Friday November 22, 2013 - 03:37:11 GMT
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KSHITIJ.COM - Morning Briefing
The Dow (16009.99, +109.17, +0.69%) recovered earlier losses instead of breaking below 15800. Although the Resistance at 16100 still holds, the lack of follow-through sales yesterday may suggest strength. We will have to see how the Week closes today. A Close above 16000-16100 can drive the market up towards 16500 also.
Asia-Pac is largely mixed. But, the Nikkei (15554, +1.23%) is up sharply again on a weaker Yen and has potential to rise towards 16200.
We have to see if the Nifty (5999.05) will see follow-through sales today or if it will also bounce back to enter a sideways range of 6000-6200
Gold (1245.35) has further dipped, breaking below 1250, and may target 1225. Silver (20.015) is in a near term down trend and may continue to target 18.5.
Copper (3.1920) has risen further from Support at 3.10 but is still below 3.20. We may expect a broad movement in the 3.1-3.35 regions.
Brent (109.960) had shown an intra-day sharp rise bouncing from the 200-day Ma. It may now target resistance in the 113-116 regions. Nymex WTI (95.24) has bounced from just above the trend support and is currently trading near the 21-day Ma. Overall it is consolidating sideways after the recent down trend and may show some more bear moves.
Euro (1.3471) has bounced from the important support zone of 1.34 but this rise looks a bit suspect and susceptible to selling any time. No real strength is seen as long as it stays below 1.3515-50. Dollar Index (81.03) has taken a pause after the sharp rally on Wednesday. We keep watching 81.50 to be crossed for further strength. No real weakness is expected as long as it manages to stay above 80.50.
Dollar Yen (101.23) has broken out of a huge consolidation pattern and above the level of 101.50-70; it is clearly headed for 105 and eventually 110. EURJPY (136.37) reflects the weakness of Yen well as it is moving towards 138.
Pound (1.6188) is trading again near the uppermost limit of a multi-year consolidation range. The bulls would like to take it above 1.63 for a major breakout, failing which the bears can come back again.
Aussie (0.92) has reached our target of 0.92 in line with our expectation and is trying to bounce. Still no sign of strength is visible and any bounce can face selling from 0.9260-80.
Dollar Rupee (62.93) may open flat today. With the trend being firmly up, the bulls would like to finish the week on a higher note and reach 63.10-63.25. After 2 days of rally, a consolidation would be a natural thing to expect but the dips would be bought till 62.40-50.
The BOJ maintained QE at JPY 70 trln p.a. yesterday, said the Yen was not excessively weak and stated an intention to keep long-term yields low. The US-Japan 10-Yr Spread (2.13%) has come off a bit, however, from 2.19%. Expect some consolidation in the 2.10-2.20% region. A rise past 2.20% might take time as Japanese yields do not seem to be in a hurry to fall, given that Inflation is rising towards the 2% target as desired by the BOJ. Still, Dollar-Yen should be on its way to 105 in coming weeks.
The US10Yr (2.77%) trades a little lower than the 2.80% it saw after the FOMC Minutes, but could be headed up overall, targeting 2.90% ahead. The 30Yr (3.88%) looks headed up towards 4.0%.
The German-US 10Yr Spead (-1.03%) has risen a bit from -1.09% earlier but is in overall downtrend while below -0.90%. The perception remains that Europe could be fighting deflation even though Draghi countered that and said that although the ECB remains "technically prepared" for negative deposit rates, its not a given.
The Indian 10Yr (9.08%) remains in an uptrend that can target 9.25%.
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