Thursday August 14, 2014 - 04:12:23 GMT
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Morning Briefing : 14-Aug-2014 -0411 GMT
From the US to the Chinese, all the markets shrugged off the disappointing data and stayed firm. The lack of any more US data may see this strength continue to the weekend but keep an eye on the Japanese market, which looks to be on the verge of a decisive move soon.
Dow (16651.80, +0.55%) has hit a 2-week high to get closer to the supply zone of 16700-800. A bout of correction from this area, especially 16800-850 canít be ruled out. Dax (9198.88, +1.43%) is trading inside the range of 8900-9200 as expected and now once again the price action near the long term resistance in 9300-400 will be the decider.
Nikkei (15294.31, +0.53%) may be close to finishing its corrective bounce near 15400-500 and a severe fall would materialize only on a break below 14750. But this bearish scenario must be confirmed with immediate selling pressure from 15400 levels. Shanghai (2224.33, +0.07%) consolidation in the range of 2180-2230 continues with the bullish bias fully intact. It may attempt a rally to the final long term resistance of 2260-70 after this consolidation.
Nifty (7739.55, +0.16%) found support exactly at 7700 on the correction yesterday and may hit fresh highs today but the market breadth is not accompanying the rise so far and that may result in some more sideways movement in the range of 7500-7800.
Gold (1311.50) has been tightly ranged with very small moves in the 1310-1320 region. The 1305 level is acting as a good support for now and while that holds, the metal may continue to consolidate sideways. A fall to 1300-1290 is still a possibility unless we see a break above 1320-1325.
Silver (19.846) continues to remain ranged in the 19.66-20.108 region but it may not take it long to break the 19.6 levels to extend its fall downwards to19-18.5. Gold-Silver ratio (66.046) is soaring high breaking above the 65.7 levels. If this continues it may soon target 67.5 in the near term. This may indicate that Silver may have some room on the downside given that Gold remains stable.
Nymex WTI (97.31) is keeping itself calm above 96 and seems to have entered into a short term consolidation. Note that it is testing long term support near current levels on the weekly line charts and may soon start with a fresh rise targeting 100-101.81 levels. However, a break below 96 (if seen) could push it down to 94.
Brent (104.54) recovered all losses seen on Tuesday and bounced back to 104.5 from just above support on the weekly line charts. It may now rise towards 105-106 in the near term. Look at http://www.kshitij.com/graphgallery/brentcrudecandle.shtml#candle
Copper (3.1095) has fallen as expected and is testing support near 3.10 which if holds may take it again to 3.15-3.20 levels; else a break below 3.10 could push it towards 3.07-3.05 levels.
The BOE Governor nearly destroyed the Pound when he dampened the chances of a rate hike this year and suggested that the pace of rate hike is going to be slower than the market expectation. As a direct result Dollar has found some strength.
Euro (1.3357) is stuck in a contracting range taking a triangular shape, with boundaries coming at 1.3450 and 1.3330. We are already tracking for a breakout from the range of 1.3300-1.3450 that may create huge moves.
Dollar-Yen (102.58) is trading in the range of 101-103 and the range bound price action doesnít look like ending anytime soon. Euro-Yen (137.04) has been approaching the upper end of its downward channel on the back of weak Yen but the range of 135.75-138.00 may not break without any major event.
Pound (1.6680) crashed exactly from our resistance at 1.6840 to hit a 4 month low at 1.6670, beyond our target levels of 1.6740-6700. Holding above 1.6660-20, some short covering may emerge but the next major support comes way deeper around 1.64 levels.
Aussie (0.9297) bounced from the long term support zone of 0.9250-9200 again and may extend the bounce on a break above 0.9310. The probability of the range of 0.92-0.95 breaking any soon looks very slim at this moment.
Dollar-Rupee (61.21) bounced and found sellers at higher levels as expected. Today there is a probability of the sellers pressing the pair down and a break below 61 would signal further fall to 60.70-50.
Important data today is EU GDP (current 0.20%, expected 0.10%) and EU CPI (current 0.50%, expected 0.50%). If they turn out to be weaker than expected, German yields may drop further. The 2Yr (-0.0115%) is already lower than the day before. The 10Yr (1.03%) looks set to test even lower levels near 0.90%.
Interestingly, the German-US 2Yr Spread (-0.42%) seems to be breaking above an important trendline resistance as the US 2Yr (0.42%) has dipped more than the German 2Yr. Keep an eye on whether this can still lead to short-covering in Euro-Dollar (1.3359). Take a look at http://www.kshitij.com/graphgallery/eurusddiff.shtml#eurusd
The new range for the US 10Yr (2.44%) may be kept at 2.40% on the downside and 2.55% on the upside. Note that the 10-5Yr Spread (0.85%) is now trying to peek above the crucial 0.85% Resistance. Take a look at
In India, the market did not take the 7.96% CPI release too badly. The Indo-US 10Yr Spread (6.08%) is down a decent bit, which is a bit of a relief for the Rupee.
6:30 GMT or 12:00 IST IN WPI
...Previous 5.43 %
9:00 GMT or 14:30 IST EU GDP
...Expected 0.10 % ...Previous 0.20 %
9:00 GMT or 14:30 IST EU CPI (YoY)
...Expected 0.40 %
...Expected -1.7% 1.6% -1.7%
CN Ind Prodn (YoY)
...Expected 9.1 % ...Previous 9.2 % ...Actual 9.0 %
CN Retail Sales (YoY)
...Expected 12.5 % ...Previous 12.4 % ...Actual 12.20 %
...Expected 6.40 % ...Previous 6.50 % ...Actual 6.40 %
EU IND Prodn (MoM)
...Expected 0.50 % ...Previous -1.18 % ...Actual -0.30 %
US Retail Sales (MoM)
...Expected 0.40 % ...Previous 0.24 % ...Actual 0.02 %