Morning Briefing : 17-Mar-2010 - 0339 GMT


GOOD MORNING!


EQUITIES
The US Markets were up yesterday on a news that the U.S. Federal Reserve will keep borrowing costs near zero for an “extended period.”. The Dow (10685.98) was up 0.41% and the Nasdaq (2378.01) was up 0.67%. We continue to hold our view of an up move towards 11000-250 on the Dow in the next few weeks.

The Asian Equities are all up today. The Nikkei (10795.78) is up 0.69% on expectations that Japan’s central bank may increase a credit program by at least 5 trillion yen ($55 billion) today to stem deflation as separate credit measures are set to expire. We continue to hold a bullish view on the Nikkei and may see a rise towards 11000-250 in the coming weeks. The Shanghai (3012.298) is up 0.65% and the HangSeng (21193.56) up 0.81%. In India, the Sensex (17383.18) was up 1.27% and the Nifty (5198.10) was up 1.35% yesterday. The markets shot up heavily during the last hour of trading backed by news that the index heavyweight Reliance Industries Limited may enter into a joint-venture with Atlas Energy, a US based Energy giant. The Sensex is nearing a crucial Resistance level at 17500.

COMMODITIES
Crude (81.92) bounced back sharply and closed above 81 yesterday as the dollar weakened following the Fed's decision to keep the rates unchanged for an extended period. Immediate Resistance is seen at 82.50 a break above which might test the previous high of 83.95 (11-Jan-10) which is also the upper end of the range (68-84) in which it has been trading over the last few months. The OPEC is expected to leave the output unchanged in its meet today in Vienna. The US Crude inventory data is due today.

Gold (1126.90) has risen sharply easing the threat of a break below 1100 as the dollar weakened following the Fed's decision to keep the rates unchanged for an extended period of time. It is now heading towards the upper end of the range (1100-50) that we have been mentioning for some time.


CURRENCIES
Contrary to our expectation, the Euro (1.3770) is trading higher, having found good Support at 1.3640 yesterday. But there can still be chances of a fall, given that the Euro-Yen (124.51) is looking relatively weak, with potential for a dip towards 121.80. This is despite sentiment for the Dollar-Yen (90.39) being relatively bullish on expectation that the BOJ will ease credit further in its meeting today, expanding a credit programme from JPY 10 trln to JPY 15 trln. We see Dollar-Yen as essentially ranged with a slight upward bias in the near term.

The Pound (1.5230) has moved up well yesterday after several days of negative news. It is trading at a crucial Resistance just now and a break thereof could be very bullish. Dollar-Swiss (1.0550) seems poised to dip towards 1.0465. The Aussie (0.9180) has moved up again yesterday and might well test strong Resistance at 0.9250.

In Asia, Dollar-Won (1132) is managing to hold up, maintaining its recent narrow range, despite the bit of a wobble in the Dollar against most Majors overnight. USD-SGD (1.3942) has dipped yesterday and is now testing a crucial Support right here. Might be worth buying if the Support holds.

Dollar-Rupee (45.58) was closed on account of Gudi Padwa yesterday, but might open lower today as Equities, Gold and the Euro are up.


INTEREST RATES
3M USD LIBOR was unchanged at 0.26%. The yields on US Treasuries dipped a little. The 2Y and 10Y yields quoted 2 and 4 bps lower at 0.92% and 3.66% respectively.

The Fed continued to honour its pledge of keeping the interest rates at a very low rate thus giving sufficient time for the economy to recover. The interest rates were left unchanged at <0.25%. The Fed observed that the inflation was under control and hence it did not warrant a rate increase soon.

The BoJ is scheduled to announce its interest rate decision today. Markets expect BoJ to expand JPY 10 tln lending program to help fight deflation. The interest rates are likely to be kept unchanged at 0.10%.


DATA TODAY
05:00 GMT BOJ Meeting
...Expected 0.10%...Previous 0.10%
http://www.kshitij.com/fundamentals/funcharts/jpboj.shtml

08:30 GMT UK BOE Minutes
...Expected 0-0-9 hold...Previous 0-0-9 hold

08:30 GMT UK Unemp
...Expected 7.8%...Previous 7.8%

12:30 GMT US Feb Core PPI (MoM)
...Expected 0.1%...Previous 0.3%
http://www.kshitij.com/fundamentals/funcharts/usppi.shtml

12:30 GMT US Feb Core PPI (YoY)
Previous 1.0%
http://www.kshitij.com/fundamentals/funcharts/usppi.shtml


DATA YESTERDAY
--------------
EU Feb CPI (YoY)
...Actual 0.9%...Previous 0.9%

US Feb Housing Starts
...Actual 0.580 Mln...Previous 0.610 Mln
http://www.kshitij.com/fundamentals/funcharts/ushsgstarts.shtml

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