Market Morning Briefing

GOOD MORNING!

EQUITIES
The Dow (16323.06, +0.36%) is stuck in the 500 points band of 16000-16500 for the last 6th weeks. This range is contracting and a major move may come sooner than later but this sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.

The Shanghai (2033.17, -0.42%) 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 (14758.94, +0.43%) has broken above 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 (6695.90, +0.82%) continues its rally with no weakness visible yet. We keep watching the supports of 6645-20 and 6570 but the rally may reach our next targets of 6750-60 and 6810 now. By tomorrow the effect of the RBI policy and any possible FII window dressing may get clear.

COMMODITIES
Gold (1297.29) bounced from support near 1285 as expected and may remain ranged within 1285-1309. But a fall below 1285 could push it to 1274-1260.8 levels. Gold-Silver ratio (65.427) has started to retrace the recent rise and may target 64-63.82 in the near term.

Silver (19.779) is testing crucial support near 19.66 and may consolidate within 19.5-20.5 regions before a sharp up move.

Copper (3.0325) has fallen again towards 3 and is finding difficulty to move past 3.05 for now. While this continues it may range between 3 and 3.10 before further direction is seen.

Brent (107.85) came off a bit from 108.3 and may range between 107 and 108 for now. It may target 109-110 in the near term if it breaks above 108. Nymex WTI (101.44) came off from 102.2 and may target 103-104 in the coming sessions. Overall near term looks bullish.

CURRENCIES
Dollar Index (80.19) 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 (1.3753) remains weak below 1.3810-50 and the bearish momentum may intensify on a break below 1.37. The next important support comes at 1.3650.

Dollar-Yen (102.85) 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. A break above 103.25 may increase the possibility of a rise to 104-105.

The Euro-Yen Cross (141.42) keeps trading in the narrow range of 140-142. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50.

Pound (1.6631) 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 coming at 1.6520-1.6500.

Aussie (0.9246) 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 (59.8850) falls to 59.70 where a short term bottom may be formed pending confirmation yet. It remains to been this week if the weekly low of 59.70 holds or not as a break below 59.70 may open further downside to 59-58.80. Our bias remains negative till Dollar Rupee manages to break above 60.50-55.

INTEREST RATES
The US 10Yr (2.73%) and the 5Yr (1.77%) both saw a rise. The 10Yr has come to trade in the long term crucial resistance zone at current levels while the 5yr has moved past the resistance near 1.75%. The 10-5Yr yield differential (0.96%) which has been narrowing since 20-Feb-14 (1.23%) suggests a rise in the 5Yr yields and we may see the 5Yr go up to 1.80%.

The German 10Yr (1.55%) remained stable and can target of 1.50%. The German – US 2Yr spread (-0.32%) has dropped further and may target -0.35%.

The Japan 10Yr (0.64%) saw a rise and has come up to our resistance zone of 0.65%-0.67%. A break beyond the resistance may see the 10Yr go up to 0.70%. The US-Japan 10Yr spread (2.09%) has also dropped further.

The Indian 10Yr GOI (8.80%) fell as Dollar-Rupee fell below 60. It remains in the range of 8.75% - 8.85%. Tomorrow’s RBI Meeting is going to be very crucial. We need to watch whether the RBI reduces or increases the rates.

DATA TODAY

23:15 GMT or 4:45 IST JP PMI
...Previous 55.50 ...Actual 53.9

13:30 GMT or 19:00 IST CA GDP
...Expected 0.40 % ...Previous -0.50 %

FRIDAY'S DATA

JP Unemp
...Expected 3.70 % ...Previous 3.70 % ...Actual 3.60 %

UK Cons Conf
...Expected -6 ...Previous -7 ...Actual -5

UK GDP
...Expected 0.70 % ...Previous 0.68 % ...Actual 0.68 %

EU Biz Climate
...Expected 101.40 ...Previous 101.20 ...Actual 102.40

US Personal Income
...Expected 0.40 % ...Previous 0.29 % ...Actual 0.33 %

US PCE Price Index M/M
...Expected 0.30 % ...Previous 0.17 % ...Actual 0.26 %