Morning Briefing : 18-Jan-2010 - 0337 GMT


GOOD MORNING!


EQUITIES
Last week was calm for the US markets. Despite of some major data relases, no major movements were seen in the major indices. The Dow closed (10609.65) closed slightly lower (0.08%) than its previous week's close of 10618.19 and NASDAQ (2287.99) closed 1.25% lower than its past week's close of 2317.17. The Dow moved within a range of 10600 - 10710 and has an important support at 10500 on the Weekly candles. The US markets are closed today on account of Martin Luther King's birthday.
http://www.kshitij.com/graphgallery/djiacandle.shtml#candle

Asian markets are down today as a reaction to the below expected results of JP Morgan. Nikkei (10781.03) is trading down 1.83% and Hangseng (21381.37) is down 1.26%. Despite some good corporate results last week, the markets remained quiet, closing 0.07% higher than the previous weeks closing of 17540.29.


COMMODITIES
Crude (77.27) is continuing to trade lower. The Stronger dollar and high oil inventories are keeping up the downside pressure. The easing cold weather which is expected to reduce the fuel consumption also supporting the fall. Technically speaking Crude has broken and is trading below the significant Support at 78.50 on the weekly graph. If it continues to trade lower we might see 75.50-75 on the downside in the coming days. To see the Crude weekly graph click on the following link:
http://www.kshitij.com/graphgallery/nymexcrudecandle.shtml#candle

Gold (1131.10) fell sharply on Friday as the dollar strengthed thereby reducing the metal's hedge value. As mentioned earlier 1120 is the immediate signifcant Support, a break below which might see 1100-1090 on the downside.


CURRENCIES
Early indications of Euro (1.4357) strength last week were belied in Friday's fall to a low near 1.4335, a good part of which has been due to the sharp decline in Dollar-Yen (90.77) which has dragged the Euro-Yen (130.30) to a low near 130.08 today. The danger is that the Yen might strengthen further towards 88.77 if the immediate Support at 90.50-25 does not hold today. Remember that the Yen had strengthened last week as a proxy to possible Yuan revaluation prospects as well as Chinese tightening.

The Aussie (0.9195) has been facing stiff Resistance at 0.9300-30 and might simply consolidate between 0.90-93 for a couple of weeks before deciding what to do for the rest of 2010. Dollar-Swiss (1.0285) has risen over the last few days, mirroring the Euro's suddent weakness but may face Resistance at 1.0335 this week. The Pound (1.6289) had done well last week on better than expected data and continues to look biddish despite some profit-taking on Friday, which had pulled it lower to 1.6210.

In Asia, the Sing Dollar is trading a little weaker near 1.3910. Likewise for the Korean Won (1127.40) which has ceded ground from last Monday's strong level of 1115. Both seem to have been a bit bitten by the Yen's strength. Dollar-Rupee had closed at 45.78 on Friday and might rise further towards 45.90-46.00 this week.

Note that currency market action might be a little muted today since the US is closed for Martin Luther's birthday today.


INTEREST RATES
3M USD LIBOR was unchanged at 0.25%. The 2Y and 10Y yields were 6 bps lower each at 0.86% and 3.67% respectively.


DATA TODAY
No major data release today


FRIDAY'S DATA
EU Dec CPI (YoY)
...Actual 1.1%...Previous 1.0%

EU Trade Bal
...Actual 3.9 Bln...Previous 4.7 Bln

Dec Core CPI (MoM)
...Actual 0.1%...Previous 0.0%
http://www.kshitij.com/fundamentals/funcharts/uscpi.shtml

US Dec Industrial Production
...Actual 0.6%...Previous 0.6%

US Dec Capacity Utilization
...Actual 72.0%...Previous 71.5%