Market Morning Briefing

GOOD MORNING!

EQUITIES
The global markets are in a consolidation mode after the good rise earlier in the week.

The Dow (16572.55, -0.00%) ended the session absolutely unchanged after hitting a new life high at 16004. Trading above 16000 now would signal the beginning of the rise to 17000 or more..

The Dax (9628.82, +0.06%) is stalling near our interim resistance zone of 9600-9700 before it can reach 9900. A failure to firmly break above 9700 may generate weakness and it may return 9400-9350 levels.

The Shanghai (2045.72, -0.63%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only.

Nikkei (15091.33, +0.13%) has broken above 15000 in a show of weakening bearish momentum and may extend the rise to 15450-500 now.

Nifty (6736.10, -0.24%) continues its rally with intermittent small corrections but the number of corrections it is undergoing in the last few sessions may turn out to be a concern for the bulls if Nifty fails to break above our next target levels of 6810-20 fast. A break below 6675-60 may be the first sign of short term weakness in this uptrend.

COMMODITIES
Gold (1285.76) is stable for now. We could either see a bounce from current levels or a fall to 1270 before it starts rising. It is testing crucial support near current levels on the weekly line charts and if this holds could see a bounce to 1300-1325 in the coming weeks.

Silver (19.817) is trading above the support near 19.5-19.6 levels and while that holds we may see ranged moves within 19.65-20.2 targeting 20.5 eventually.

Copper (3. 0420) is stable, trading below 3.05. While the bears continues to hover around we may not expect a sharp rise but eventually may move up towards 3.15 in the near term.

Brent (106.16) and Nymex WTI (100.30) have both bounced sharply and if this rise continues Brent may target 107-108 regions again while WTI may look for 101.11-102.

Gold-WTI ratio (12.7948) has fallen and may target 12.5-12. This may indicate that the WTI Crude may rise higher against Gold which may consolidate or fall a little towards 1270.

CURRENCIES
Dollar Index (80.48) broke above the range of 79.90-80.35 to reach our initial target of 80.50 and now, holding above 80.30-25, may reach 80.75 and even 81.

The Euro (1.3713) is testing the support of 1.37-1.3675, below which the bearish momentum may. The next important support comes at 1.3600.

In Dollar-Yen (103.95) is testing the upper end of the 10-week long range of 101-104 and sustaining above 103.75-45 may extend the rise to 105.

The Euro-Yen Cross (142.54) has broken above 142 and looks on its way to 144-145 now if it manages to trade above 142.50-75.

Pound (1.6587) is in a corrective mode after achieving our initial target of 1.6650. Now a further rise to 1.67-1.6750 may be expected holding above the major support at 1.6520-1.6500.

Aussie (0.9234) is in a mild correction after breaking above 0.92 to signal a medium term rise to 0.9380-0.94. This correction now should be limited to 0.9150-0.91.

Dollar-Rupee (60.1650) held above 59.90 and reached our target of 60.20-25. For a continuation of this rally, any correction must be limited to 60-59.95 and then it must break above 60.25-35. In that case, the major resistances of 60.50-55 and 60.75-80 will come into play.

INTEREST RATES
The US 10 Yr (2.80%) and 5Yr (1.80%) remained stable after rising above earlier crucial resistance zones and we may further rise towards 2.90% and 1.85% respectively. The 30Yr (3.62%) also remained stable. With the yield differentials (10-5Yr 1.00%, 30-10Yr 0.84%) rising steadily we may see the US yield curve steepening after several days of flattening.

The German-US 10yr spread (-1.18%) has seen a slight rise and the 2Yr spread (-0.25%) has come up to test resistance at current levels. But the Euro (1.3713) dropped further as the ECB President Draghi said that the ECB was ready to take necessary steps to counter deflation. There were no surprises from the ECB as they kept the interest rates unchanged as expected. The German 10Yr (1.61%) has remained stable and can target 1.65% while above 1.60%.

The US-Japan 10Yr spread (2.15%) is trending up along with the Dollar -Yen (103.95). The close co-relation may take it higher to 2.25-2.30%. The Japan 10Yr (0.65%) is trading at our resistance zone of 0.65%-0.67%. and can target 0.70% if it manages to break above the resistance at current levels. With the 10-5Yr yield differential (0.44%) rising steadily, the rise in the 10Yr looks possible.

The India-US 10Yr spread (6.21%) has come is just below the resistance near 6.25%. The 10Yr GOI (9.01%) has broken above 9.00% and may now go up to 9.10% as the India-US 10YR spread keeps on widening.

DATA TODAY

12:30 GMT or 18:00 IST US NFP
...Expected 196 K ...Previous 175 K

12:30 GMT or 18:00 IST US Unemployment Rate
...Expected 7.00 % ...Previous 7.00 %

12:30 GMT or 18:00 IST CA Labour Force
...Expected 25.30 K ...Previous -7.0 K

14:00 GMT or 19:30 IST CA PMI
...Expected 58.30 ...Previous 57.20


DATA YESTERDAY

Australia Trade Balance
...Expected 0.82 AUD Bln ...Previous 1.39 AUD Bln ...Actual 1.20 AUD Bln

EU Retail Sales
...Expected -0.30 % ...Previous 1.03 % ...Actual 0.39 %

ECB Meeting
...Expected 0.25 % ...Previous 0.25 % ...Actual 0.25 %

US Trade Balance
...Expected -38.30 $ Bln ...Previous -39.25 $ Bln ...Actual -42.30 $ Bln