Friday January 24, 2014 - 03:41:08 GMT
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Morning Briefing : 24-Jan-2014 -0339 GMT
Equities worldwide have tumbled since yesterday on weak Chinese PMI (49.6, down from 50.5) yesterday and news of the Argentian Peso devaluation. The Dow (16197.35, -175.99, -1.07%) has fallen below earlier support at 16300 and could target 16000 near term.
The Nikkei (15458, -236, -1.51%) has also fallen quite a bit in line with our warning yesterday about a fall towards 15500-400 and could be in danger of further decline towards 15000. All of Asia-Pac is down except for the Shanghai (2051, +0.44%), which seems like it wants to build on the short-covering rally it saw a couple of days ago. That said, it needs to rise past 2150 to break the longer term downtrend it is trapped in.
The Dax (9631.04, -89.07, -0.92%) also fell yesterday despite the strong rise in the Eurozone PMI data released yesterday. It is testing immediate Support at 9600 and could rise again from here. But a break, if seen, could push it down to 9400-9350, longer term Support.
The Nifty (6345.65) could see a dip today alongwith all other Equity markets globally. We've been warning about chances of a gradual fall towards 6250-6200, especially below 6280. Let's see how far down we go today.
Gold (1260.83) has risen sharply stretching its eventual upward rally since mid-Dec 2013 as physical demand for the metal increases in China. It may now target 1280 in the near term if current levels sustain.
Silver (20.055) continues to consolidate within 19.5-20.5. It has been ranged in those levels since mid-Nov 2013 and a break above 20.5 seems difficult for now. We may see this sideways movement for some more sessions.
Copper (3.2944) declined sharply falling below 3.30 on lower China PMI yesterday. If it is unable to rise past 3.30 in the next few sessions, we may see a fall towards 3.25-3.20 which is not very likely.
Brent (107.69) is trading a bit lower today as the bears dominated the price yesterday not allowing a rise past 108.28. It is currently testing the 200-day MA support which if holds may rise towards 108.5. While above 107, we still expect a rise towards 109-110. Overall the long term uptrend persists.
Nymex WTI (97.35) continues its upward rally and may target 98.75-99 and even 101-102 in the coming weeks. The 100-102 zone is a crucial resistance zone which if holds may pull back prices back to 98-99 levels. Overall the long term trend remains up.
The Dollar has taken a beating against the G3. The Dollar Index (80.474) has come down sharply and could be in danger of dipping to 80.00.
The Euro (1.3680) saw a stellar rise yesterday, first breaking above the earlier resistance at 1.3600 on the strong Eurozone PMI data and then benefitting from the sharp dip in the US-10Yr yield to 2.79%. The rally has recouped all of last week's losses. A further rise towards 1.38 could be seen unless selling comes in at current levels and pushes the market below 1.3650.
Dollar-Yen (103.51) dropped sharply yesterday to test 55-day MA at 102.97 yesterday, but has bounced a bit from there today. Our bullishness has received a bit of a setback and maybe we have to consider chances of a sideways range of 103-105 for a while. The Euro-Yen Cross (141.60) has been steady yesterday as both the Euro and the Yen have gained equally against the Dollar. Expect a sideways range of 141-143 for a few days.
The Pound (1.6632) is maintaining its upmove and a rise past 1.6650 can see it target 1.69-70. The Aussie (0.8764) fell sharply yesterday, hit by the weak Chinese PMI, and could be in danger of seeing a meltdown towards 0.8500.
Dollar-Rupee (61.9325) might move up today on weakness in Emerging Market currencies in the wake of the devaluation of the Argentinian Peso yesterday. wake of the devaluation of the Argentinian Peso yesterday.
INTEREST RATESDATA TODAY
The US 10Yr (2.78%) saw sharp drop and fell below the support near 2.82%-2.83%, as a rise in demand for Haven Assets increased the money inflow. The Existing Home Sales data coming out lower than expected and the devaluation in the Argentinean Peso, being a few reasons for the increased demand. It is difficult to say as to where the Treasury yields will move from here. We may see the 10Yr now testing long term support near 2.50%.
The German 10Yr (1.71%) also dropped after a strong PMI release in Germany which in turn saw a strong rise in Euro. It is trading near the lower end of our range of 1.70%-1.85% and we may see it targeting the support near 1.70%-1.65% if the fall continues. The German-US 10Yr spread (-1.02%) rose after the drop in the yields.
The Japan 10Yr (0.63%) has also dropped after a steady rise in the 2 days. We may see a ranged movement between 0.60% - 0.70%. The US-Japan 10Yr yield spread (2.14%) has risen.
The Indian 10Yr GOI yield (8.66%) saw a further rise yesterday. We can expect a ranged movement between 8.60% - 8.75% till the RBI policy meeting early next week.
13:30 GMT or 19:00 IST CA Inflation Y/Y
... Expected 1.30 % ...Previous 0.90 %
Euro Area Monthly Balance of Payments
... Previous 22.20 EUR Bln ...Expected 19.20 EUR Bln ...Actual 23.50 EUR Bln
US Existing Home Sales
...Expected 4.94 M ...Previous 4.82 M ...Actual 4.87 M
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