Tuesday March 2, 2010 - 03:54:50 GMT
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Morning Briefing : 02-Mar-2010 - 0340 GMT
The US equities opened higher this week. The Dow (10403.79) rose 0.76% and the Nasdaq (2273.57) rose 1.58% yesterday after news of AIG selling its Asia business to Britain's Prudential PLC boosted confidence in the economy. Corporate buyouts are seen as sign of confidence in the economy. The economic data was mixed. While the personal spending rose more than expectations, the personal income numbers came in lower than expectations. The Dow has Support near 10250 and can be ranged between 10250-10500 over the next couple of days.
The Asian indices are trading marginally higher today except for Nikkei (10169.80), Shanghai (3077.81) and Hang Seng (20907.19). These indices are trading 0.02%, 0.32% and 0.73% lower respectively. The Sensex (16429.55) rejoiced last week post-budget in which the Finance Minister of India set specific targets and timelines to reduce fiscal deficit in a phased manner. The budget also pleased the middle class households as the income tax slabs were reshuffled and was seen to be less taxing than earlier. The Sensex closed 1.08% higher on Friday and ended the week higher by 1.47%. It may rise further over the next few weeks towards 17500.
Crude (78.79) fell sharply from the high of 80.62 failing once again to see a break above the Resistance at 81. The stronger dollar and the continuing sentiment to sell on rally towards 80-81 is keeping the Commodity pressured below the significant Resistance at 81. On the downside immeidate Support is seen at 77.50.
Gold (1118.10), though continuing to trade above 1100 over the last couple of days, the Resistance in 1120-40 region and stronger dollar are still retaining the downside pressure. As mentioned earlier we might expect a sideways move between 1100-50 for sometime. If 1100 is broken then we might expect a little broad range of 1080-1150.
Signs of diversification between currencies are already there for us to see. This year is unlikely to be a simple buy/ sell the Dollar against everything else.
The Pound (1.4937) has been the biggest mover yesterday, falling to a low of 1.4781, the lowest in 10 months. We suspect a part of this move is due to the Prudential purchase of AIG's Asian business. The Euro (1.3530) also lost ground yesterday, despite the German-Franco rescue promise for Greece. Dollar-Swiss (1.0807) remains in an overall uptrend, mirroring the fall in the Euro-Dollar.
In Asia, the USDJPY (89.28) is trading near the lower end of a 88.50-92.000 range, within an overall downtrend. The Korean Won (1152.70) and the Sing Dollar (1.4051) have both strengthened yesterday, presumably as an alternative to Europe. The Aussie (0.9002) remains ranged/ biddish, alongwith the Canadian Dollar which is trading strong near 1.0427. Both the Aussie and the Loonie have gained over the last 3-4 days, at the expense of the Euro and the Pound.
Dollar-Rupee was closed yesterday on account of Holi. The NDFs are trading near 46.09, close to where the market closed at 46.0850 on Friday. Support is seen at 46.00-45.90 for Dollar-Rupee.
3M USD LIBOR was unchanged at 0.25%. The yields on US Treasuries were also little changed yesterday.
Today, the RBA is scheduled to announce its interest rate decision in the next few minutes. The expectations are of an increase of 25 bps to 4.00%. The BOC is also scheduled to announce its interest rate decision today and may keep its interest rates unchanged at 0.25%.
This week, other countries scheduled to announce their interest rates are Euro and Britain on Thursday. Here, too, the expectations of unchanged interest rates.
...Actual 4.9%...Previous 5.2%
03:30 GMT AUD RBA Interest Rate
...Expected 3.75%...Previous 3.75%
06:45 GMT CH GDP QoQ(4th Quarter)
...Expected 0.4%...Previous 0.3%
14:00 GMT BoC Meeting
...Expected 0.25%...Previous 0.25%
...Actual 9.9%...Previous 9.9%
...Actual 0.6%...Previous 0.4%
US Jan Personal Income
...Actual 0.1%...Previous 0.3%
US Jan PCE Price Index M/M
...Actual 0.0%...Previous 0.1%
Feb US Manufacturing ISM
...Actual 56.5...Previous 58.4
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