Friday August 3, 2012 - 03:42:27 GMT
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Morning Briefing : 03-Aug-2012 -0340 GMT
GOOD MORNING!
EQUITIES
The Dow Jones (12879, 82) ended lower for the fourth consecutive day as ECB President disappointed by taking no immediate major step. The markets was expecting a lot and had discounted a big positive event which never came and hence the sell off was on expected lines. The Dow can come down to 12700 soon, though the trend can still be considered as up.
The Nikkei (8517, -138) is in negative with all the other Asian indices except Shanghai and continues its down trend targeting 8300-200.
Shanghai (2114, +0.14%) has taken support at 2100 and has bounced back but trades flat today with inherent weakness in the charts. The index can possibly break its support of 2100 and move lower towards 2050 soon.
Nifty (5227, -0.24) took resistance at 5250 and has retreated. International markets can drag the index lower towards 5150. SGX Nifty is already showing a cut of more than half a percent.
Dax (6606, 2.20%) was hit badly as it had high expectations from ECB which were shattered and the index came down 250 points from the days high. However, the uptrend is intact till it stays above 6400.
COMMODITIES
Nymex Crude (87.49, +0.41%) has support at 87 the break of which can take it down to 85 in no time. The short term uptrend is under threat. Oil prices strives on economic growth and output from OPEC and is seems oil is taking a hit from the economic growth prospects of the EU which is a considerable consumer of the commodity. We can see oil at 83.50-00 in a few days.
Brent (106.30, +0.40%) stands exactly at its resistance of 106-107 which we expect it to hold and it can come down to 103-102. But its out-performance over Nymex continues. Today oil is up as out put from North Sea US is expected to be lower in the month of September on account of maintenance.
Gold (1590.30, +0.18%) is marginally up after dropping more than a percent yesterday. Support is seen at 1560 on the down side, broadly it is ranged between 1630-1550 with stronger support on the down side.
Silver (27.13, +0.50%) stands at its support zone of 27.00-26.50 and continues to be range bound between 26 and 28 in the short term.
Copper (3.31, 0.74%) has also bounced today after a sharp fall yesterday, this we think is a short covering rally post which we can expect the commodity to move lower if it breaks its support of 3.30.
CURRENCIES
Disappointment to the market as the ECB President failed to indicate any immediate action. Draghi said that the ECB will act only after the Euro Zone governments activate the bail out funds. The Dollar Index (83.34) has risen well above 83 and can head back to 84+ levels in the coming days. Following the ECB yesterday, markets will now be waiting for the US NFP data release today.
The Euro (1.2174) has come back sharply from its high of 1.2403. Some Support is seen near 1.2135 which is holding as of now and a break below it can take it further down to 1.2050-30 today. Dollar-Yen (78.18) is contiuing to be ranged between 78.00 and 78.60. The Euro-Yen Cross (95.16) has broken its Support at 95.70 but has strong Support near 94 which can restrict further fall and trigger a bounce back t0 96-97 once again.
Dollar-Swiss (0.9868) remains bullish and has risen well above 0.9800. With Support now in 0.9830-00 region, a further rise to 0.9950+ levels can be seen now. The Pound (1.5511) is broadly ranged between 1.5400-750 over the last couple of months and can now fall to the lower end of this range, 1.5450-00. Aussie (1.0473) is not looking as weak as other currencies and has good Supports at 1.0435 and 1.0390. The pair is bullish for 1.0650-700.
In Asia, the USD-SGD (1.2482) has risen back well from the low of 1.2409 and if it can sustain above 1.2450 a fresh rally to 1.2600 and even higher levels will be on the cards in the coming weeks. Dollar-Rupee had closed at 55.84/85 and can rise further to test its 56.20-30 Resistance region.
INTEREST RATES
The BOE left the interest rates unchanged at 0.50% and also made no changes in its asset purchases.
The ECB also left the rates unchanged yesterday at 0.75%, but the ECB President Mario Draghi disappointed the markets with no signals of any immediate action to resolve the Euro Zone Crisis. Draghi said that the ECB will come out with plans for bond purchase in the coming weeks.
The Spanish 10Yr yields has risen back above 7% and is now at 7.16%. The yield can revisit 7.50-60 once again. Also we see a threat of even seening 7.80%-8.00% on the Spanish 10Yr yields.
The US Treasury yields are down. The 2yr, 5yr and 10yr were down 1bps, 3bos and 4bps each to quote at 0.23%, 0.61% and 1.48% respectively. The Treasury yields can come down further. The 5yr yield can target 0.50% while the 10Yr yield can come down to 1.30%.
DATA TODAY
9:00 GMT or 14:30 IST EU Retail Sales
...Expected 0.1% ...Previous 0.6%
12:30 GMT or 18:00 IST June US NFP
...Expected 101K ...Previous 80K
DATA YESTERDAY
BOE Mtg
...Actual 0.50% ...Previous 0.50%
ECB Meeting
...Actual 0.75%...Previous0.75%
PMI CH
...Actual 48.6 ...Previous 45.4
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