Market Morning Briefing

EQUITIES
Dow (16130.40, -0.15) is consolidating near our resistance zone of 16100-200 with the uptrend intact. There is a possibility of a reaction from the current levels until 16200-240 is cleared.

Nikkei (14742.36, -0.68%) achieved our target of 14700 and rallied to the old resistance zone of 14900, above which it may extend to 15100-200 at most for now. Weakness will return below 14200.

Shanghai (2120.11, +0.05%) 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 (9659.78, +0.03%) is consolidating at the higher levels and keeping the uptrend intact, may reach 9800-900 next.

Nifty (6127.10, +0.89%) achieved our second target of 6140 and close near the highs. Though no such weakness is visible yet, the lack of volume in the current rally and the existence of multiple overhead resistances in the 50 point band of 6140-6190 keeps the bulls at risk.

COMMODITIES
Oil Market shot up as fuel demand increased in US and the inventories decreased in Cushing and Oklahoma while we see a pause in the precious metals for now.

Gold (1318.5) has come off from 1332 levels and is trading a bit lower. Only above 1325 we may expect a further rise towards 1350-1400 else chances of a fall to 1295 cannot be negated.

Silver (21.761) has paused after its recent sharp rise and may remain stable for a few sessions. While above 21.48, it may target 23. Overall it is in a near term uptrend.

Copper (3.2840) remains stable. Note that it is testing resistance on the daily and if this holds may see little downward movement before again rising towards 3.30-3.35.

Brent (110.19) and Nymex WTI (102.15) saw a sharp rise while within the near term uptrend and may target 111-112.5 and 103.30-104 respectively in the coming weeks. However, there may be a short pause before resuming its upward rally.

CURRENCIES
The lack of strength in the Dollar Index (79.98) was mentioned repeatedly and it has dropped to 79.95 now. It was rejected exactly from our resistance of 80.25-30 area, which must be broken above for any sign of strength or else it may go down further towards 79.60-70.

The Euro (1.3764) managed to break above the major resistance of 1.3750, above which it may rally quickly towards 1.3850-1.39. The bullish momentum remains intact as long as it holds above 1.37-1.3750.

Dollar-Yen (102.26) gave the sudden spike upwards warned about and reached 102.74 before weakening again. With the medium term downtrend still in force, any rally may face supply pressure at the old resistance zone of 103.50. The bearish momentum will return on a break below 101.40.

The Euro-Yen Cross (140.70) broke above 140.40 to reach 141 so far. It may reach our target of 142 staying above 141.25 and even142.70-143 is possible. It has bounced from a major monthly trendline support at 136.20 to produce this sharp rally.

Pound (1.6682) has signaled the next phase of the major uptrend has resumed and now it is in a small correction after reaching our first target of 1.6750. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.6470-80 may be bought into.

The Aussie (0.9005) is close to our major resistance of 0.91 again after bouncing from 0.8925 levels in line with our expectation with a positive bias but the strength remains suspect until 0.91 is broken above. Below 0.8925-0.89 it may reach 0.8830-0.8730.

Dollar-Rupee (62.20) is closed today. The rallies are taking much lesser time compared to the drops implying an undercurrent of bullish strength which would be confirmed initially on a break above 62.32 and then 62.50. Till the breakout above 62.32 materializes, the risk of gradual drop towards 62 remains on the cards.

INTEREST RATES
Interest rates are down globally.

The US10Yr (2.71%) and the UK10Yr (2.74%) have come down from just below the resistances near 2.75% and 2.80% respectively. The German 10Yr (1.67%) also dipped a bit but is stable for now. We see that the yield curve is getting steeper in all the three countries, with the 10-5 Yr differential in US (1.23%), Germany (1.0122%) and UK (1.10%) showing a rise. We can expect the 10Yr yields to rise.

The Japan 10Yr (0.60%) remained unchanged after the BOJ Monetary Policy decision yesterday. We may see it target the support near 0.53%-0.55%. The US-Japan 10Yr spread (2.10%) is stable and can target 2.20%.

The Indian 10Yr GOI yield (8.77%) dropped as the Rupee weakened to 62.20. We expect the 10Yr to maintain the range of 8.75%-8.85% for now.

DATA TODAY

9:30 GMT or 15:00 IST UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 %

9:30 GMT or 15:00 IST UK Unemp
...Expected 7.10 % ...Previous 7.10 %

13:30 GMT or 19:00 IST US PPI ex Food & Energy (MoM)
...Expected 0.20 % ...Previous 0.27 %

13:30 GMT or 19:00 IST US Housing Starts (Mln)
...Expected 950 K ...Previous 999 K

DATA YESTERDAY

BOJ Meeting
...Expected <0.10 % ...Previous <0.10 % ...Actual <0.10 %

Euro Area Monthly Balance of Payments
...Expected 21.00 EUR Bln ...Previous 23.30 EUR Bln ...Actual 21.30 EUR Bln

UK CPI Y/Y
...Expected 2.00 % ...Previous 2.00 % ...Actual 1.90%

US TICS (Net foreign purch of long-term Sec)
...Expected 28.90 $ Bln ...Previous -28.03 $ Bln ...Actual-45.88 $ Bln