Forex Knowledge 9 JUNE 2014 currency Report.
The US payrolls data, Japanese growth data and Chinese Trade data all beat the expectations and created a very positive sentiment for all the markets this morning.
The long-term Bull markets Dow (16924.28, +0.52%) is extending the rise towards 17000-200 as expected but if any correction doesn't emerge from 17000-200 soon, the bulls may generate more momentum to push the index up to 17400-600. The Dax (9987.19, +0.40%) keeps testing the 10000 levels but the last correction implies long term bullish strength, which looks strong enough to push it up to 10300-400 as long as it stays above 9800-700.
The long-term Bear markets - The Nikkei (15161.71, +0.56%) is trying to push its upper boundary but may find it difficult to break above 15200-400 immediately. Profit booking may emerge in this area of 15200-400 though the Double Top is negated. The Shanghai (2039.98, +0.49%) keeps trading in the range of 1990-2080 in a base-building process but keep an eye on 2010 & 2060 for early signals.
The long-term Bull market - Nifty (7583.40, +1.46%) rallied to 7550+ as BankNifty joined the part too as expected and not it faced the last long term resistance in 7600-40. A 2-3 days closing above 7640 may bring a vertical rise towards 8000-8200, even 8500 would not be impossible. But a failure around these levels would mean fall towards 7300-200 again.
COMMODITIES
Gold (1252.88) has risen from 1240 levels but while within the 1240-1260 zone, we cannot negate the danger of a fall towards 1225. However, a break above 1260 (if seen) may take it higher to 1280. Note that it has bounced from support near 1240.48 on the weekly.
Silver (19.04) is in an overall downtrend within which may move up towards 19.4-19.5 in the near term while above 19.
Nymex WTI (102.78) had bounced from 101.6 levels last week but the correction possibly is not over yet as it is heading towards 102.94 from where it may see yet another fall towards 101.5-101before a fresh rise begins. Brent (108.65) after bouncing from 107.76 is stable for now. Bearish pressure still remains while below 109.5 and it may consolidate within 108.5-109 for a couple of sessions. Long term target remains near 111-112.
Copper (3.0470) had the last leg of its short term rally last week and decided to resume its longer term down trend coming back to earlier levels of 3.07-3.00. breaking the support near 3.07 it may see levels of 3-2.95 in the coming sessions.
FOREX
Euro consolidation after the sharp bottom creation has kept most of the currencies quiet but weakness is emerging in Dollar against the EM currencies too. Please note, except Euro, the other major currencies are yet to break out above their respective ranges but whenever they do, Dollar may crash much more.
Euro (1.3644) is in our anticipated corrective mode after creating the major bottom at 1.35. At the end of this correction, it may head higher towards 1.3750-3800.
Dollar-Yen (102.52) is trading close to the upper end of the 9 week long range of 101-103. The strength remains intact above 101.95-85 but the Dollar bulls need a break above 103. The Euro-Yen (139.87) tested 138.70 levels before rebounding to 140 levels on the back of immense volatility in Euro against Dollar. It is taking the shape of a Triangle, which if correct, may push it up to 141.50 levels.
Pound (1.6807) is trying to break out of the congestion zone but it is still contained inside the previous week range. Keep an eye on 1.6690 and 1.6885 for major move signals. The trend may reverse from down to up soon.
The Aussie (0.9351) is very close to a major trendline resistance at 0.9365 but broadly it remains stuck in the range of 0.92-0.94 for now with no clear short term directional clues. Only a break of this range of 0.92-0.94 may produce any meaningful moves.
Dollar-Rupee (59.17) has consolidated in a very narrow range on Friday but may open weak today. The bullish momentum would weaken below the support of 59.00-58.90 but still, only below 58.80-75, a retest of the 58.40-30 levels could be expected.
INTEREST RATES
Lower yields all around except for the USA where there is a slight uptick.
Although the US NFP (+217K) came in little lower than the expected 219K, US Yields are trading higher. The 5Yr (1.67%) and 10Yr (2.61%) had bounced well last week and may be able to remain in positive territory if data does not come out too weak. Retail Sales (Thursday) is the next release to be watched.
European yields are trading lower with a sharp dip in the German 10Yr to 1.35% from levels of 1.43% and 1.40% earlier last week. The 5Yr (0.37%) is seeing a steeper fall and seems headed for important Support at 0.30%.
BOJ is the next big central bank meeting on Friday this week and its a given that policy will remain loose and accomodative especially in the wake of the consumption tax increase.
In India, there are already noises about whether the RBI will bow to the market forces that are driving the 10Yr Yield (8.51%) lower. As there is room for the 10Yr to fall towards 8.25% and even 8.0% in the coming weeks/ months, there may be pressure on the RBI to lower rates going forward.
