Wednesday June 6, 2012 - 04:38:54 GMT
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Morning Briefing : 06-Jun-2012 -0434 GMT
GOOD MORNING!
EQUITIES
The US markets had closed in green yesterday following the data release showing better than expected growth in the US service sector. The Dow (1217.95) was up 0.22% and the Nasdaq (2778.11) was up 0.66%.
All the Asian markets are trading in green ranging from +0.80% (Taiwan, 7056.59) to +1.31% (Nikkei, 8492.18) except for the Shanghai (2311.72) which trading slightly lower by 0.01%. The Sensex (16020.64, +32.24) and Nifty (4863.30,+15.15) had closed slightly higher and can extend its rise following the other Asian markets.
Important to note is that there is a Wedge pattern on the Shanghai chart and the market is breaking below the Wedge Support at 2320. A weekly close below 2320 will be very bad going forward. The developments should be watched carefully.
COMMODITIES
Nymex Crude is managing to trade above 84 and can extend this bounce back move to 88-90 if it can sustain above 84.
Brent Crude (99.17) is not gaining further strength. As we had mentioned yesterday, we need to see a strong break/close above the psychological level of 100 to see any futher rise. Failure to do so can take it down to 90.
Gold (1626) seems to be gaining strength and we expect a rise to 1650-70 in the coming days.
Silver (28.74) is continuing to trade above 28 and can break its 27-29 sideways range on the upside to rise to 30-32 in the coming days.
Copper (3.33) is not breaking 3.30 strongly on the downside and can test its Resistance at 3.40 now. A break above 3.40 will reduce the chances of seeing 3.10 on the downside and can take it up to 3.50.
CURRENCIES
The Euro (1.2489) fell to a low of 1.2410 yesterday and has bounced back well from there and is keeping alive the chances of seeing 1.2630-50 on the upside. A strong break above the Resistance at 1.2520 would trigger this rise. Dollar-Yen (78.86) has risen above its 200-DMA (78.66) following the comments from the Japanese Finance Minister that the G7 nations are in support for market intervention. 79.10 is a significant Resistance which needs to be broken for the pair to move up further. The Euro-Yen Cross (98.43) has broken its Resistance at 98.30 and can now rise further to 99.30 while above 98.00.
Dollar-Swiss (0.9619) is coming off from its high of 0.9677 and can extend its corrective fall to 0.9550-00 on the downside before we see a fresh rise to 0.9900-50. The Pound (1.5411) has bounced back well from yesterday's low of 1.5321 and can rise to 1.5500-5600 in the coming days. Aussie (0.9836) has risen sharply following the strong GDP data release today. Immediate Resistance is seen at 0.9845 (21-DMA) and a strong break above it can take it further up towards 0.9900-50.
In Asia, the Korean-Won is trading near 1173 and the Sing Dollar is trading near 1.2808. The Sing Dollar has broken below 1.2820 and can now strengthen to 1.2730 in the coming days. Dollar-Rupee had closed at 55.62/63 can test is Support in 55.50-30 region once again today.
INTEREST RATES
There's a sharp fall in Spanish 10-Yr to 6.31%, from a high of 6.70% on 30-May, on hopes Spanish banks may get help from Europe. Support should be coming up near 6.275%, though, and tomorow's bond auctions by Spain will be test of whether the market is actually hopeful or not. We'd say the situation has really stabilised only if the 10-Yr falls to 6.0%.
The US 10-Yr has seen a sharp rise to 1.59%, from 1.49% a couple of days ago. It looks like short-covering on the charts. Whether it will sustain or not, whether the yield can rise past 1.65% or not will be crucial. At the same time, though, German yields continue to decline. The 2-Yr yields 0% and the 3-Yr yields only 0.07%. The 10-Yr has dipped a little more to 1.21%. There can be chances of another 25-50 bp dip in the longer term.
Bond yields are very low and people may tire of pushing them lower. Good tidings, if any, from the ECB today and from Ben Bernanke's testimony tomorrow, could go a long way in putting some floor below US and German yields.
Indian 10-Yr (8.34%) has also fallen sharply, from 8.52% on 29-May. 3-mth Indian Mibor (9.72%) remains steady, but the 3-mth Mifor (7.19%) has been coming down and can test 7.0%.
DATA TODAY
0:30 GMT or 6:00 IST AU GDP QoQ
...Expected 0.5% ...Previous 0.4%
9:00 GMT or 14:30 IST EU GDP Q1 '12 (Second)
...Expected 0.0% ...Previous 0.0%
11:45 GMT or 17:15 IST ECB Meeting
...Expected 1.00% ...Previous 1.00%
DATA YESTERDAY
RBA Meeting
...Actual 3.50% ...Previous 3.75%
EU Retail Sales
...Actual -1.0% ...Previous 0.3%
BOC Meeting
...Actual 1.00% ...Previous 1.00%
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