Forex Knowledge 30 APRIL 2014 currency Report.
EQUITIES
Today is big day for various kinds of data. BOJ will start the day with its rate decision and statement. Then Germany will release Retail Sales data with Italy releasing its CPI data too. This will be capped off by US GDP data and the FED decision, widely expected to continue the $10 Billion QE cut. All these may affect all the financial segments for the next few sessions.
The Dow (16535.37, +0.53%) is close to the upper end of the 10 week long range of 16000-16600 once again. But the bulls still need a new high above 16650 to confirm the resumption of the uptrend.
The Dax (9584.12, +1.46%) shot up sharply after two days of loss. This rangebound movement inside the broad range of 9050-9720 may continue for some more time before a breakout but a breakout above 9720 may produce a very sharp rally to 10000-10200.
In the Asia-pac, Shanghai (2024.04, +0.18%) is enjoying the second 30 points bounce in the entire fall from 2147 to 1997. Now only an extension above 2030 may take it to 2050 levels, otherwise the fall may resume again. 2080 stands as the trend decider zone.
The Nikkei (14321.60, +0.23%) has reached close to our target zone of 14200 with the risk of falling further to 14000-13900. The trend remains weak below 14675-700. But a break above 14700 will take it higher to 15000. Bias is neutral now.
Regarding the Nifty (6715.25, -0.68%), the expected bounce never came and it closed near the day low of 6709 and looks ready to hit 6685-6650 by the weekend. The midday bounce failed exactly at our resistance area of 6655-6685. Right now the most the bulls can hope for is a bounce towards 6685 if they manage to find buyers from this support area of 6685-6650.
COMMODITIES
Metals are in an overall downtrend while the Oil market looks bullish.
Gold (1294.89) is trading low as the resistance near 1306 holds well for now. It may range in the 1290-1300 regions targeting 1280 on the downside until a break above 1309-1310 is seen. Note crucial support coming up in the 1286-1290 while within the overall downtrend.
Silver (19.441) is falling towards 19.24-19.00 from where it may bounce back to 20-20.5. But if it breaks below 19 it may face the danger of a fall to 18.5.
Copper (3.0750) is trading low as resistance near 3.139 is holding well for now. It may fall a little more towards 3.05 before rising towards 3.15 again. Overall near term uptrend persists.
Brent (108.62) bounced from support near 107.86 but while below 109 we cannot negate an initial fall to 107-106.5 before rising to 110-112. Near term looks bullish.
Nymex WTI (100.42) is trading lower nearing 100 which if breaks may push prices towards 98. However, if it bounces from 100 or levels above, it may target 103 and further 104-105. Overall it is in an uptrend.
FOREX
Dollar Index (79.8020) is stuck in the narrow range of 79.50-80.00 for the last two weeks and 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. A break above 80.15 would be an initial sign of strength.
The Euro (1.3805) is trading inside 1.3770/85-1.3880 for the last two weeks and this narrow range may break this week giving birth to a trending move towards either 1.3655 on the lower end or 1.4000-30 on the upper end.
Dollar-Yen (102.35) is coming down after facing rejection from the resistance of 102. It has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. We keep watching the long term support at 101.00-100.50 for major moves.
The Euro-Yen Cross (141.32), contrary to our expectation, came down even after breaking above 142. This false breakout increases the possibility of testing the major support at 141-140 now, below which a major breakdown would be signaled.
Pound (1.6825) is trading inside the narrow range of 1.6750-1.6870 just like the other major currencies. To reach 1.7000-50 in the next 1-2 weeks, it must break above 1.6870. The short term momentum remains intact above 1.6730-1.6695.
Aussie (0.9281) remains in a weak state and facing selling pressure on all rallies now till it manages to break above 0.9380-0.9400 but it may try to bounce to 0.9330 levels now above which the initial signal for strength may come. Major supports remain at 0.9160-30.
Dollar-Rupee (60.42) remains in a weak state with no reversal signals visible. But the RBI may be buying at the lower levels and it remains to be seen the buyers? activity at the support area of 60.20, that may be the trend decider for the next few sessions.
INTEREST RATES
The US 10Yr yield (2.69%) has fallen below 2.70% and is vulnerable to a fall towards 2.60% or else it can target 2.85% if it breaks above 2.75%. The US 5Yr yield (1.73%) is trading in the resistance zone of 1.73%-1.75% and may rise to 1.80% in the near term on a break above 1.75%. The two day FOMC Meeting will conclude today and we may see yet another cut in the bond purchases by $10 Billion.
The German-US 2Yr spread (-0.26%) remained unchanged and is testing resistance at current levels. The German-US 10Yr spread (-1.16%) rose yesterday while the Euro (1.3805) came off from the high of 1.3878. The German 10Yr yield (1.50%) remained unchanged and is testing resistance at current levels. It is vulnerable to a fall to 1.45% while below 1.50%. A break above 1.50% can take it higher towards 1.60%.
The US-Japan 10Yr spread (2.07%) has come down again to test the support near 2.06% moving in perfect co relation with the Dollar-Yen (102.35) which also dropped. The Japan 10Yr yield (0.62%) remained unchanged and testing resistance at current levels. A break above the current resistance can take it towards 0.65%. The BOJ Meeting has just concluded with no change in its main policy rates.
The Indo- US 10Yr spread (6.11%) has dropped below the support near 6.15% with the fall in Dollar-Rupee (60.4250). The Indian 10Yr GOI yield (8.83%) also dropped further and is expected to maintain a range of 8.75% - 9.00%. A break beyond this range will give us further direction.
