Morning Briefing : 16-Nov-2009 - 0338 GMT


GOOD MORNING!


EQUITIES
Equities have risen last week. The Dow (10270.47) has risen nearly 6% over last two weeks. There's strong Resistance near 10400. A host of economic data release this week will be watched very closely. US Retail Sales is due today . Industrial Production and Capacity Utilisation is due tomorrow and US Housing Starts on Wednesday. Markets are divided over the pace of recovery. While some investors are bothered that the stocks are only as strong as the latest economic data, the others are betting on a stronger and faster recovery.

The Asian indices have been mixed last week. The Nikkei (9782.69) and the Shanghai (3244.79) have traded in a narrow range last week. The Sensex has however continued to rise and recorded gains of 4.27%. It has risen 6% over the last two weeks. Expect a rise towards 17500 over the next couple of weeks. Today, Asian indices are trading higher. The Shanghai is up 1.79% and Nikkei is up 0.13%.


COMMODITIES
Crude (77.03) has risen from Friday's low of 75.57 and is now trading just above 77. The increase in US Crude inventories and a fall in Consumer sentiment are keeping up the worries of economic recovery and the energy demand. If it continues to trade above 77 and gains upside momentum, we might see a rise once again towards 79-80 in the coming days. Significant Support is seen at 75.50. To see the Support on the Crude graph click on the following link:
http://www.kshitij.com/graphgallery/nymexcrudecandle.shtml#candle

Gold (1124) has risen sharply as dollar weakened and is looking strong in its upmove. As mentioned earlier the overall picture remains bullish for a target of 1150-1200. On the downside Support is seen at 1100. To see the Gold graph click on the following link:
http://www.kshitij.com/graphgallery/goldcandle.shtml#candle


CURRENCIES
Most currencies are strong against the Dollar today and look well poised for further gains at the beginning of the week. The Euro (1.4945) may rise towards 1.50+. The Aussie (0.9335) looks quite good and may see fresh 2009 highs this week. Even the Pound (1.67) is doing well, having found good Support at 1.65 last week. The Swiss Franc remains strong at 1.0105, but is likely to be ranged between 1.0030-0190 for the early part of the week.

Dollar-Yen (89.65) has been holding above 89.00 for the last two weeks, but threatens to drift lower. It is quite remarkable, really, that the market has grown so accustomed to see Dollar-Yen below 100, even below 90. Something that was unimaginable some years ago. With the USA increasing pressure on China on the Yuan, the Yen is likely to remain strong as a proxy. The Euro-Yen Cross (134.05) is beautifully ranged between 133-136 and should be a range-trader's delight this week.

The Sing Dollar and Korean Won continue to gain, albeit slowly (which is good for them, really). They trade near 1.3853 and 1154.50 respectively. Dollar-Rupee had closed at 46.31 on Friday and may well see 46.10 this week.

INTEREST RATES
3M USD LIBOR continued to stay at 0.27%. The US Treasury yields have fallen a little over the last few days. The 10Y T-note yields (3.41%) have Support at 3.30%.

Over the last few weeks, the US yield curve has been steepening. While the yields on 5Y notes have been falling, the yields on 10Y notes have been ranged with a bullish bias. The 30Y bond yields have been rising more than the 10Y yields. Take a look at the chart of US yields at: http://www.kshitij.com/graphgallery/usdsin00.shtml#sin00 and also notice the sharp rise in 10Y-5Y yield differentials at the following page: http://www.kshitij.com/graphgallery/usddiff.shtml#sindiff


DATA TODAY
JP GDP Q3'09 (Pre)
...Actual 1.2%...Previous 0.7%
http://www.kshitij.com/fundamentals/funcharts/jpgdp.shtml

10:00 GMT EU Oct CPI (YoY)
...Expected 1.2%...Previous 1.2%

01:30 GMT US Oct Retail Sales
...Expected 1.0%...Previous -1.5%
http://www.kshitij.com/fundamentals/funcharts/usretail.shtml

FRIDAY'S DATA
EU GDP Q3 '09 (Adv)
...Actual 0.4%...Previous -0.2%
http://www.kshitij.com/fundamentals/funcharts/eugdp.shtml

US Sep Trade Balance
...Actual $ -36.5 Bln $...Previous -30.8 Bln
http://www.kshitij.com/fundamentals/funcharts/ustrbal.shtml