Market Morning Briefing

GOOD MORNING!

EQUITIES
Dow (15963.94, -0.19%) has taken a pause near our resistance zone of 16100-200 after 5 days of rally. If it manages to break and stay above 16100-200 now, then the expected resumption of downtrend may get negated. Right now it is not clear if the current rally is a new upmove or just a correction of the last fall.

Nikkei (14664.02, -0.92%) as expected, faced selling pressure exactly from our major supply zone of 14850-15100 as it remains in a bear market. It has filled one gap already but two more gaps at 14470 and 14310 are left.

Shanghai (2105.14, -0.23%) is moving sideways close to the resistance of 2120-30 above which it may rally towards 2165-85. Bears may attempt once again to push it down from 2120-30.

Dax (9540, +0.65%) broke above our resistance of 9300-80 and reached our upper limit of 9500-50. There is a fair chance that the bears may attempt to return here but the clarity will come in the next couple of sessions.

Nifty (6084, +0.35%) is stalling near our supply zone of 6100-10 with mild weakness so far. A failure to sustain above 6100-10 may resume the major downtrend. Even in the best case scenario, we do not see the current rally going above 6150-90 at this moment.

now before resuming its rally towards 102.

COMMODITIES
Commodities are all in a near term upward rally, except Brent which is trading low after being pushed by resistance.

Gold (1291.447) has risen further targeting 1300 while within an uptrend since Dec’13. A rise above 1300 would take it higher towards 1324.4.
Silver (20.28) is taking small movements rallying towards resistance near 20.5 since last week and if this holds we may see prices falling back to 19.5-19. But a break above 20.5 could take it higher to 20.98-21.5.

Copper (3.2470) has risen a bit and may eventually target 3.30-3.35 while above 3.25. No major movement is expected for now.

Brent (108.24) has fallen while the resistance near 109.8 still holds well. It is currently testing support near 108.017 and if this holds may bounce back towards 110. Failure to bounce from 108 levels may see a danger of falling to earlier levels of 107.

Nymex WTI (100.14) made an intra-day high of 101.38 yesterday but could not sustain those levels while still in an uptrend since Jan’14. It may pause within the 100-101 levels for now before resuming its rally towards 102.

CURRENCIES
The Dollar Index (80.6050) has bounced from our support of 80.35-40 but no sign of strength is visible yet. A successful break above 81.50 is required to take it sharply to 81.85-90 and then 82.50-60. Below 80.35-40, it may test 80.15 on the downside, after which testing the major support of 79.60-70 is possible.

The Euro (1.3612) tested 1.3550 in line with our expectation but still holding onto most of its gains. If Euro manages to break above 1.3690 and 1.3750 soon, it may rally quickly towards 1.38-1.39. Failing to break above 1.3690 would invite the bears.

Dollar-Yen (102.34) bounce is stalling near 102.50 above which it may extend it to103.50 but the resumption of downtrend may come any day which will be confirmed below 102. In that case, we may see 101.20-100.75 again.

The Euro-Yen Cross (139.35) has achieved our next target of 140.35-40 and now it has to break and stay above 140.40 to rise further towards 142. Otherwise it may correct to 138 before any more rally. It has bounced from a major monthly trendline support at 136.20 to break above 138 to negate any immediate fall.

Pound (1.6620) achieved our target of 1.6510 and much more to signal that the next phase of the major uptrend has resumed and now it may reach 1.6750-1.7050.

The Aussie (0.8942) faced sharp rejection from our major resistance of 0.91. It may attempt a bounce from 0.89 levels but below that it may reach 0.8830-0.8730.

Dollar-Rupee (62.10) may open lower near 61.95-62 today after the improved CPI data released yesterday evening. Staying below 62, we may see a further drop towards 61.70-80 before any sign of strength emerges. On the other hand, holding 62 may produce a bounce towards 62.15-25.

INTEREST RATES
The US 10Yr (2.74%) rose for a second day after Yellen’s speech. It is testing resistance at current levels. A break above it and we may see it going up to 3.00%.

The German 10Yr (1.71%) rose after the Industrial production data came out lower than expected and can now target 2.75%. The German 10-5Yr yield differential (1.0094%) is up and trading just above the support at 0.99%-1.00%. The German-US 10Yr differential (-1.08%) has dropped and can target the support near -1.10%. The UK 10Yr (2.82%) saw a sharp rise and has move beyond our target of 2.80%. It can now rise further to target the resistance zone of 2.95% - 3.05%.

The Japan 10Yr (0.61%) rose slightly but is stable in the 0.60% - 0.62% range. The US-Japan 10Yr spread (2.16%) has moved past the resistance and our target of 2.15%. It can target 2.25% with the rise in the US yields.

The Indian 10Yr GOI yield (8.81%) rose yesterday before the IIP and the CPI data. The IIP came out at -0.6% and the CPI at 8.79%. With the low Inflation figure, we may expect rupee to strengthen and the yields to remain lower..

DATA TODAY
0:30 GMT or 6:00 IST Australia Labour Force
...Expected 15.30 K ...Previous -23.0 K ...Actual -3.7 K

13:30 GMT or 19:00 IST US Retail Sales
...Expected 0.20 % ...Previous 0.73 %

DATA YESTERDAY

CN Trade Bal
...Expected 24.2 $ Bln ...Previous 25.60 $ Bln ... Actual 31.86 $ Bln

EU IND Prodn (MoM)
... Expected -0.2 % ...Previous 1.71 % ... Actual -0.79 %

EU IND Prodn (YoY)
... Expected 1.8 % ...Previous 2.74% ...Actual 1.21 %

IN CPI (Jan'14)
...Previous - 9.87 % ... Actual 8.79 %

IN IIP (Dec'13)
...Previous - -1.30 % ... Actual -0.06 %