Morning Briefing : 17-Nov-2009 - 0336 GMT


GOOD MORNING!


EQUITIES
The US equities rejoiced on good Retails Sales numbers yesterday. The Dow (10406.96) and Nasdaq (2197.85) closed over 1% higher after data showed that the retails sales had grown 1.4% in October MoM. The Resistance at 10400-10450 would be an important one to be watched over the next couple of days. A break of this Resistance might be extremely bullish. However, if the Resistance holds, Dow may come down towards 10000 during the course of the week.

The Asian indices aren't doing as well. The cues are mixed. The Nikkei (9777.42) is trading 0.14% lower, while Shanghai (3293.69) is trading 0.57% higher. Yesterday, the Sensex (17032.51) continued to rise and recorded gains of over 1%. Having risen nearly 11% from a low of 15330 on 3rd Nov, there can be some sideways movement today. The target of 17400 initially and 18000 thereafter is still intact.


COMMODITIES
Crude (78.69) has risen sharply following the weaker dollar and the better than expected US retail sales. Resistance is seen at 80, a strong break above which might see a rise towards 84.50-85.00 in the coming days. On the downside Support is seen at 77. The broader picture remains bullish for a target of 88-90. To see the Resistance on the Crude graph click on the following link:
http://www.kshitij.com/graphgallery/nymexcrudecandle.shtml#candle

Gold (1137.80) is keeping up its upside momentum as the dollar continues to weaken. As metioned earlier we might see a rise towards 1150-1200 in the coming days. On the downside Support is seen at 1120-1100 which we expect to hold for sometime.


CURRENCIES
Volatile up-down trading was seen in the currency markets overnight, which left the Dollar weaker by the time things quietened down. The Dollar has weakened the most against the Yen, with the USD-JPY (89.10) having seen a low of 88.75 overnight. The Dollar notched temporary gains against most currencies when Ben Bernanke said that the US is committed to a strong Dollar, but fell back when he said that interest rates will remain "exceptionall low for an extended period" of time. This should be music to the ears of the "Dollar-Carry Trade" fraternity, which is pretty much the whole world at the moment. However, the further strengthening of the Yen on the back of Bernanke's comments is proving to be a drag for the other (non-USD and non-JPY) currencies.

Euro (1.4949) has come up from a low near 1.4880. The Aussie (0.9336) had seen a range of 0.9325-9405 overnight and has Support at 0.9315 just now. The Euro-Yen Cross (133.25) is trading near the lower end of its anticipated range of 133-135. The Pound (1.6810) had surged to 1.6879 yesterday and remains bullish overall. Dollar-Swiss (1.0091) had dipped to 1.0047 overnight and seems well supported at 1.0050-30.

In Asia, the USD-SGD (1.3843) saw a low near 1.3815 in early trade today. USD-KRW trades near 1154. Dollar-Rupee has opened at 46.18/20 today as compared to yesterday's close near 46.21.


INTEREST RATES
3M USD LIBOR was left unchanged at 0.27%. The yields on US Treasuries corrected sharply across the yield curve. The 2Y and 10Y yields dropped 4 and 9 bps to quote at 0.77% and 3.33% respectively.

In Euro, the yields on Govt debt has become ranged and so has the 10Y-5Y yield differentials. The yields differentials have taken a sideways route and the 10Y-5Y is oscillating between 0.80 to 1.00 percentage points over the last few months. To see the chart of 10Y-5Y Bund yield differential, click on: http://www.kshitij.com/graphgallery/eurdiff.shtml#sindiff


DATA TODAY
09:30 GMT Oct UK CPI Y/Y
...Expected 1.4%...Previous 1.1%
http://www.kshitij.com/fundamentals/funcharts/ukcpi.shtml


10:00 GMT EU Trade Bal
...Expected -0.9 Bln...Previous 1.0 Bln

01:30 GMT US Oct Core PPI (MoM)
...Expected 0.1%...Previous -0.1%
http://www.kshitij.com/fundamentals/funcharts/usppi.shtml

01:30 GMT US Oct Core PPI (YoY)
...Previous 1.8%
http://www.kshitij.com/fundamentals/funcharts/usppi.shtml

14:00 GMT US Oct TICS (Net foreign purch of long-term Sec)
...Expected $ 27.3 Bln...Previous $ 28.6 Bln
http://www.kshitij.com/fundamentals/funcharts/ustics.shtml

14:15 GMT US Oct Industrial Production
...Expected 0.4%...Previous 0.7%

14:15 GMT US Oct Capacity Utilization
...Expected 70.9%...Previous 70.5%

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

EU Oct CPI (YoY)
...Actual 1.2%...Previous 1.2%

US Oct Retail Sales
...Actual 1.4%...Previous -2.3%
http://www.kshitij.com/fundamentals/funcharts/usretail.shtml