0.40%-0.41%. The Japan 10Yr yield (0.61%) can target 0.65% on a bounce of the yield differential.
The Indo- US 10Yr spread (6.15%) remained stable. The Indian 10 Yr GOI yields (8.86%) were unchanged and can drop further to test the support near 8.75% before a bounce back to 9.00% and beyond.
DATA TODAY
1:30 GMT or 7:00 IST AU CPI
...Expected 0.80 % ...Previous 0.80 % ...Actual 0.6 %
9:30 GMT or 15:00 IST UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 %
14:00 GMT or 19:30 IST US New Home Sales
...Expected 451 K ...Previous 440 K
DATA YESTERDAY
US Existing Home Sales
...Expected 4570 K ...Previous 4600 K ...Actual 4590 K
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