Thursday August 22, 2013 - 03:34:54 GMT
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Morning Briefing : 22-Aug-2013 -0333 GMT
Equities are not so very bearish after the FOMC Minutes.
The Dow (14897.55, -0.70%) has broken the crucial support at 15000 as FOMC Minutes broadly support tapering of the economic stimulus. There could be some support near current levels. We would not suggest selling unless this breaks on a Week Close basis tomorrow.
Nikkei (13436.79, +0.09%) is up a bit as Yen resumes its slide against the dollar. But chances of a fall towards 13200 still remain. Shanghai (2076.08, +0.15%) is also up and has moved above 2075 now. It needs to continue rising to avoid a fall to 2050 and move up towards 2100.
Nifty (5302.55) fell sharply after registering a low of 5268.45 yesterday as the Rupee hit an all time low. The bear target of 5250 has almost been met. There is an outside chance of a bounce today, which might be worth looking at.
Commodity market slumps overall as the FED supports tapering.
Gold (1362.30) has fallen on rise of Dollar index. Strong trend Resistance coming in at 1375-80 now. Silver (22.85) has fallen. It may consolidate a bit lower for now before rising again towards 24.
Copper (3.3360) has risen a bit, but seems to be consolidating sideways for now before deciding to rise higher towards 3.40.
Nymex WTI (103.79) has fallen sharply. Watch Support at 103.50 now. Should that break, we would see a fall towards 99. Watch this onw. Brent(109.53) is held down well by the Resistance at 111. Indecisive whether it wants to break above 111 to test 114 or break below 108. Anyway, long-term Resistance at 114 should be strong.
Strong recovery in the Dollar Index (81.37) from the low of 80.75. The Euro (1.3335) and Pound (1.5593) have both come off sharply after the FOMC Minutes yesterday. The Yen (98.20) too has weakened again and is close to testing the crucial Resistance at 98.40. The Dollar has gained as the US 10-Yr (2.92%) has risen sharply again and can test 3.05% within the end of this month.
We see limited room on the upside for the Pound, with Resistance available from current levels up to 1.5770. The outlook on the Euro is not so clear while it trades between 1.33-34. Should Dollar-Yen manage to break above 98.40, it may try to test 100 in the coming weeks. But, certainty levels are not too high at the moment.
The Aussie (0.8973) has fallen to 0.8960 as anticipated. It may stabilise/ bounce back a bit in the near term now.
All the R-currencies saw big falls yesterday. Some more weakness is possible near term. But, we could see profit-taking at higher levels once the US 10-Yr touches 3.05% in a few days. The Rand (10.40) has super-crucial long-term Resistance at 10.50.
While a test of 65 is a possibility for Dollar-Rupee (64.10) in the all-round Dollar strength, we think it is hugely Overbought and the Rupee is possibly undervalued now.
The US 10-Yr (2.92%) is headed up to 3.05%. That's a given. It should come off from there. We don't know what the trigger will be, but by 3.05%, the September tapering will be fully factored in. The 30-Yr (3.93%) also faces a 19-year trendline Resistance near 4.25-30%. So, there is limited room on the upside now.
The 10-Yr (-1.08%) and 2-Yr (-0.17%) German-US Spreads have both fallen sharply yesterday, leading to the fall in the Euro. The US-Japan 10-Yr (2.18%) continues to rise after breaking above 1.88% a few days ago.
The Indian GOI (8.46%) came off sharply yesterday. The Indo-US 10-Yr Spread (5.54%) could stabilise/ reduce a bit now.
No major data release today.
US Existing Home Sales (Mln)
...Actual 5.39 M ...Previous 5.06 M
FOMC Meeting Minutes
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