Market Morning Briefing

GOOD MORNING!

STOCKS
US Jobless Claims came lower than expected but the fall in Philly Fed index and Housing starts were interpreted as solid reasons to push the rate hike back. So the US market was energetic along with the European markets. Asia-Pac is following the sentiment with Japan in confirmed bull market.

Dow (17265.99, +0.64%) rallied strongly this time to shrug off any negative thoughts. Now 17700 can be expected soon with support in 17150-100. Dax (9798.13, +1.41%) broke out above 9700 as expected with 10000 as the current target.

Shanghai (2311.60, -0.19%) is not feeling the effect of the Chinese stimulus yet as it has corrected to our support 2285 and confirmation is needed to conclude that the corrective phase is over. Expect support from 2285-70. The Nikkei (16301.08, +1.45%) has broken above the longterm resistance in 16100-200 and now testing the 2013 high of 16320. It looks set for 16700-750 next.

Nifty (8114.75, +1.75%) turned the game around as it bounced very sharply after retesting our support band in 7940-30. Today can well be a consolidation day after the sharp gains.

COMMODITIES
Gold (1223.14) and Silver (18.501) are stable for now. Gold continues to remain below 1225 and may soon target 1200 while Silver may see lower levels of 18-17.5 if it is unable to bounce back immediately. Near term remains bearish.

Nymex WTI (92.91) has come off from the channel resistance near 95 on the daily charts. While 95 holds we may see a fall to 91-90. A break above 95 if seen would take it towards near term resistance near 97.

Brent (97.55) is hit by the 21-day MA near 99.6 pushing it back to levels below 98. While weakness is still on the cards, it will be difficult to break above crucial levels of 99.6-100-101. A failure to break above these levels may keep Brent ranged in the 96-99 region for a few sessions.

Copper (3.0980) has been behaving strangely fluctuating in the broad 3.05-3.20 levels and unless a break on either side of this range us seen it will be difficult to determine further direction.

FOREX
The Dollar pullback discussed yesterday is really taking place as Dollar Index (84.26) came down from 84.75 and the Majors are bouncing back sharply, especially Sterling. This Dollar weakness can keep the Rupee strong for the day if the EM currencies manage to stand on their legs for the day.

Euro (1.2918) created a Bullish Harami pattern but requires a confirmatory run above 1.2981 to make it significant. This week is ending with no significant loss on a net basis and later, that may well turn out to be crucial.

Dollar-Yen (109.12) has broken above the long term resistance of 109 just like Nikkei but looks a bit overstretched. A bit of consolidation/correction coming from 110-112 before further rally? The Euro-Yen Cross (141.01) has achieved all our targets in just two sessions. Clearly, as long as Yen continues to crash, this pair will be going places. But immediately breaking above 141.25 may not be that easy and a consolidation may take place.

The Pound (1.6488) is ripping higher on the possibility of “Yes” votes winning in Scottish independence referendum. Too much volatility but 1.6550-6650 may be cap of the current bounce.

Aussie (0.8969) is in a pause mode as expected, If our target support band of 0.8920-0.8890 remains protected, expect the pause to extend both price and timewise.

Dollar-Rupee (60.8350) tested 61.15 as expected before crashing down to a new weekly low. It looks like a genuine reversal this time and 60.60 and even 60.30 can’t be ruled out.

INTEREST RATES
The US 5Yr (1.86%), US 10Yr (2.64%) and the 30-Yr (3.36%) have risen from 1.83%, 2.62% and 3.34% respectively. The US 10 Yr is moving towards 2.75% and if a break above this is seen, it may target resistance near 3.00% in the coming weeks.

The German 2Yr (-0.057%) and 5Yr (0.232%) have risen slightly and may remain stable for now. The German 10-2 Yr0 (1.13%) is testing resistance near current levels which if holds may push it back to 1.10% levels indicating a fall of the 10-Yr yields against the 2-Yr. The German-US 2Yr spread (-0.64%) has again fallen from -0.60% indicating that the inherent weakness is still there while the trend is firmly down.

The Indian 10Yr (8.453%) has fallen a bit from 8.49% and as said earlier, the 8.47-8.54% range may hold for sometime now. The Indo-US 10 Yr (5.85%) has fallen further but is nearing support near 5.80% from where we may see a bounce back to 5.0-6.00%.

DATA TODAY

9:00 GMT or 14:30 IST EU EA (17) Curr Acct Bal
...Previous 20.80 EUR Bln

12:30 GMT or 18:00 IST CA Inflation Y/Y
...Previous 1.70 %


DATA YESTERDAY

SNB Meeting
...Expected < 0.25 % ...Previous <0.25 % ...Actual <0.25 %

US Housing Starts
...Expected 1040 K ...Previous 1117 K ...Actual 956 K

US Philifed Index
...Expected 22.80 ...Previous 28.00 ...Actual 22.5