The US payrolls data, Japanese growth data and Chinese Trade data all beat the expectations and created a very positive sentiment for all the markets this morning.
The long-term Bull markets Dow (16924.28, +0.52%) is extending the rise towards 17000-200 as expected but if any correction doesn't emerge from 17000-200 soon, the bulls may generate more momentum to push the index up to 17400-600. The Dax (9987.19, +0.40%) keeps testing the 10000 levels but the last correction implies long term bullish strength, which looks strong enough to push it up to 10300-400 as long as it stays above 9800-700.
The long-term Bear markets - The Nikkei (15161.71, +0.56%) is trying to push its upper boundary but may find it difficult to break above 15200-400 immediately. Profit booking may emerge in this area of 15200-400 though the Double Top is negated. The Shanghai (2039.98, +0.49%) keeps trading in the range of 1990-2080 in a base-building process but keep an eye on 2010 & 2060 for early signals.
The long-term Bull market - Nifty (7583.40, +1.46%) rallied to 7550+ as BankNifty joined the part too as expected and not it faced the last long term resistance in 7600-40. A 2-3 days closing above 7640 may bring a vertical rise towards 8000-8200, even 8500 would not be impossible. But a failure around these levels would mean fall towards 7300-200 again.
COMMODITIES
Gold (1252.88) has risen from 1240 levels but while within the 1240-1260 zone, we cannot negate the danger of a fall towards 1225. However, a break above 1260 (if seen) may take it higher to 1280. Note that it has bounced from support near 1240.48 on the weekly.
Silver (19.04) is in an overall downtrend within which may move up towards 19.4-19.5 in the near term while above 19.
Nymex WTI (102.78) had bounced from 101.6 levels last week but the correction possibly is not over yet as it is heading towards 102.94 from where it may see yet another fall towards 101.5-101before a fresh rise begins. Brent (108.65) after bouncing from 107.76 is stable for now. Bearish pressure still remains while below 109.5 and it may consolidate within 108.5-109 for a couple of sessions. Long term target remains near 111-112.
Copper (3.0470) had the last leg of its short term rally last week and decided to resume its longer term down trend coming back to earlier levels of 3.07-3.00. breaking the support near 3.07 it may see levels of 3-2.95 in the coming sessions.
FOREX
Euro consolidation after the sharp bottom creation has kept most of the currencies quiet but weakness is emerging in Dollar against the EM currencies too. Please note, except Euro, the other major currencies are yet to break out above their respective ranges but whenever they do, Dollar may crash much more.
Euro (1.3644) is in our anticipated corrective mode after creating the major bottom at 1.35. At the end of this correction, it may head higher towards 1.3750-3800.
Dollar-Yen (102.52) is trading close to the upper end of the 9 week long range of 101-103. The strength remains intact above 101.95-85 but the Dollar bulls need a break above 103. The Euro-Yen (139.87) tested 138.70 levels before rebounding to 140 levels on the back of immense volatility in Euro against Dollar. It is taking the shape of a Triangle, which if correct, may push it up to 141.50 levels.
Pound (1.6807) is trying to break out of the congestion zone but it is still contained inside the previous week range. Keep an eye on 1.6690 and 1.6885 for major move signals. The trend may reverse from down to up soon.
The Aussie (0.9351) is very close to a major trendline resistance at 0.9365 but broadly it remains stuck in the range of 0.92-0.94 for now with no clear short term directional clues. Only a break of this range of 0.92-0.94 may produce any meaningful moves.
Dollar-Rupee (59.17) has consolidated in a very narrow range on Friday but may open weak today. The bullish momentum would weaken below the support of 59.00-58.90 but still, only below 58.80-75, a retest of the 58.40-30 levels could be expected.
INTEREST RATES
Lower yields all around except for the USA where there is a slight uptick.
Although the US NFP (+217K) came in little lower than the expected 219K, US Yields are trading higher. The 5Yr (1.67%) and 10Yr (2.61%) had bounced well last week and may be able to remain in positive territory if data does not come out too weak. Retail Sales (Thursday) is the next release to be watched.
European yields are trading lower with a sharp dip in the German 10Yr to 1.35% from levels of 1.43% and 1.40% earlier last week. The 5Yr (0.37%) is seeing a steeper fall and seems headed for important Support at 0.30%.
BOJ is the next big central bank meeting on Friday this week and its a given that policy will remain loose and accomodative especially in the wake of the consumption tax increase.
In India, there are already noises about whether the RBI will bow to the market forces that are driving the 10Yr Yield (8.51%) lower. As there is room for the 10Yr to fall towards 8.25% and even 8.0% in the coming weeks/ months, there may be pressure on the RBI to lower rates going forward.
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