Wednesday December 3, 2014 - 03:16:22 GMT
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Morning Briefing : 03-Dec-2014 -0316 GMT
As the volumes returned to the markets, the markets restarted the Dollar buying with lower oil prices getting factored in. FED's Fischer said low oil prices would keep inflation lower, and push back the FED's rate hike date. Also the lower oil, is expected to boost US growth.
Dow (17,879.55, +0.58%) showed a strong close, and SP500 also broke above its sell-signal levels. We advise caution as these levels are at technically stretched levels. Unless we see a conclusive trend move happening on the upside or the downside, no positions are recommended. However, put options could be bought on the index.
Nikkei (17,839.48, +1.00%) has achieved the two targets since the break of 17,500 levels. We now look at the next target at 18,000, before our next big target at 18,250. Nikkei is again moving in line with Yen-depreciation, so we will watch out for that as well.
The spectacular run in Shanghai (2,800.08, +1.30%) continues. After a 3% rise yesterday, it is up another percent as we write. The next resistances are 2,825, 2,910, and 3,000. Forgive our umpteenth repetition but we think Shanghai bull phase is just starting out, and any serious long term investor should consider holding Shanghai or Chinese stocks on any corrections.
Dax (9,934.08, -0.30%) popped up above the 10,000 levels briefly but could not sustain above. We expect this test of 10,000 to continue as long as the benign global equity climate remains. We expect an eventual break on the upside with the immediate targets of 10,200 and 10,500.
Nifty (8,524.70, -0.36%) despite the unchanged policy stance of RBI, held its support at 8,500. The larger trend remains bullish. For the day, we need to see if the 8,500 is held, as not all the "rate cut" positions might have been squared off. Supports below 8,500 are at 8,400. The resistances are at 8,550 and 8,600.
Gold (1199.77) is showing some signs of a rise now and if it is able to keep above 1200 it may target higher levels of 1225-1250 in the coming weeks. For now we may see the price holding on to 1230-1180.
Silver (16.40) is stable after the sharp rise from 14.65 to 16.78 and may now choose to remain ranged in the 16-17 region for sometime.
Brent (71.19) seems to have made the bottom at 67.53 but need confirmation from a sustained move above 72-74 region for some sessions at least. For now we may see some sideways movement in the 67-72 range. Note that a possibility of a fall below 67.53 still exists.
Nymex WTI(67.72) is stable and may see some sideways consolidation before deciding further moves. Need to see a rise towards 75-80 to avoid the danger of falling towards 60. Near term is positive.
Copper (2.90) is testing resistance near current levels and if that holds may be pushed to 2.80-2.75 before a sharp rise is seen.
Euro (1.2384) fell below the support of 1.2400 and now trading just above its year lows and only support in this range at 1.2350-60. We expect this to be broken and 1.2250 to achieved before the year end.
Pound-Dollar's (1.5640) is back testing the lows and supports of 1.5600-20. Below 1.5600, we expect the GBPUSD to reach 1.5435, with intermediate target of 1.5500.
Dollar-Yen (119.37) has broken above 119. On sustaining above 119, we will reassess and possibly abandon the expectation of 118-handle as tough resistance.
Dollar-Rupee (61.88) traded weak on the back of RBI announcements. We think the possibility of bounce to 62.35 is high, especially 61.80 supports holds. If 61.80 break we could drift down to 61.50 and even to 61.20.
Aussie-Dollar (0.8406) formed a double top, filled the gap and dropped back sharply to make new lows. Technically this would be an indication that the gap was a running gap, with the possible target of 0.82. This further reinforces the possibility of 0.82 as a good target zone.
The US yields are stable for now. The 10Yr-5Yr yield differential (0.695%) has fallen 3bps from 0.698% yesterday. The 10Yr (2.286%) may continue to fall in the near term.
The UK 30Yr yield (2.741%) is heading lower towards support near 2.5% which if holds may bring a small bounce before resuming the longterm downrend. The UK10Yr- US 10Yr yield differential (-0.314%) is testing mid-term support at current rates and may bounce back from here to give some boost to the Pound.
The Indian 10Yr yield (7.9686%) declined yesterday below our expected level of 8% after the RBI kept rates unchanged but said that rate cut is around the corner possibly 1st quarter of 2015 . The yield is now sharply heading down towards major long term support near 7.80% and could easily see those levels by next week. USDINR (61.90) has also come down in the last few sessions but will the falling yield rate help Rupee to strengthen or keep it stable for now? Need to keep an eye on that.
1:30 GMT or 7:00 IST AU GDP
...Expected 0.70 % ...Previous 0.50 % ...Actual 0.3 %
5:45 GMT or 11:15 IST CH GDP
...Previous -0.04 %
10:00 GMT or 15:30 IST EU Retail Sales
...Expected 0.60 % ...Previous -1.21 %
13:15 GMT or 18:45 IST US ADP Emp
...Expected 223 K ...Previous 230 K
15:00 GMT or 20:30 IST BOC Meeting
...Expected 1.00 % ...Previous 1.00 %
...Expected 2.5 % ...Previous 2.5 % ...Actual 2.5 %
RBI Repo Rate
...Previous 8.0 % ...Actual 8.00 %
RBI Reverse Repo Rate
...Previous 7.0 % ...Actual 7.00 %
...Previous 4.0 % ...Actual 4.00 %
...Previous 9.0 % ...Actual 9.00 %
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