Friday January 15, 2010 - 03:35:52 GMT
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Morning Briefing : 15-Jan-2010 - 0333 GMT
The US stocks rose on optimism over earnings yesterday. The Dow (10710.55) and the Nasdaq (2316.74) rose 0.28% and 0.38% respectively. The Dow seems to be moving in a bullish wedge which can lead to a rise towards 11000 on a significant break above the immediate 10700 Resistance. The US Retail sales numbers have come in lower than expectations. The December Core retail sales showed a decline of 0.2% vis-a-vis growth of 1.9% in November.
The Asian indices are trading mixed today. While the Shanghai (3221.17) and the Hang Seng (21759.85) are trading a tad higher, the Nikkei (10889.32) is trading marginally lower. The Sensex (17584.87) had risen yesterday. It has been oscillating between 17500-17800 over the last several days. Now that Reliance has started moving (which was an underperformer until now), the Sensex may eventually break out of this range possibly next week.
Crude (78.90) is continuing to trade lower. The weak economic data (jobless claims and the retail sales) released yesterday which still keeps up the concerns of economic recovery,retained the downside pressure on the price. Immediate Support is seen at 78.40 a break below which might pull it down towards 77.50.
Gold (1141.60) closed higher for the second consecutive day after Tuesday's sharp fall. As mentioned earlier we might see a sideways move for sometime. With Support at 1120, the broader picture continues to remain bullish.
Sudden sharp fall in the Euro (1.4425) in the Euro in the Asian session today, setting a low of 1.4407. Suddenly the newswires are talking about an increase in "risk aversion" which has brought the Aussie (0.9275) down a bit from US session highs near 0.9324. We suspect it is profit-taking on the high-yielders driven by profit-taking at the 21-day Moving Average (91.95) in Dollar-Yen which rose to 92.05 yesteday (from Tuesday's low near 90.72). The overall uptrend remains intact in the Aussie while it trades above 0.9250 and 0.9200. Of course, there is a danger, certainly of the Yen strengthening further towards 89.50, on growing fears of Yuan revaluation, so that's a dampener for most "high yielders".
The Pound (1.6310) remains strong with Support at 1.6235 and chances of 1.6400. Dollar-Swiss (1.0235) of course has risen to a high near 1.0250, reflecting the fall in the Euro.
The Asian currencies remain strong, though they have given up some of their gains to the USDollar today, but only marginally. USD-SGD and USD-KRW trade near 1.3887 and 1122.90 respectively, as compared to their lows near 1.3846 and 1115 earlier this week. Dollar-Rupee should trade in a range of 45.50-70, with a bit of bullish bias today.
Eyes will be on US data today (CPI, Industrial Production and Capacity Utilisation) after the Retail Sales disappointed yesterday, coming in at -0.2% against an expectation of +0.4%.
3M USD LIBOR was unchanged at 0.25%. The US Treasury yields have come off after rising sharply over the last few days. The 2Y and 10Y yields were 4 and 6 bps lower at 0.92% and 3.73% respectively.
ECB has kept interest rates unchanged at 1% yesterday. It has mentioned that despite the economic activity having expanded towards the end of 2009 beacuse of rise in exports, the pace of growth is likely to be moderate and uneven because of low capacity utilisation and high unemployment. It also observed that the inflation, too, was moderate. This does not make a case for ECB to raise interest rates soon.
10:00 GMT EU Dec CPI (YoY)
...Expected 1.0%...Previous 1.0%
10:00 GMT EU Trade Bal
...Expected 5.4 Bln...Previous 6.3 Bln
13:30 GMT US Dec Core CPI (MoM)
...Expected 0.1%...Previous 0.0%
14:15 GMT US Dec Industrial Production
...Expected 0.7%...Previous 0.8%
14:15 GMT US Dec Capacity Utilization
...Expected 72.0%...Previous 71.3%
Dec Australia Labour Force
...Actual 35.2K...Previous 31.4K
EU Nov IND Prodn (MoM)
...Actual 1.0%...Previous -0.3%
E-15 ECB Announcement
...Actual 1.00%...Previous 1.00%
US Dec Retail Sales
...Actual -0.2%...Previous 1.3%
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