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Market Morning Briefing

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Market Morning Briefing

Thu, Nov 5 2009, 03:38 GMT
by Kshitij Consultancy Service Team

Kshitij Consultancy Service

Morning Briefing : 05-Nov-2009 - 0342 GMT

GOOD MORNING!

EQUITIES
The Dow (9802.14) ended marginally higher yesterday after trading over 1% higher through major part of the day. This has come despite encouraging assessment of the economy by the Fed. The interest rates have been kept unchanged as the Fed pledged to keep rates near zero for an "extended period". It assured that the housing sector has been picking up and the consumer spending, too, has been growing despite challenges of high unemployment.

Most of the Asian indices are trading lower today fuelled by South Korean concerns over sustainability of economic rebound. The Nikkei (9730.68) has fallen 1.15% while the Shanghai Composite (3145.82) is trading higher by 0.55%. The Sensex (15912.13) recovered yesterday more than it lost on Tuesday surging nearly 3.3%. The Support at 15200 is likely to be honoured going forward.

COMMODITIES
Crude (80.02) has risen and closed above 80 yesterday following the EIA's Crude inventory data release that showed an unexpected drop of 4 million barrels against the expected rise of 1.4 million barrels. If it continues to trade above 80, we might see a rise towards 82.50-83.00 in the coming days. The bigger picture remains bullish for a target of 88-90.

Gold (1088.60) continues to trade strong and recorded a high of 1098.50 yesterday. The overall bullish sentiment is intact and a break above the immediate Resistance region 1100-10 might see a rise towards 1150-1200 over the next few days/weeks. Support is seen at 1060.

CURRENCIES
Good surge in the Euro (1.4845) yesterday, to a high near 1.4910. A little lesser surge in the Aussie (0.9081) which saw a high near 0.9145. The fall in these currencies has been well arrested and they are, at worst, likely to consolidate sideways for a few days. At the same time, there is room on the upside. Dollar-Swiss (1.0168) has fallen alongwith the rise in the Euro. It saw a low near 1.0140 yesterday. Look for a further dip to 1.0130 today.

Dollar-Yen (90.43) has come off a bit after spiking upto 91.30-33 yesterday. Look for a range of 89-92 for the next several days. Euro-Yen (134.14) had risen to as much as 135.75 yesterday, but is seeing some profit-taking now. Expect Support in the 133.70-20 region. The Pound (1.6511) has been strengthening against the Euro (EUR-GBP is 0.8988) for 2-3 weeks now. Against the Dollar, the Pound has an imporant Resistance at 1.6610. Should that break, the Pound may become very bullish. Else look for a fall back towards 1.62.

The Korean Won (1179.40) is maintaining its strength as is the Sing Dollar, near 1.3975. It may move sideways between 1.3930-4030 over today-tomorrow, within an overall downtrend. Dollar-Rupee (which had closed at 47.05 yesterday) is expected to trade a range of 46.80-47.20 for a couple of days. The near NDFs are quoting at a discount near 46.90-95.

INTEREST RATES
The Fed has kept the rates unchanged and intends to keep the interest rates near zero for an "extended period". The 3M LIBOR continued to be stable at 0.28% and has been there for over a month.

The yields on US Treasuries steepened as the yields of farther term maturities rose more than the near term. The yields on 2Y, 10Y and 30Y maturities were quoting at 0.90%, 3.51% and 4.39% respectively. With Fed having completed the repurchase program and the near term interest rates continuing to remain low, the curve may continue to get steeper. The yields differentials between different maturities which had gone into a sideways range over the last several days, may see a jump here. To see the chart of yield differentials between different maturities, click on: http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff

The BoE and the ECB Meets are scheduled today.

DATA TODAY
Oct Australia Trade Balance
...Actual A$ -1.85 Bln...Previous A$ -1.65 Bln
http://www.kshitij.com/fundamentals/funcharts/autrbal.shtml

10:00 GMT EU Retail Sales
...Expected 0.3%...Previous -0.2%
http://www.kshitij.com/fundamentals/funcharts/euretail.shtml

12:00 GMT BOE Mtg
...Expected 0.50%...Previous 0.50%
http://www.kshitij.com/fundamentals/funcharts/ukboe.shtml

12:45 GMT E-15 ECB Announcement
...Expected 1.00%...Previous 1.00%
http://www.kshitij.com/fundamentals/funcharts/euecb.shtml

DATA YESTERDAY
US FOMC Interest Rate
...Actual <0.25%...Previous <0.25%
http://www.kshitij.com/fundamentals/funcharts/usfed.shtml

Published on  Thu, Nov 5 2009, 03:49 GMT