Wednesday January 20, 2010 - 03:49:06 GMT
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Morning Briefing : 20-Jan-2010 - 0335 GMT
The US equities rose yesterday led by healthcare stocks on hopes that the outcome of an election in Massachusetts would make it difficult for Obama to make changes to healthcare industry. The Citibank numbers, too, were in line with expectations and hence the stocks rose as the impact of bad Citibank numbers was already built in the indices earlier. The Dow (10725.43) and the Nasdaq (2320.40) rose over a percent each. The Dow could rise towards 11000 over the next few days.
The Asian indices are trading mixed. While the Nikkei (10818.91) is trading higher by half a percent, the Shanghai (3205.38) and the Hang Seng (21430.08) and the Taiwan Weighted (8200) are trading over lower between 0.60% to 1.30%. The Chinese and Taiwanese markets are falling because of liquidity tightening by central banks to curb asset bubbles. The Sensex (17486.06) had seen some correction yesterday. It fell nearly a percent yesterday on declining European stocks anticipating bad Citibank numbers.
Crude (78.92) rose and closed above 79 yesterday. The US stock market which rose more than 1% supported the price rise although the dollar remained strong. Though the stronger dollar, high inventories and decrease in demand because of the easing cold weather might still keep up the downside pressure, we will have to wait and watch whether Curde can overcome all of it. The US Crude inventory data will be released tomorrow (21-Jan-10) instead of today.
Gold (1135.00) is continuing to trade sideways. Though the dollar strengthed, a sharp fall was not seen in the commodity's price. This divergence is keeping up the broader bullish sentiment intact.
Early morning debacle in the Euro (1.4225) which has fallen below the 200-day MA (1.4312) for the first time since May-09. Greek debt problems are being blamed for this fresh fall in the Asian hours today. The Australian Dollar (0.9190) was also jolted by the Euro decline, falling to a low near 0.9150. This is despite the Yen (91.20) weakening appreciably from yesterday's strong level of 90.30, a crucial Support for the Dollar, which has held well. We may see the Euro and the Yen weaken further against the Dollar, while the Aussie might stabilise. That the Euro has broken the 200-day MA is worrisome for its health going forward.
The Pound (1.6331) has also come off a bit from yesterday's high near 1.6460, but is performing much better than the Euro because it is seen to be away from the Euro's problems. The EUR-GBP Cross (0.8712) has been falling from 0.9130 on 12-Jan and might dip a little more before it finds Support at 0.8651. Dollar-Swiss (1.0365), needless to say, has moved up, reflecting the Euro's weakness.
Among the Asians, the Sing Dollar has weakened to 1.3935, but the USD might find Resistance at 1.3977. The Won too has weakened to 1130.20, reflecting the all-round fall vis-a-vis the US Dollar. As a result, we may well see Dollar-Rupee move further up towards 45.90, maybe even 46.00. That said, some hope might be there due to the rise in the Dow yesterday and the Nikkei today.
There has been news on the retail currency trading front, both in India and in the USA. In India, the SEBI-RBI combine has allowed futures trading in GBP-INR, EUR-INR and JPY-INR. At the same time, in the USA, there is a proposal by the CFTC to limit the leverage on currency trades to 1:10 from the obscene levels of 1:200 and 1:500 that are being offered currently.
3M USD LIBOR was set at 0.25%. The yields on US Treasuries have risen slightly. The 2Y and 10Y yields were up 2 bps and 1 bp to quote at 0.89% and 3.69% respectively.
The Bank of Canada in its monetary policy meeting yesterday had kept the key interest rates unchanged at 0.25%.
09:30 GMT UK BOE Minutes
...Expected 0-0-9 hold...Previous 0-0-9 hold
09:30 GMT UK Unemp
...Expected 8.0%...Previous 7.9%
12:00 GMT CA Core Inflation Index Y/Y
13:30 GMT US Dec Core PPI (MoM)
...Expected 0.1%...Previous 0.5%
13:30 GMT US Dec Core PPI (YoY)
13:30 GMT US Dec Housing Starts
...Expected 0.580 Mln...Previous 0.570 Mln
Dec UK CPI Y/Y
...Actual 2.9%...Previous 1.9%
US Dec TICS (Net foreign purch of long-term Sec)
...Actual $ 126.8 Bln...Previous $ 19.3 Bln
...Actual 0.25%...Previous 0.25%
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