Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
EQUITIES
Despite a better than expected US Unemployment data, the markets are trading almost totally flat as the US GDP came a bit lower than expected. All the Asian markets display a very muted price action.
The Dow (16264.23, -0.03%) is stuck in the 500 points band of 16000-16500 for the 6th week now. A retest of 16000 may be on the cards now but this sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.
The Shanghai (2045.40, -0.06%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only. Not falling anymore nowadays on the bad Chinese data and all the hoopla about it entering a new bear market invites the suspicion if the already established 6 year long bear market is coming to a close.
The Dax (9451.21, +0.03%) is testing the higher end of our resistance zone of 9400-9460. A successful break above 9460 may take it to 9700-9900 but we will keep note of the interim supply zone of 9600-9650. Right now it is looking like one of the stronger markets.
Nikkei (14626.29, +0.06%) is consolidating in the range of 14200-14700 but the downtrend remains in force till 15000. We look for a break of 14200 to confirm the bearish momentum.
Nifty (6641.75, +0.61%) entered our medium term target zone of 6650-6700 and maybe it’s time to get a bit cautious here with the weekend and the financial year end coming to an end by next Monday. Protecting 6620, it would still be possible to rise further to 6750 but the other possibility of the FII year-end window dressing going to end might not be ruled out too. We will keep watching the support of 6570 and 6540 if weakness sets in.
COMMODITIES
Metals look bearish except Copper while the oil market is trading on bullish expectation.
Gold (1294.098) has fallen sharply but is trading just above crucial levels of 1285. A bounce could lead to some ranged moves within 1285-1309 but thereafter it may again fall to 1274-1260.8 levels. Gold-Silver ratio (65.21) has fallen from crucial resistance just as expected and if this holds, we may see 64 in the coming weeks.
Silver (19.83) has bounced a bit from 19.66 and its moves are small. There is a possibility of being ranged within 19.5-20.5 regions until we see some sharp movement.
Copper (3.0075) has shown up above 3 for the first time in the last two weeks and this could be a signal of a rise upwards. If it sustains above 3 it may target 3.15-3.25 in the coming sessions. A little more rise would confirm near term bullishness.
Brent (107.69) is trading high and testing resistance near 108. While that holds, we may see short sideways movement below 108. A break above 108 could take it higher to 109-110 levels. Overall it is in an uptrend. Nymex WTI (101.34) has risen sharply as expected and as inventories declined considerably in Cushing. It is now targeting 102 above which it may rise towards 104.
CURRENCIES
Dollar Index (80.10) is consolidating in a Triangular pattern but remains firmly on course to its way to 80.50-75 after this correction ends. Staying above 79.70-65, the strength remains intact.
The Euro (1.3744) remains weak as it is yet to break above 1.3885-95 to negate the downtrend. The bearish momentum may intensify on a break below 1.3750. The next important support comes at 1.3650.
Dollar-Yen (102.14) holds above 101 to 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 (140.37) is testing the lower end of the narrow range of 140-142 and a firm break will bring the initial sign of weakness. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131.
Pound (1.6621) has achieved our initial target of 1.6650 after resuming the medium term uptrend. Now a further rise to 1.67-1.6750 may be expected with the major support unchanged at 1.6450.
Aussie (0.9287) have broken above 0.92 to signal a medium term rise to 0.9380-0.94. Any correction now should be limited to 0.9150-0.91.
Dollar-Rupee (60.31) has bounced after 4 consecutive sessions of negative close. If it manages to hold above 60.16 in any correction, the bounce may extend to 60.50-55. The main trend remains down.
INTEREST RATES
The US 10Yr (2.68%) dipped further and can now drop towards 2.50%. While the 5Yr (1.72%) saw a slight rise and is trading in the long term crucial resistance zone at 1.73% - 1.75%. Looking at the 10-5Yr yield differential (0.97%) which has been narrowing, we may see a rise in the 5Yr yields. The 30 Yr (3.53%) also saw a drop, flattening the yield curve further.
The German 10Yr (1.54%) fell yesterday and is well on its way to our target of 1.50%. The German – US 2Yr spread (-0.28%) fell below the support near -0.25% to -0.26% taking the Euro (1.3744) below 1.3750.
The Japan 10Yr (0.63%) remained unchanged near the upper limit of our range of 0.55% - 0.65%. A break beyond the resistance near 0.65% and we may have the yield targeting 0.70%. The US-Japan 10Yr spread (2.06%) remained stable near the support at 2.05%.
The Indian 10Yr GOI (8.83%) saw a rise but remained in the range of 8.75% - 8.85%. The RBI Meeting is to be held on the 1st of April and expectations are that it will refrain from increasing interest rates. We need to wait and watch.
DATA TODAY
23:30 GMT or 5:00 IST JP Unemp
...Expected 3.70 % ...Previous 3.70 % ...Actual 3.60 %
0:05 GMT or 5:35 IST UK Cons Conf
...Expected -6 ...Previous -7 ...Actual -5
9:30 GMT or 15:00 IST UK GDP
...Expected 0.70 % ...Previous 0.68 %
10:00 GMT or 15:30 IST EU Biz Climate
13:30 GMT or 19:00 IST US Personal Income
...Expected 0.40 % ...Previous 0.31 %
13:30 GMT or 19:00 IST US PCE Price Index M/M
...Expected 0.30 % ...Previous 0.41 %
DATA YESTERDAY
US GDP
...Expected 2.70 % ...Previous 2.40 % ...Actual 2.60 %
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The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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