Market Morning Briefing

GOOD MORNING!

EQUITIES
Dow (16154.39, +0.79%) is testing our resistance zone of 16100-200. Contrary to our expectations, the uptrend has resumed. Still the area of 16200-240 may produce a reaction even if it set for higher targets in the coming days.

Nikkei (14396.56, +0.58%), while in a confirmed bear market, may try to bounce to 14700 if manages to hold above 14200. Below 14200, the fall will extend to 14000 and 13700.

Shanghai (2119.15, +0.15%) is struggling near our resistance of 2120-30 above which it may rally towards 2165-85. Bears may attempt once again to push it down from 2120-30.

Dax (9662.40, +0.68%) rallied to 9650 and beyond confirming the uptrend but there is a fair chance that the bears may attempt to return here at 9620-50 .

Nifty (6048.35, +0.79%) opened higher to make a new low later but reversed sharply thereafter. It may test the 6100-10 area again and even reach the next major 50 points wide supply zone of 6140-90 this week where the bears may return. The broader range of 6150-6350 is in action now.

COMMODITIES
Precious metals stretch its rally while the oil market remains ranged.

Gold (1326.636) continues to rise upwards stretching its rally towards 1350-1400 in the coming weeks while Silver (21.793) shot up high crossing 21.5 levels and is targeting 23 in the near term. Gold-Silver ratio (60.77) fell sharply as Silver shot up relative to Gold. It may come down a bit more towards 60.15.

Copper (3.2805) rose to 3.32 but fell from there and is currently trading below 3.30. It is in an uptrend since 5th Feb’14 and may target 3.35 in the near term while above 3.30.

Brent (109.01) is ranged in the broad 109.85-107.6 regions and a break above 109.85 would take it higher to 110.10 and even 111.28 in the longer run.

Nymex WTI (100.48) remains ranged with no major movement. It may remain ranged within the broad 99-101.5 for sometime before a major move. Overall it is in a near term uptrend.

CURRENCIES
The lack of strength in the Dollar Index (80.03) was mentioned repeatedly and it has dropped to 79.95 now. For any attempt to rally, the bulls must hold this low or else it may go down further towards 79.60-70.

The Euro (1.3711) managed to break above 1.3690 to reach closer to the major resistance of 1.3750, above which it may rally quickly towards 1.38-1.39 but at this point, the strength looks a bit suspect. Failing to break and sustain above 1.3750 could take it to 1.36 again before further rally.

Dollar-Yen (101.62) has come lower as expected but the momentum is lacking. Though staying below 101.60-102 may take it lower but keep an eye for any sudden attempt to rally.

The Euro-Yen Cross (139.30) has achieved our next target of 140.35-40 and now it has to break and stay above 140.40 to rise further towards 142. Otherwise it may correct to 138 before any more rally. It has bounced from a major monthly trendline support at 136.20 to break above 138 to negate any immediate fall.

Pound (1.6801) has signaled the next phase of the major uptrend has resumed and now it has reached our first target of 1.6750. It may reach 1.69-1.7050 next. All the dips till 1.6460-10 may be bought into.

The Aussie (0.9054) is close to our major resistance of 0.91 again after bouncing from 0.8925 levels in line with our expectation but the strength still remains suspect. Below 0.8925-0.89 it may reach 0.8830-0.8730.

Dollar-Rupee (61.93) may open flat to negative near 61.85-90 today. We will be watching the major support area of 61.70-80 to generate any bounce from the oversold state, failing which a fall towards 61.50 and 61.20 may materialize.

INTEREST RATES
The US 10Yr (2.74%) remained unchanged and is trading just below the resistance at current levels. With the 10-5 Yr differential (1.22%) showing a rise we can expect the 10Yr yields to go up to 3.00% if it is able to move past the resistance.

The German 10Yr (1.68%) remained stable and is trading just above the support at current levels. The 10-5Yr yield differential (1.0064%) is also just above the support at 0.99%-1.00%. The German-US 10Yr differential (-1.07%) has dropped near the support at -1.10%. The UK 10Yr (2.79%) remained unchanged and has come up to a resistance at current levels. The 10-5 Yr differential (1.09%) has been pushed back from the resistance at 1.13% suggesting a drop in the 10Yr yields. Therefore, failing to break above the resistance we may see the 10Yr drop to 2.60%.

The Japan 10Yr (0.58%) remained stable and can target the support near 0.50%-0.52%. The US-Japan 10Yr spread (2.16%) is up from the support near 2.14% and can target 2.20%.

The Indian 10Yr GOI yield (8.81%) dropped after the WPI data came in at 5.05% on Friday. We expect the 10Yr to maintain the range of 8.75%-8.85% for now.

DATA TODAY
23:50 GMT or 5:20 IST JP GDP
...Expected 0.70% ...Previous 0.30% ...Actual 0.30%

FRIDAY'S DATA

CN PPI (YoY %)
...Previous -1.40 % ...Expected -1.70% ...Actual -1.60%

CN CPI (YoY %)
...Previous 2.50 % ...Expected 2.30% ...Actual 2.50 %

IN WPI
...Previous 6.16 % ...Actual 5.05%

EU GDP
...Expected 0.20 % ...Previous 0.10 % ...Actual 0.30%

US Industrial Production
...Expected 0.20 % ...Actual- 0.39 % ...Previous 0.40%

US Capacity Utilization
...Expected 79.4 % ...Previous 78.90 % ...Actual 78.50 %