Market Morning Briefing

GOOD MORNING!

STOCKS
A Chinese stimulus of nearly $81 billion boosted the markets everywhere and the US market rallied on the expectation from the prominent Fedwatchers that the FOMC is not going to change its language. Expect the mood to remain moderately positive.

Dow (17131.97, +0.59%) made a new life high at 17167 keeping with our bullish bias. The short term uptrend may have resumed but we would like to see some more follow up buying along with a weekly close above 17160 for confirmation.

Dax (9632.93, +0.28%) has contracted a lot around our support of 9600 for the last few sessions. Now a break above 9690 may trigger the expected rally or a break below 9570 may negated the bullish sentiment.

The last fall from 2348, a new high, of Shanghai (2304.21, +0.31%) engulfed all the price action of the previous 5 sessions. The bearish implication can’t be missed and probably the short term corrective period may continue. Expect support from 2285-70. The Nikkei (15951.06, +0.25%) has been stalling in the band of 15800-16000 , in the close vicinity of the long term resistance area in 16100-200 and needs an immediate breakout on the upside to keep the bullish momentum intact.

The Nifty (7932.90, -1.36%) tested and just closed above our intermediate support band of 7940-30 as expected. Global cues point to a gap up open but stay cautious until 8050-85 is broken on the upside. 7990-8000 can act as immediate resistance now.

COMMODITIES
Gold (1237.61) and Silver (18.737) are trying to rise since the last 3-sessions and may continue to do so in the coming weeks. A target of 1263-1280 and 19.25-19.75 respectively could be seen on the upside for now. This may be a short term correction and we cannot negate the longer term bearishness just now.

Nymex WTI (94.73) has risen sharply for 2 consecutive sessions now, giving a reversal signal for the Crude. However confirmation can come only after a rise beyond 96.95 is seen. Near term target is 96.95 and further 99 on the upside. Gold-WTI ratio (13.06) has fallen sharply and may target 12.5-12 in the near term signalling a stronger rise in WTI against Gold. Brent (98.94) on the other hand is trading higher and may target 103.65 in the near term. Near term indicates some bullish moves coming in.

Copper (3.1485) has risen as the Chinese economy boosts bringing in fluctuation in the prices. Near term is unclear while the longer term downtrend persists.

FOREX
The Majors remain almost totally unchanged as the global markets wait for the FMOC meet to conclude today and the two day ECB meet to conclude tomorrow.

Euro (1.2952) keeps consolidating in a probable Bear Flag/Pennant. The bearish momentum remains very strong below 1.3025-50 and a resumption of the downtrend may come soon.

Dollar-Yen (107.18 has made 4 small candles suggesting slight loss of bullish momentum, after hitting the trendline resistance at 107.40, also near the 12-year old long term trendline resistance of 108-109. The price action here will have severe impact on both this pair and Nikkei. The Euro-Yen Cross (138.84) is correcting a bit now after achieving our first target of 139.15. Expect support from 138.25-00 if Yen doesn’t strengthen up considerably.

The Pound (1.6260) is trading quietly in the narrow range of 1.6200-80 after the gap-filling exercise. The weekly candle suggests buyers coming from the long term support of 1.6050-6000 levels but a massacre of this magnitude requires a long base building before any sustainable reversal attempt.

The Aussie (0.9066) bounced with the commodities after the Chinese stimulus of $81 billion. But the technical damage is too severe and expecting a bounce to even 0.92 right now can be very difficult. The next targets remain unchanged at 0.8920-0.8890.

Dollar-Rupee (61.0550) traded very quietly for the day and may remain in the same silent mode today. Expect support at 60.90-85 and resistance in 61.15-25 to contain the range for the day.

INTEREST RATES
The US 5Yr (1.77%) has fallen by 1 bps and is testing resistance at current levels while the10Yr (2.58%) and 30Yr (3.35%) have risen. The US 10-5Yr (0.82%) has risen above the channel resistance near 0.80% but may soon resume the downtrend in a couple of sessions. Markets may remain a bit stable before the FOMC today.

The German 10Yr (1.06%) is stable for now while the German-US 10Yr Spread (-1.53%) has fallen and is in a sharp downtrend targeting -1.6% in the near term. The 2Yr Spread (-0.59%) has risen well and may now target -0.55% in the near term.

The Indian 10Yr GOI (8.497%) has fallen given that the US 10-Yr is rising. The 10Yr GOI-US 10 Yr spread (5.94%) has risen sharply and may impact the Rupee negatively. 5.89% yesterday. Rise in the 10Yr GOI against the US 10Yr yield is likely in the coming sessions.

DATA TODAY

8:30 GMT or 14:00 IST UK BOE Minutes
...Expected 0-0-9 ...Previous 0-0-9

8:30 GMT or 14:00 IST UK Unemp
...Expected 6.30 % ...Previous 6.40 %

9:00 GMT or 14:30 IST EU CPI (YoY)
...Expected 0.40 % ...Previous 0.38 %

12:30 GMT or 18:00 IST US Core CPI (MoM)
...Expected 0.2 % ...Previous -0.01 %

12:30 GMT or 18:00 IST US Current Account Balance
...Expected -114 $ Bln ...Previous -111.18 $ Bln


DATA YESTERDAY

UK CPI Y/Y
...Expected 1.50 % ...Previous 1.60 % ...Actual 1.50 %

US PPI ex Food & Energy (MoM)
...Expected 0.10 % ...Previous -0.16 % ...Actual 0.05 %

US TICS (Net foreign purch of long-term Sec)
...Expected 24.3 $ Bln ...Previous -18.70 $ Bln ...Actual -18.6 $Bln