Tuesday February 18, 2014 - 03:24:41 GMT
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Morning Briefing : 18-Feb-2014 -0322 GMT
The US market was closed yesterday and most if not all the markets traded absolutely flat resulting in almost no change in the views.
Dow (16154.39, +0.79%) is testing our resistance zone of 16100-200. Contrary to our expectations, the uptrend has resumed. Still the area of 16200-240 may produce a reaction even if it set for higher targets in the coming days.
Nikkei (14519.85, +0.88%), while in a confirmed bear market, may try to bounce to 14700 if manages to hold above 14200. Below 14200, the fall will extend to 14000 and 13700.
Shanghai (2120.25, -0.71%) is struggling near our resistance of 2120-30 above which it may rally towards 2165-85. Bears may attempt once again to push it down from 2120-30.
Dax (9656.76, -0.06%) rallied to 9650 and beyond confirming the uptrend but there is a fair chance that the bears may attempt to return here at 9620-50 .
Nifty (6073.30, +0.41%) may test the 6100-10 area again and even reach the next major 50 points wide supply zone of 6140-90 this week where the bears may return. The broader range of 6150-6350 is in action now.
Gold (1322.87) and Silver (21.65) have paused a bit while still in an upward rally targeting 1350-1400 and 23 respectively in the coming weeks. Gold-Silver ratio (61.107) has bounced from support near 60.46 and may consolidate for some time. Does this indicate chances of a fresh fall for the metals? We need to watch in the coming sessions.
Copper (3.2745) is in an eventual rise towards 3.30-3.35. No major movement is expected for now.
Brent (109.09) has bounced from the 100-Day MA. While below, 109.84 it may show movements within the 107.6-109.83 regions. Only a break above 109.85 would take it higher to 110.10 -111.28 in the longer term. On the other hand, Nymex WTI (100.49) is stable and is trying to rise eventually towards 101.5-102.
The lack of strength in the Dollar Index (80.1350) was mentioned repeatedly and it has dropped to 79.95 now. For any attempt to rally, the bulls must hold this low and break above 80.25-30 or else it may go down further towards 79.60-70.
The Euro (1.3706) managed to break above 1.3690 to reach closer to the major resistance of 1.3750, above which it may rally quickly towards 1.38-1.39 but at this point, the strength looks a bit suspect. Failing to break and sustain above 1.3750 could take it to 1.36 again before further rally.
Dollar-Yen (101.95) has come lower as expected but the momentum is lacking. Though staying below 101.60-102 may take it lower but keep an eye for any sudden attempt to rally, especially if it manages to break above 102.20-25..
The Euro-Yen Cross (139.73) has to break and stay above 140.40 to rise further towards 142. Otherwise it may correct to 138 before any more rally. It has bounced from a major monthly trendline support at 136.20 to break above 138 to negate any immediate fall.
Pound (1.6727) has signaled the next phase of the major uptrend has resumed and now it has reached our first target of 1.6750. It may reach 1.69-1.7050 next. All the dips till 1.6460-10 may be bought into.
The Aussie (0.9064) is close to our major resistance of 0.91 again after bouncing from 0.8925 levels in line with our expectation with a positive bias but the strength remains suspect until 0.91 is broken above. Below 0.8925-0.89 it may reach 0.8830-0.8730.
Dollar-Rupee (61.84) may open fat to negative near 61.80-85 today. We will be watching the major support area of 61.70-80 to generate any bounce from the oversold state, failing which a fall towards 61.50 and 61.20 may materialize.
The US markets was closed yesterday. The 10Yr (2.74%) is trading just below the resistance at current levels. With the 10-5 Yr differential (1.22%) showing a rise we can expect the 10Yr yields to go up to 3.00% if it is able to move past the resistance.
The German 10Yr (1.68%) remained unchanged and is just above the support at current levels. With the 10-5Yr yield differential (1.0074%) moving up from the support at 0.99%-1.00% we may see the 10Yr go up to 1.75%. The UK 10Yr (2.78%) remained stable and has come up to a resistance at current levels. The 10-5 Yr differential (1.10%) is up slightly after having been pushed back from the resistance at 1.13%. Failing to break above the resistance we may see the 10Yr drop to 2.60%.
The Japan 10Yr (0.60%) was up before the BOJ Monetary Policy decision today. The US-Japan 10Yr spread (2.13%) is down and just above the support near 2.14% and can target 2.20%.
The Indian 10Yr GOI yield (8.80%) remained stable. We expect the 10Yr to maintain the range of 8.75%-8.85% for now.
3:00 GMT or 8:30 IST BOJ Meeting
...Previous - <0.10 %
9:00 GMT or 14:30 IST Euro Area Monthly Balance of Payments
...Expected 21.00 EUR Bln ...Previous 23.50 EUR Bln
9:30 GMT or 15:00 IST UK CPI Y/Y
...Expected 2.00 % ...Previous 2.00 %
14:00 GMT or 19:30 IST US TICS (Net foreign purch of long-term Sec)
...Expected -24.70 $ Bln ...Previous -29.29 $ Bln
...Expected 0.70% ...Previous 0.30% ...Actual 0.30%