Market Morning Briefing

GOOD MORNING!

EQUITIES
Equities have recovered some of the post-FOMC losses globally. But, the picture is mixed looking across the world.

The Dow (16331.05, +108.88, +0.67%) looking potentially very bullish after yesterday's bounce back. A Week Close above 16400-500 (if seen) could lead to 17000 in the medium term. BUT, failure to break above 16500 could be very bearish as well. So, the market seems to be in a very crucial make/ break situation. Need to be careful.

Problem is, the Shanghai (2000, +0.33%) continues to look weak, targeting 19200. The Dax (9296.12) has risen this week after bouncing from near 8900 last week, but needs to break above 9400 today to inspire confidence. Japan is on holiday today, but the Nikkei (14224.23) had closed quite bearish yesterday with potential for a fall towards 14000 and lower next week.

Decent chances of seeing a strong bounce in the Nifty (6483.10) today given trendline Support in the 6480-60 region and the bounce in the Dow last night. There could be potential for 6600 also. Let's see.

COMMODITIES
Gold (1332.85) is trading a bit higher after bouncing from support near 1321 and may target 1360-1380 in the near term while above 1350. Overall it is in an uptrend.

Silver (20.37) has broken crucial support at 20.5 but has bounced a bit from 20.2. A fall below 20.2 could take it to 19.5-19 levels. Gold-Silver ratio (65.45) is targeting 66-66.5 in the near term from where it may come off. Till then we do not expect a rise in Silver.

Copper (2.9330) is trading within the crucial levels of 3-2.90 and has fallen in reaction to the FED signal to cut rates. We need to wait for more clarity as further movements seem indecisive. For now there are equal chances of breakouts on either direction.

Brent (106.13) is at a pause near support at 106 from where it may bounce towards 108-109 levels while Nymex WTI (98.49) is trying to rise eventually to 99.8-100 and further towards 101.5. Overall the near term looks bullish. Brent-WTI spread (7.63) has bounced sharply from support near 5.5 as expected and may further rise to 8-8.5 from where we may see a fall to 5.

CURRENCIES
Dollar Index (80.14) has hit 80.35 fast and is well on its way to 80.50-75 with a possible correction interrupting the rally. The bullish momentum remains intact as long as it holds above 79.90-70.

The Euro (1.3825) has broken below 1.3790 to enter into a short term downtrend and staying below 1.3810-30, may reach 1.3650-1.36 soon.

Dollar-Yen (102.35) held above 101 to shoot up sharply and 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 (141.08) remains in an uptrend that is in a risk of getting nullified if a rally doesn’t materialize soon. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.

Pound (1.6515) is close to our buying zone and the medium term trend decider level of 1.6470-50 now. Now if it manages to hold above our stop loss level at 1.64, a resumption of the uptrend may be expected.

Aussie (0.9061) is consolidating in range of 0.89-0.9150 for the last 3 weeks with no particular directional clue. A break below 0.8925-0.89 may ensure a journey back to 0.87 now.

Dollar-Rupee (61.34) is stuck in a narrow range of 60.90-61.50. Till this range gets broken decisively, it would be better to trade the range by selling higher and buying lower.

INTEREST RATES
The US 5Yr (1.70%) is unchanged and testing the resistance at 1.70%. A break above 1.70% and we may see the 5Yr rise to 1.80%, as suggested by the US 10-5Yr yield differential (1.07%) breaking below the support on the weekly charts. The 10Yr (2.77%) is stable and is expected to be ranged between 2.75-2.80%.

The German 10Yr (1.64%) is almost at our target of 1.65%. A break above the resistance near 1.65-1.66% can signal a rise to 1.70-1.75%. The German-US 10Yr spread (-1.17%) is still trending down and the 2Yr spread (-0.24%) has seen a slight bounce from the trend support. Whether the support holds or not needs to be watched. The US-Japan 10Yr spread (2.17%) has seen a bounce from the support near 2.04-2.05% and we may see 2.20-2.25% now.

The Indian 10Yr GOI (8.82%) rose but still remains below the resistance near 8.85-8.86% which needs to be watched. Only on a break above the resistance will we see 9.00%.

DATA TODAY

9:00 GMT or 14:30 IST Euro Area Monthly Balance of Payments
...Expected 18.40 EUR Bln ...Previous 21.30 EUR Bln

12:30 GMT or 18:00 IST CA Inflation Y/Y
...Expected 0.90 % ...Previous 1.50 %

DATA YESTERDAY

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

US Philifed Index
...Expected 4.20 ... Previous - 6.30 ...Actual 9.0

US Existing Home Sales
...Expected 4650 K ...Previous 4620 K ...Actual 4600 K