EURO, JAP YEN and EURO-YEN
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EQUITIES
The US markets has risen sharply yesterday. Dow (11143.31) was up 3.95% and the Nasdaq (2492.68) was up 4.69%. However, the bigger picture remains bearish for both the indices.
The EU has said that Belgium, France, Italy and Spain would impose ban on Short Selling from today (12-Aug-11). Remember South Korea and Greece had also banned Short Selling earlier this week.
The Asian markets are trading in the green following the strong rise in the US markets. Nikkei (8997.55) is up 0.17% and Shanghai (2595.69) is up 0.55%. The Sensex (17059.40, down 71.11 points) and Nifty (5138.20, down 22.70 points) had closed higher yesterday and could move up higher following the other markets.
COMMODITIES
Nymex Crude (85.03) has risen well following the strong rise in the US equity markets and the good jobs data release. The strong rise yesterday has eased the downside pressure a bit and has increased the chances of testing 90 on the upside.
Gold (1761) witnessed a strong sell off from its high of 1815.80 and fell to a low of 1733.10. CME's move to increase the margin for trading and profit taking triggered the fall, However, it has bounced back well from its low and it needs to be seen as how does it close for the week today.
Silver (38.86) still remains mixed between 38 and 40.
Copper (4.03) is trading volatile between its Support at 3.80 and the psychological Resistance at 4.00. A close above 4.00 will ease the downside pressure but it needs to see a strong break above 4.20 to wipe out the downside threat.
CURRENCIES
The Euro (1.4195) retains its 1.4100-4400 sideways range with an overall bearish sentiment. Failure to see a strong break above 1.4300 yesterday has increased the chances of seeing a downside breakout of this 1.4100-4400 range which could take it down to 1.4000-3900. Dollar-Yen (76.85) has found Support in 76.40-30 region and is slowly inching up higher. But it needs to see a strong break/close above 77 to ease the downside pressure. The Euro-Yen Cross (109.11) has bounced back well from near 108, but continues to get Resistance at 109.50. Good chances of testing 107 on the downside while below 110.
Dollar-Swiss (0.7605) has risen sharply following the SNB's statement that it could ease the monetary policy futher. It has important Resistance at 0.7750 which might hold for some time. Pound (1.6218) has risen well from near 1.6100 but the overall outlook remains bearish with significant Resistance in 1.6250-75 region. Aussie (1.0328) is trading volatile between 1.0100-0400 over the last few days and it needs to be seen whether it can close above the 200-DMA (1.0307) today.
The Asian currencies are trading strong. The Korean-Won is trading near 1077 and the Sing-Dollar is trading near 1.2110. Dollar-Rupee had closed higher yesterday at 45.4050/4150 and could extend its upmove towards 45.60-70 breaking above its Resistance at 45.45 given the overall strength in the Dollar.
INTEREST RATES
Yields across all bond markets have bounced back as per our expectation published in the previous edition. In the US, 5Y, 10Y and 30Y yields closed at 1.00 %( +5bps), 2.31% (13bps) and 3.77% (+21bps) respectively. In Euro area, German yields for the corresponding tenors closed at 1.40% (+13bps), 2.32% (13bps) and 3.12% (12bps) respectively.
3M USD LIBOR increased to 0.26% gaining 3bps in the month so far after remaining stable at 0.25% for June and July against drop in 3M EUR LIBOR to 1.49% loosing 7bps in the month so far. We expect the EUR LIBOR to fall further in near term. As per the latest data disclosed by ECB following IMF SDDS, currency in circulation has increased by 4.3% (YoY).
In India, 3M Mibor has come off to 9.34% releasing 16bps in the month so far.
DATA TODAY
09:00 GMT July EU IND Prodn (MoM)
...Expected 0.1% ...Previous 0.1%
12:30 GMT July US Retail Sales
...Expected 0.4% ...Previous 0.1%
DATA YESTERDAY
July Australia Labour Force
...Actual -0.1K ...Previous 18.2K
June US Trade Balance
...Actual $ -53.1 Bln ...Previous $ -50.8 Bln
Source: http://www.fxstreet.com/technical/market-view/market-morning-briefing/2011-08-12.html
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