EQUITIES
Today is big day for various kinds of data. BOJ will start the day with its rate decision and statement. Then Germany will release Retail Sales data with Italy releasing its CPI data too. This will be capped off by US GDP data and the FED decision, widely expected to continue the $10 Billion QE cut. All these may affect all the financial segments for the next few sessions.
The Dow (16535.37, +0.53%) is close to the upper end of the 10 week long range of 16000-16600 once again. But the bulls still need a new high above 16650 to confirm the resumption of the uptrend.
The Dax (9584.12, +1.46%) shot up sharply after two days of loss. This rangebound movement inside the broad range of 9050-9720 may continue for some more time before a breakout but a breakout above 9720 may produce a very sharp rally to 10000-10200.
In the Asia-pac, Shanghai (2024.04, +0.18%) is enjoying the second 30 points bounce in the entire fall from 2147 to 1997. Now only an extension above 2030 may take it to 2050 levels, otherwise the fall may resume again. 2080 stands as the trend decider zone.
The Nikkei (14321.60, +0.23%) has reached close to our target zone of 14200 with the risk of falling further to 14000-13900. The trend remains weak below 14675-700. But a break above 14700 will take it higher to 15000. Bias is neutral now.
Regarding the Nifty (6715.25, -0.68%), the expected bounce never came and it closed near the day low of 6709 and looks ready to hit 6685-6650 by the weekend. The midday bounce failed exactly at our resistance area of 6655-6685. Right now the most the bulls can hope for is a bounce towards 6685 if they manage to find buyers from this support area of 6685-6650.
COMMODITIES
Metals are in an overall downtrend while the Oil market looks bullish.
Gold (1294.89) is trading low as the resistance near 1306 holds well for now. It may range in the 1290-1300 regions targeting 1280 on the downside until a break above 1309-1310 is seen. Note crucial support coming up in the 1286-1290 while within the overall downtrend.
Silver (19.441) is falling towards 19.24-19.00 from where it may bounce back to 20-20.5. But if it breaks below 19 it may face the danger of a fall to 18.5.
Copper (3.0750) is trading low as resistance near 3.139 is holding well for now. It may fall a little more towards 3.05 before rising towards 3.15 again. Overall near term uptrend persists.
Brent (108.62) bounced from support near 107.86 but while below 109 we cannot negate an initial fall to 107-106.5 before rising to 110-112. Near term looks bullish.
Nymex WTI (100.42) is trading lower nearing 100 which if breaks may push prices towards 98. However, if it bounces from 100 or levels above, it may target 103 and further 104-105. Overall it is in an uptrend.
FOREX
Dollar Index (79.8020) is stuck in the narrow range of 79.50-80.00 for the last two weeks and 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. A break above 80.15 would be an initial sign of strength.
The Euro (1.3805) is trading inside 1.3770/85-1.3880 for the last two weeks and this narrow range may break this week giving birth to a trending move towards either 1.3655 on the lower end or 1.4000-30 on the upper end.
Dollar-Yen (102.35) is coming down after facing rejection from the resistance of 102. It has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. We keep watching the long term support at 101.00-100.50 for major moves.
The Euro-Yen Cross (141.32), contrary to our expectation, came down even after breaking above 142. This false breakout increases the possibility of testing the major support at 141-140 now, below which a major breakdown would be signaled.
Pound (1.6825) is trading inside the narrow range of 1.6750-1.6870 just like the other major currencies. To reach 1.7000-50 in the next 1-2 weeks, it must break above 1.6870. The short term momentum remains intact above 1.6730-1.6695.
Aussie (0.9281) remains in a weak state and facing selling pressure on all rallies now till it manages to break above 0.9380-0.9400 but it may try to bounce to 0.9330 levels now above which the initial signal for strength may come. Major supports remain at 0.9160-30.
Dollar-Rupee (60.42) remains in a weak state with no reversal signals visible. But the RBI may be buying at the lower levels and it remains to be seen the buyers? activity at the support area of 60.20, that may be the trend decider for the next few sessions.
INTEREST RATES
The US 10Yr yield (2.69%) has fallen below 2.70% and is vulnerable to a fall towards 2.60% or else it can target 2.85% if it breaks above 2.75%. The US 5Yr yield (1.73%) is trading in the resistance zone of 1.73%-1.75% and may rise to 1.80% in the near term on a break above 1.75%. The two day FOMC Meeting will conclude today and we may see yet another cut in the bond purchases by $10 Billion.
The German-US 2Yr spread (-0.26%) remained unchanged and is testing resistance at current levels. The German-US 10Yr spread (-1.16%) rose yesterday while the Euro (1.3805) came off from the high of 1.3878. The German 10Yr yield (1.50%) remained unchanged and is testing resistance at current levels. It is vulnerable to a fall to 1.45% while below 1.50%. A break above 1.50% can take it higher towards 1.60%.
The US-Japan 10Yr spread (2.07%) has come down again to test the support near 2.06% moving in perfect co relation with the Dollar-Yen (102.35) which also dropped. The Japan 10Yr yield (0.62%) remained unchanged and testing resistance at current levels. A break above the current resistance can take it towards 0.65%. The BOJ Meeting has just concluded with no change in its main policy rates.
The Indo- US 10Yr spread (6.11%) has dropped below the support near 6.15% with the fall in Dollar-Rupee (60.4250). The Indian 10Yr GOI yield (8.83%) also dropped further and is expected to maintain a range of 8.75% - 9.00%. A break beyond this range will give us further direction.
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