GOOD MORNING!


EQUITIES
The Dow Jones (13326.39, -0.14%) rose yesterday but failed to hold on to its gains which is definitely a bearish sign and a failure to rise above 13500 can pull it down to 13000. It has made a double top in the daily charts (take a look http://www.kshitij.com/graphgallery/djiacandle.shtml#candle) which can be bearish.

All the Asian markets are trading in the green today Australia (4513.00, +0.17%), Hang Seng (21140.49, +0.67) except Taiwan (7446.62, -0.07%).

The Nikkei (8566.72, +0.23%) is weak and is targeting 8465 which if broken can take it lower to 8300 also. Broadly the index is weak.

Shanghai (2114.82, +0.57%) has been rising well from 2000 and next level to be watched is 2150 which if broken can take it to 2200 in the coming days. The trend might well turn positive above these levels.

Nifty (5708.05, +0.99%) bounced back from the support of 5650-30 that we mentioned yesterday, the larger view though positive we might still move lower to 5650-30 and even lower if this support breaks. The broader picture is bullish.

Dax (7281.70, +1.06%) bounced back but any rise from current levels is expected to face resistance at 7400, down side is open for a fall to 7100-000 as far as 7400 continues to hold. The bigger trend is positive.


COMMODITIES
NYmex Crude (92.44) is mixed and ranged between 88 and 94. Technically Crude is bouncing from its 21-Week-MA now and if it can sustain above 90, there will be good chances of seeing a break and rise above 94 towards 97-98.

Brent Crude (115.71) is just below its important Resistance at 116 and a strong break above it will open doors for further rise to 121. We see good chances of a break above 116. However, if 116 holds, a pull back to 110-109 is possible.


Gold (1768.80, UNCH) and Silver (34.09, +0.04%) continue to trade in their 1795-40 and 35-33 ranges respectively. Gold has bounced from its 21 EMA (1758) on the daily charts and can rise to the higher side of the range. Silver is finding support in the 33.80-50 range and can move further up towards 35. The bigger trend in both Gold and Silver remains bullish.

Copper (3.74, -0.16%) has risen from 3.70 and can move towards 3.85, but continues to be ranged in 3.70-85 with the bigger trend being positive


CURRENCIES
Dollar has failed to extend its upmove and the Dollar Index (79.79) has come off failing to see a strong rise past 80 and is expected to retain its 79-80 sideways range. Comments from the IMF chief Christine Lagarde that Spain and Greece can be given more time to cut their deficits has put pressure on the Dollar.

The Euro (1.2933) has risen well above 1.2933 and can rise further to 1.3000-50 while above 1.2900. With strong Support near 1.2800, the overall picture is bullish and a rally to 1.3150-200 or even higher is possible in the coming days/weeks. Dollar-Yen (78.40) failed to sustain the break below 78 and has risen back sharply once again. It is expected to be ranged between 78 and 79 for some time. The Euro-Yen Cross (101.39) has risen back well above 101 and is keeping the overall bullish view intact. While above 101, a rise to 103-104 is possible in the coming days.

Dollar-Swiss (0.9352) has failed to extend its upmove strongly above 0.9400 and could be ranged between 0.9300-9400 for some time with an overall bearish bias for a fall to 0.9200-100. The Pound (1.6035) remains weak and is hovering around the psychological 1.6000 level. With lack of upside momentum and with strong Resistance in 1.6100-30 region, the downside remains open for an immediate fall to 1.5900-5850. Aussie (1.0269) remains higher and is bullish for an immediate rise to 1.0350-400.

In Asia, the USD-SGD (1.2220) as expected had dropped sharply following the Monetary Authority's decision to leave their policy unchanged today. As we have been mentioning for some time, the Singapore Dollar can strengthen towards 1.2000 in the coming days/weeks. Dollar-Rupee (52.6850/6950) fell and has closed well below 53 yesterday and extend its fall now to 52.50-40 while below 53. has come off sharply

INTEREST RATES
The European bond market is stabilising a bit even though the S&P cut Spain's rating to BBB-. The Spanish 10-Yr (5.76%) has retreated from 5.80% and the Italian bond auction went off well yesterday. At the same time, the German 10-Yr (1.50%) has moved a miserly 1bp. Still, the Spain-Germany 10-Yr Spread (4.26%) is well contained below 4.50-60% and could even have chances of falling towards 3.75% in the longer term. That should be good for markets overall.

The US 10-Yr (1.68%) is more or less steady, within an overall downtrend that can target 1.60% and maybe 1.55%-1.50% in the longer term. Yesterday's US trade numbers were not good, with exports falling and imports rising. Growth remains a concern and as such yields can dip further.

The US LIBOR has been dipping over the last couple of month and the 6-mth is down to 0.6039% from levels above 0.70% earlier. The Indian Mibor is coming down steadily. The 1-mth Mibor is close to 8.5% while the 3-mth is close to 8.75%. Both have fallen more than 100bp since May and can fall further.

Pressure will certainly be there on the RBI to reduce rates at its meeting at the end of the month.

DATA TODAY
9:00 GMT or 14:30 IST Aug EU IND Prodn (YoY)
...Expected -4.1% ...Previous -2.8%

9:00 GMT or 14:30 IST Aug EU IND Prodn (MoM)
...Expected -0.4% ...Previous 0.6%

12:30 GMT or 18:00 IST Sep US PPI ex Food & Energy (YoY)
...Expected 2.5% ...Previous 2.6%

12:30 GMT or 18:00 IST Sep US PPI ex Food & Energy (MoM)
...Expected 0.2% ...Previous 0.2%

DATA YESTERDAY

Sep Australia Labour Force
...Actual 14.5K ...Previous -9.5K

Aug US Trade Balance
...Actual $ -44.2 Bln ...Previous $ -42.5 Bln