The Dow Jones (13494.61, +0.09%) stays flat to positive as ADP Employment comes in at 162K better than expected of 141K. Index continues to take support at its 21 EMA on the daily charts and is also continuing to trade in the 13650-400 range. Any dip towards 13400 and even to 13250 is expected to find buyers as the uptrend seems to be intact.
Asian markets, Australia (4461.00, +0.05%), Hang Seng (20897.44, +0.04%), Taiwan (7637.28, -0.62). are mostly positive on positive US data.
The Nikkei (8796.67, +0.57%) after breaking its trend line support at 8800 is up today on the back of short covering which is understandable after four consecutive “RED” days. The trend is bearish and the index is likely to dip lower 8650 in the coming days.
Nifty (5731.25, +0.22%) was marginally in the positive as the uptrend continues targeting 5900 in the coming days. SGX Nifty is showing mild up tick of about +0.20%. The rally is expected to continue with the Government determined to end their Policy paralysis, Insurance, Pension and Pharma sectors might well be the new targets for FDI tweak.
Dax (9322.08, +0.22%) took support at its trend line (at 7265) on the daily charts to rise yesterday and the down side will be limited till it holds on to this trend line and stays above its 21EMA (at 7270) on the daily charts. Looking lower, support emerges at 7100 which would hold the index on the down side.
Nymex Crude (88.23, +0.10%) Crude breaks its crucial support of 90-89.75 and looks good for a test of 87.00 on a close below 88.00 (200 EMA on the weekly charts), but a short covering rally can take it to 90.00 again as well. The Crude seems negative now and eyes should be on the 200 EMA support mentioned at 88.00 on the weekly charts.
Brent (108.36, +0.18%) has also broken its support of 108.50 and is under pressure and a further decline towards 104 is possible provided it stays below 108.50. the medium term trend negative below this support
Gold (1777.30, UNCH) continues the same range bound movement in its extended 1790-40 range within an uptrend. This consolidation is “Precious” for the precious metal and an upwards break is likely. Gold/Crude ratio has broken its resistance of 20 and a further rise towards 21-22 seems likely which suggests Crude to be weak rather than Gold to rise, this does not rule out an eventual upward break for Gold tough. But the ratio can dip before a further rise on short covering in Crude. (Take a look at the charts http://www.kshitij.com/graphgallery/crudeandgold.shtml#ma)
Silver (34.82, +0.39%) also continues to trade in the 35-33 range in the overall uptrend. The break is likely on the upside and 36 would be the first target for it.
Copper (3.77, -0.18%) is making indecisive candles on the daily charts and a break above 3.80 can take it further to 3.85 and 3.90, support is seen at 3.70. Wait and watch for a move to unfold.
The diversification in the market that we had mentioned yesterday is holding well. The Euro (1.2920) and Swiss (0.9377) are still ranged while the Yen (78.63), Pound (1.6090) and the Aussie (1.0205) remains weaker against the dollar. he Dollar Index (79.75) is still mixed and ranged between 70.30 and 80.10. A daily close below 79.50 could add downside pressure for a break below 79. Market will be waiting for the outcome of the ECB Meeting today.
The Euro (1.2920) is retaining its 1.2800-3000 sideways range and our bias is bullish to see an upside break and rise above 1.3000 towards 1.3200-3400. Dollar-Yen (78.63) has risen further as expected and can test 78.80-79.00. The two day BOJ meets today and the market would be waiting for its outcome tomorow. The Euro-Yen Cross (101.64) has risen well above 101 and is keeping our bullish view intact for a test of 102.50 on the upside. 101.00-100.80 would be a very good Support region now.
Dollar-Swiss (0.9377) is retaining its 0.9330-450 sideways range and can expect sellers coming in the 0.9400-50 region. We expect a downside break of this range which can take it down to 1.0200. The Pound (1.6090) remains weak and can fall to 1.6050-6000 with good Resistance in 1.6100-50 region. Aussie (1.0205) is weak but has important Support in 1.0180-70 region which if broken will open doors for a sharp fall to 1.000 initially and then 0.9700-600 eventually.
In Asia, the USD-SGD (1.2308) has come off from its high of 1.2336, but still remains above 1.2300. Failure to rise past 1.2350 can take it down to 1.2200 once again. Dollar-Rupee (52.16/17) remains weak and can move down further towards 51.80-70.
Series of Central Bank meetings over today/tomorrow. The ECB and BOE meets today while the BOJ's two day meet concludes tomorrow.
Market will be waiting to hear from Draghi after his OMT announcement in the last meeting. A 25bps rate cut from 0.75% to 0.50% would come as a surprise to the market as the broader market expectation is to leave the rates unchanged at0.75%. We will have to wait and see.
The BOE is expected to keep the rates unchaged at 0.50%. It will have to be seen whether the BOE is announcing an increase in its asset purchases or not as against the market expectation to leave the asset purchases at 375 billion pounds.
The Spanish 10yr yield has risen 6bps to 5.81% and has pushed up the Spain-German yield differential to 4.36%. There are good chances that the differential can rise to 4.60% to 4.70% while it remains above 4.25%.
11:00 GMT or 16:30 IST BOE Mtg
...Expected 0.50% ...Previous 0.50%
11:45 GMT or 17:15 IST ECB Meeting
...Expected 0.75% ...Previous 0.75%
14:00 GMT or 19:30 IST PMI CA
...Expected 61.1 ...Previous 62.5
EU Retail Sales
...Actual 0.1% ...Previous 0.1%
US ADP Emp
...Actual 162K ...Previous 189K