Market Morning Briefing

GOOD MORNING!

STOCKS
Dow 30 (17,647.75, +0.07%) recovered to its new high levels after a choppy trade. The momentum has dropped considerably owing to range-bound moves and direction remains uncertain. We continue to trade with the larger up trend and considering the underlying economic data for US which is expected to be better than previous readings. US PPI is to be released today.

Quite a bit of off-the-charts themes playing out in Japan, with a new one adding to uncertainty: the possibility of early elections. We expect both Nikkei (17,252.62, +1.64%) and USDJPY to consolidate their gains before things become clearer up on fundamentals. 

After dropping big yesterday, Nikkei has regained some of its losses. For the day, We expect Nikkei to hold 17,400 resistance as the BOJ's interest rate decision is awaited tomorrow. For the day, trade with bearish bias towards 17,100. 

Shanghai (2,460.66, -0.57%) is dropping back after failing to cross 2,500 levels. The supports are at 2,460 and 2,445. In short term, 2,450 is a key pivot. A break below 2,450 would be bearish for short term, indicating a triple-top at 2,508 levels and the target for the top would be 2,400. If the support holds, we can see a retest of the tops again.

Dax(9,306.35, +0.58%) on short-term continues to be bearish and seems to be preparing for worse. For the short-term, a low-risk high-reward sell may be initiated with stops above 9,400 (or 9,450) a loss of 1%, for a immediate target of 8,950, (a gain of 4%+).

Nifty (8,430.75, +0.49%) broke above to new highs, after testing its supports. In short term we expect this momentum to continue to 8,500.

COMMODITIES
Gold (1186.66) is struggling below 1200 because of stagnant Dollar Index. Either side break out will take place only beyond 1130-1200 range. As it has been in a prolonged downtrend, so we prefer being bearish at this juncture. 16.80 was our upside target for this pull back in Silver (16.09), yesterday it moved up to 16.46. Upside retracement against the longer term down trend may be limited till 16.80 levels. Our down side target of 14.60 is intact.

We are hopeful about a counter rally in Brent (78.90). Technical parameters can favour short term bulls. But, 80-81 levels are the major obstacles infront of Brent oil. Yesterday Nymex WTI (75.35) failed to move beyond 76.50. But, higher bottom on hourly chart suggests short term buying would get intensified above 76.50. Eyes will be on the resistance levels of 76.50-60. 

Copper (3.0295) is showing no indication of change in its price structure. Movements have become much sticky and the range is getting compressed. Further indication is waited for the purpose of future trend prediction. 

FOREX
Dovish Draghi sent Euro (1.2472) tumbling from its resistance levels of 1.2600. As we write, Euro has bounced from 1.2440, which has become prominent in recent days. Key sentiment indicators are set to release today, which current readings portend dire situation in Europe. A further bearish reading will take Euro below 1.2440, 1.2400 and 1.2370, which are the key supports for Euro right now.

Pound (1.5654) has a key CPI data release (expected unchanged at 1.2%). Technically, even the dead-cat bounces are not holding on Pound-Dollar, in line with high bearishness. Trigger for the recent losses were the pushing back the rate-hike expectation from Q1 of 2015, to Q1 of 2016. Expectation of early rate hike was key driver for the Pound's dramatic gain from mid-1.50s to 1.72.

Yen (116.51) awaits the BOJ press conference and any clues on how they plan to act. The stance is expected to be dovish in continuation with recent stimulus. 

Rupee (61.73) traded most of the day near its range highs, and dropped as it could not breach 61.80. 61.85 is the key mark on the upside. Though we expected Rupee to trade in the range, the threat of large Dollar gains against Euro, Yen and Pound on back of good-US data and pessimistic data from other regions looms large. Such a scenario could easily push Dollar-Rupee above 61.80 to 62.10.

Aussie (0.8726) trades within the large flat (range) of 0.8900-0.8550. Though the markets want a weaker Aussie to support growth and exports, RBA has been supporting Aussie with bullish forecasts.

INTEREST RATES
US 10Yr (2.3257%) did not meet our target expectation at 2.25, but bounce from the lows of 2.28. We are now back above the short-term resistance of 2.32. We now expect a retest of 2.40% levels. Better US-economic data this week will help in increasing interest-rate hike expectations sooner than late-2015. US Yields is likely to trade with upward bias into the rest of November. This is Dollar-bullish.

GOI 10Yr (8.1805%) is expected to hold the support of 8.15%. Stronger supports are in the range of 8.00-8.10%. Overall, we expect a retest of the levels of 8.35-8.36% in coming days.

Dovish Draghi hinting at buying government bonds might have allayed some fears, as we saw a good spike in Italian and Spanish bonds (dip in their yields) Consequently, GER 10Yr (0.803) eased a bit off their safe-haven status. We saw a good bounce from 0.772 levels to 0.803. We expect the yields to track higher to 0.825 levels for next few days. This should provide some relief to Euro as well.

JGB 10 (0.497) picked up from the supports of 0.46. We expect the long-term bottom in Japanese yields is in place, and we are likely to see the yields go higher from here. 0.420 is a key support on the downside.

DATA TODAY

9:30 GMT or 15:00 IST UK CPI Y/Y 
...Expected 1.20 % ...Previous 1.26 % 

13:30 GMT or 19:00 IST US PPI ex Food & Energy (MoM) 
...Expected 0.1 % ...Previous 0.0 % 

14:00 GMT or 19:30 IST US TICS (Net foreign purch of long-term Sec) 
...Expected 41.30 $ Bln ...Previous 52.07 $ Bln


DATA YESTERDAY:

JP GDP 
...Expected 0.5% ...Previous -1.8% ...Actual -0.4 %

EU Trade Bal 
...Expected 16.20 EUR Bln ...Previous 15.8 EUR Bln ...Actual 17.70 EUR Bln

US Industrial Production 
...Expected 0.20 % ...Previous 0.8 % ...Actual -0.1 %

US Capacity Utilization 
...Expected 79.3 % ...Previous 79.2 % ...Actual 78.9 %