Monday October 11, 2010 - 03:34:22 GMT
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Morning Briefing : 11-Oct-2010 - 0329 GMT
US market closed the week on a strong note with Dow gaining 0.53% to shut shop at 11,006 and S&P500 gaining 0.61% to close at 1165. With emerging market leading the bull charge in global equities Dow is expected to drift higher. On the charts Dow has support between 10,850-10,900 and resistance around 11,050 and then 11,250.
Asian Bull rampage continues with property stocks leading the way in China and Hong Kong as both the Indices notch over a percent gain, Hangseng is up 1.12% (23,200) and Shanghai up 2.27% (2938). Australian all ordinaries touched a five-month high of 4763, up 0.5%. On Friday Nifty closed marginally lower, 6103.45, down 0.28%. Nifty has support around 6090 and resistance at 6240-50. With earnings season in full gear, we expect any correction to be absorbed quickly and Nifty to move towards 6250 in the next couple of sessions.
Crude (83.11) has risen from Friday's low of 80.30 and is trading above 83 now. The weaker dollar and continuing strike in France's oil port are keeping the prices higher. Support is seen at 80 and while above 80 there are good chances of further rise towards 88-90 in the coming days.
Gold (1353.30) has bounced back from Friday's low of 1325.70 following the weak US NFP data release. The overall uptrend is intact and we might see further rise towards 1380-1400 or even higher in the coming days.
Volatility struck after the bad US NFP on Friday, with the currency markets yo-yoing for most of the US session, not knowing whether to sell the US Dollar or buy it. The USD Index (76.97) continues to look weak in the near term with potential to fall towards 76 this week or the next.
The Euro (1.3975) has picked up again in Asia today and could climb higher towards 1.4125. Dollar-Yen (81.98) saw a low of 81.37 in the Friday-Monday handover, but has bounced a bit from there. Watch intra-day Support at 81.70 today. If it holds, USDJPY could move higher. Else, see a test of the 1995 lows.
The Pound (1.5945) and Swissy (0.9633) are relatively quiet within their overall uptrends. Buying dips is going to continue to remain the strategy for some more days. The Aussie (0.9867) is knocking on the doors of Parity, a number that is likely to be achieved because the market will gun for it. Be careful of profit-taking after that.
Among Emerging Markets, the RBI has finally warned of intervention and we may expect it to manage the Coal India IPO flows next week. Dollar-Rupee had closed near 44.42 on Friday. The Brazilian Real (1.6743) is back to being strong, despite the 2% increase in tax on foreign investments. The Korean Won (1115.50) continues to strengthen. The Yuan trades near 6.6620, stabilising a bit over the past few days. The USDSGD (1.3052) remains in a steep downtrend and has seen its lowest level (1.3030) since 1996 today.
Japan, USA and Canada are on holiday today, so expect a quiet market.
The 3M USD LIBOR was unchanged at 0.29%. The 2Y yield was down 1 bps while the 10Y was up 1 bps to quote at 0.34% and 2.39% respectively.
German 10-Yr Yields are trading lower near 2.26%, the lowest in 3 weeks, but higher than the low near 2.10% seen in August. The Greek-German yield spread (769 bp) has been trading much lower than the 954.30 bp seen a month ago. The ECB and BOE had kept rates unchanged last week.
The markets are eyeing QE2 by the Fed next month, but a lot of the expectation should already be in the price. The FOMC Minutes are due for release tomorrow.
No major data release today
Sep CA Labour Force
...Actual -6.6K...Previous 35.8K
12:30 GMT Sep US NFP
...Actual -95K...Previous -57K
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