Market Morning Briefing

GOOD MORNING!

EQUITIES
The global markets are trading in the negative zone though not sharply as the possibility of the smart money flowing back to US has arisen after the FED signaled a possible rate hike in 2015.

Nikkei (14386.72, -0.52%) has achieved our initial target of 14400 and may fall further to our next target support of 14000. A break below 14000 may accelerate the decline to 13750 and then 13200.

Shanghai (2019.28, -0.12%) bears dominate firmly as long as it stays below 2040-50 and reversal will come only on a break above 2080. A break below 1980-75 may take it to 1950-45.

Nifty (6524.05, +0.11%) is in a consolidation mode after the sharp bounce from 6430 to 6575. As long as the short term support zone of 6480-60 is unbroken, the bullish momentum remains intact. On the other hand, a break below 6460 may activate an intermediate corrective phase.

Dow (16222.17, -0.70%) has created a small H&S pattern with neckline at 16000 in the short term charts. The bulls would need to protect 16000 and break above 16500-600 to keep the uptrend intact but a break below 16000 may drag the index to the long term support area of 15600-500.

COMMODITIES
Gold (1330.85) fell sharply after the FED cut monetary stimulus and officials predicted a rise in interest rates next year; curbing demand for the metal. Currently testing crucial support near 1325, it may bounce back to 1350 levels and above. But a break below 1325 could push it to 1300.

Silver (20.667) is held by support near 20.5 and needs to bounce back from here. Failure to bounce from 20.5 could push it to 19.5-19 levels. Gold-Silver ratio (64.37) is testing support near 64.26 and may target 66-66.5 in the near term.

Copper (2.9640) rose a bit after fluctuating highly in the 2.87-99 regions trying to regain after the recent fall. A rise above 3 is expected in the coming sessions to pull up the prices further towards 3.15.

Brent (106.1) is testing crucial long term support on the weekly in the 105.65-106 zones and may bounce back towards 108-109 levels. Nymex WTI (99.25) is rallying towards 100-101. Overall the near term looks bullish while the long term uptrend still holds.

CURRENCIES
The US Fed continued its QE cut as planned but the hawkish sentiment expressed spooked the Euro and the Emerging markets and strengthened the Dollar.
Dollar Index (80.01) has snapped back sharply from the support area after the Fed signaled a rate hike next year. The break above 79.70 indicates further rise towards 80.50-75 soon.

The Euro (1.3825) has broken below the two week low of 1.3825 and is flirting with the channel support at 1.38-1.3790. A break below 1.3790 will ensure the end of short term uptrend and may pull it down to 1.3650-1.36.

Dollar-Yen (102.44) held above 101 to shoot up sharply and maintain the broader range of 101-104. The sideways action in this range may continue for some more time before a decisive move emerges.

The Euro-Yen Cross (141.58) remains in an uptrend without any serious momentum The bullish view for 144-145 survives as long as it holds above the major support area of 139-138 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.

Pound (1.6538) is close to our buying zone and the medium term trend decider level of 1.6470-50 now. Now if it manages to hold above our stop loss level at 1.64, a resumption of the uptrend may be expected.

Aussie (0.9017) has faced sharp rejection from our resistance area in 0.9150-0.92 after it reached a very important time-price confluence zone. A break below 0.8925-0.89 may ensure a journey back to 0.87 now.

Dollar-Rupee (60.95) held its ground above the major support in 60.90-80 and may open sharply higher on the back of possible outflow from all the EM currencies after the Fed statement last night. Now it has to tackle the supply zone of 61.55-60 before rising further towards 61.80-90.

Although Stocks and Currencies have reacted negatively to the FOMC yesterday, Swap Costs have not moved up dramatically. Only the 30-Yr Swap Cost (-0.027%) seems to be in an uptrend, normalizing towards Zero from levels near -0.5% seen back in Aug-11.

That said, the US Yield Curve may get a little flatter while moving up laterally as well, now that the end of QE has been spelt out as clearly as it possibly can be. Watch whether the US-5Yr (1.70%) breaks above formidable Resistance at 1.70% or not. If it does, we could some rapid rise there, which could spook the markets. The 10Yr (2.76%) is likely to remain below 2.80% for some more time.

In the meanwhile, the German-US 10Yr Spread (-1.19%) is trending firmly down now and even the 2Yr Spread (-0.27%) has come down to test trend Support. A fall to and below -0.30% (if seen) could trigger massive profit-taking on Euro Longs. The US-Japan 10Yr spread (2.15%) has moved up sharply, pulling Dollar-Yen up with it. With Support firming up above 2.0% now, maybe we can see further rise towards 2.20-2.25%.

The Indian 10Yr GOI (8.78%) remains well below 9.0% as the recent inflation data is giving the RBI some respite before the next meeting on 01-Apr.

All in all, watch whether 1.75% on the US-5Yr breaks or not.

DATA TODAY

8:30 GMT or 14:00 IST SNB Meeting
...Expected < 0.25 % ...Previous < 0.25 %

14:00 GMT or 19:30 IST US Philifed Index
...Expected 4.20 ... Previous -6.30

14:00 GMT or 19:30 IST US Existing Home Sales
...Expected 4650 K ...Previous 4620 K


DATA YESTERDAY

UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 % ...Actual 0-0-9 %

UK Unemp
...Expected 7.20 % ...Previous 7.20 % ...Actual 7.20 %

US Current Account Balance
...Expected -88.00 $ Bln ...Previous -96.40 $ Bln ...Actual -81.10 $ Bln

US FOMC Meeting
...Expected <0.25 % ...Previous < 0.25 % ...Actual < 0.25 %