Friday December 3, 2010 - 03:45:43 GMT
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Morning Briefing : 03-Dec-2010 -0343 GMT
Santa Claus in coming to Town and he is definately not dissapointing the bulls. US markets clocked another 1 percent upmove with Dow (11,362) up 0.95% and S&P 500 (1222) up 1.28%. Sentiment continues to improve in peripheral markets of Europe with yield differential with German Bund declining and economic data continuing to suggest some improvement in the core economies of the developed world. Yesterday ECB did not apply a "bazooka approach" but, as the market hoped, but did decide to prolong its liquidity injection facilities as long as necessary. But the statistics which was most promising was the 10.4% jump in pending homes sales in US. With Housing affordability at a record high and with the labour market stabilising, US consumer is stepping on the gas. Tonight we have the US NFP data, concensus is calling for a 1.50-1.60K rise. Though 200k plus jobs need to be added to cause a meaningful dent in the jobless rate but even a 100K plus figure now can be encouraging development. Dow is well supported around 11,200 and resistance is expected around 11,480-500.
After a sizable rally over last two days, lackluster trading is seen in Asia today. Hangseng is trading at 23,496 (up 0.20%), Nikkei is at 10,182 (up 0.14%), Shanghai (2960) showing an odd down tick with 0.67% cut and Kospi (1950) is up 0.02%. Yesterday, Nifty rallied 0.85% to close at 6011. Nifty faces strong resistance between 6020-30 and then around 6050. Support for Nifty is around 6000 and then between 5950-70.
Crude (87.73) has risen further and is retaining its strength. The weaker dollar supported the price rise yesterday. With immediate Support at 86, the overall outlook remains bullish for a rise towards 90-95 in the coming days/weeks.
Gold (1391.10) is ranged between 1380 and 1400 over the last couple of days. 1385-80 is a very important Resistance-turned-Support region to watch for. While above this Resitance region we might expect a strong break and rise above 1400 towards 1450-70 in the coming days/weeks. On the other hand a break below 1380 might see 1350-40 on the downside. Although we have a bullish bias, we need to be little cautious as the immediate outlook is not clear.
The Euro (1.3197) saw some erratic up-down movement after the ECB meeting on confusion whether or not the ECB would continue to provide liquidity and buy bonds. It gained to 1.3247 when it was seen that the ECB was going to be there to support the European bond markets. Important Resistance at 1.3250 today.
Dollar-Yen (83.70) has been seeing sharp up-down movements between 83.40-84.40 over the last couple of days. The Pound has been consolidating sideways between 1.5500-5675. Dollar-Swiss (0.9947) has seen a large fall yesterday to a low of 0.9887 on better than expected Q3 GDP data (+0.7% agst +0.5% expected, QoQ, not annualised). Take a look at
The Aussie (0.9752) has seen very good gains, on the pickup in "risk appetite". Overall, the Dollar Index (80.28) has dipped on profit-taking in the initial days of December, after having posted strong gains in November. It has a 100-day Moving Average Support at 80.12 today. Markets may prefer to be quiet today ahead of the important USD NFP data tonight, which is expected to post a gain of 146K, a tad lower than last month's 151K. Take a look at
We had been watching support at 1.7045 on USD-BRL, but that has broken. The Real is trading strong at 1.7015 and might see further gains in case the USDBRL falls below 1.7000. Dollar-Won (1145-1151) is looking consolidative. Dollar-Sing (1.3092) has fallen over the last couple of days, but may find Support at 1.3035 today. Dollar-Rupee had closed at 45.28 yesterday. It can fall to 45.05 today.
The 3M USD LIBOR was unchanged at 0.30%. The 2Y yields were down 1 bps to quote at 0.53% and the 10Y yields were up 2 bps to quote at 2.98%. The 10Y treasuries yielded the highest in 4 months ahead of the crucial NFP report due later today. Markets are optimistic about the report.
The debt-heavy EU countries (Greece and Portugal) are facing fresh worries over warning of further downgrade for some of their bonds. The ECB has kept its lending rates unchanged at 1% yesterday.
10:00 GMT EU Retail Sales
...Expected 0.4%...Previous -0.2%
13:30 GMT Nov US NFP
...Expected 146K...Previous 151K
12:00 GMT Oct CA Labour Force
...Expected 17.9K...Previous 3.0K
Oct Australia Trade Balance
...Actual A$ 2.63 Bln...Previous A$ 1.81 Bln
CH GDP QoQ (Q3'10)
...Actual 0.7%...Previous 0.8%
EU GDP Q3 '10 First
...Actual 0.4%...PRevious 0.4%
E-15 ECB Announcement
...Actual 1.00%...Previous 1.00
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