Morning Briefing : 09-Nov-2009 - 0340 GMT


GOOD MORNING!


EQUITIES
US equities had risen sharply last week and wiped out the losses suffered the week prior. The Dow rose 3.20% last week and recorded the first weekly close above 10000 since October 2008. Bad unemployment numbers last week seems to have been shrugged off by the markets. The health care reform bill having pased by the House of Representatives is likely to hit a roadblock as the senators are divided over passing he bill.

The Asian indices are trading higher. While the Nikkei (9797.75) and the Shanghai (3175.01) are trading only marginally high, the Hang Seng and All Ordinaries are trading 1.50% higher. Last week, the Nikkei had traded in a narrow range, while the Shanghai had surged over 5.5%. The Sensex (16158.28) which had risen 1.65% last week is lilely to move higher this week on PM's encouraging comments about the economy.

COMMODITIES
Crude (78.29) fell sharply on Friday after the US Labour Department's data release, which showed the unemployment rate increasing to 10.2% (26-1/2 year high) against the expected increase of 9.9%. However it has risen from Friday's low of 76.71 and is now trading above 78. With Support at 77, we might expect it to rise towards 80-81 in the coming days.

Gold (1099.40) is continuing to trade higher and is keeping up the bullish sentiment intact. As mentioned earlier we might expect a break above the immediate Resistance region 1100-1105 and see a rise towards 1150-1200 in the coming days/weeks. On the downside Support is seen at 1085.


CURRENCIES
"Risky" assets seem to be doing reasonably well today morning and this is reflected in the currencies as well. The Euro is up at 1.4909 and looking strong. The Aussie (0.9254) is building on the gains made through last week and can re-test last month's high near 0.9330. Dollar-Yen (90.19) had dipped to 89.61 on Friday, but is bouncing from there, trading in a range of 89.50-91.50. The Euro-Yen Cross (134.48) has bounced again today after falling to as much as 133.20 on Friday and is likely to gain further.

The Pound (1.67) is trading very strong, having risen past an important resistance (now Support) at 1.6634, and may well attract more buying support. Dollar-Swiss (1.0143) has dipped a bit from Friday's high near 1.0205. But, the Swissy is not looking as strong as the Euro, leave alone the Pound or the Aussie.

In Asia the Korean Won is quite strong near 1160.50 as is the Sing Dollar near 1.3891. Both are set to test their earlier strongest levels (seen in Oct) near 1150 and 1.3854 respectively. Dollar-Rupee had closed near 46.80 last week and may well test 46.65 this week, possibly lower as well.

INTEREST RATES
3M USD LIBOR was lowered 1 bp to be quoted at 0.27%. The yields on US Treasuries are trading flat. Last week, interest rate announcements were made by the major central banks. The RBA again increased the rates by 0.25% while the Fed announced the stimulus to continue over an 'extended period'; thus keeping the rates unchanged. The BoE and ECB have signalled slowing down on stimulus last week.

The yields on US Treasuries are quoting at 0.86% and 3.52% for 2Y and 10Y notes respectively.


DATA TODAY


FRIDAY'S DATA
Sep CA Labour Force
...Actual -43.2K...Previous 30.6K

Oct US NFP
...Actual -190K...Previous - 219K
http://www.kshitij.com/fundamentals/funcharts/usnfp.shtml