Market Morning Briefing

EQUITIES

The Dow (9791.71) and the Nasdaq (2133.15) rose 1.12% and 1.45% respectively yesterday. The Dow has now risen in 8 out of 9 consecutive days led by strong industrial production and faces Resistance near 9850. It has been rising despite caution by experts that the markets are due for correction. We shall see if this Resistance causes the correction to happen which looks like long overdue.

The Asian indices, too, have been trading higher. The Nikkei (10391.32) is up 1.17%, Hang Seng (21795.30) is up 1.83%. Shanghai (3047.53), too, has recovered from yesterday's loss and is once again testing the Resistance at 3050. The Sensex (16677.04) has broken above an important Resistance at 16500 yesterday and looks bullish even as the markets await a significant correction. There's Resistance next at 17000 on Sensex.

COMMODITIES

Crude (72.42) has risen sharply yesterday breaking above 72 following the better than expected US Crude inventory data that reported a fall of 4.7 millon barrels against the expected 3 millon barrels. If the current upside momentum continues we might see a rise towards 74.50-75.00 in the coming days.

Gold (1017.80) is continuing its upmove and posted a record high closing yesterday (1019.20). Immediate Resistance is seen at 1020. If the current upside momentum continues a break above 1020 might take it up towards the significant Trendline Resistance at 1030.

CURRENCIES

Last night the Dollar just about survived a rout, with the Dollar-Index touching a low of 76.15 but not breaking below 76.00. The current level is 76.25, which is no great comfort though for the Dollar.

The Euro (1.4725) continues to move up with buyers available on dips. Dollar-Yen (91.08) has recovered slightly after recording a fresh low near 90.15 this month. It may take time, but the danger of a break below 90.00 still remains. Euro-Yen (134.10) has shot up as a result of the rise in both EUR-USD and USD-JPY.

The Pound (1.6495) has been quiet yesterday (and today) after having fallen earlier in the week. Dollar-Swiss (1.0315) remains weak and may well see 1.0260 today. The Aussie (0.8752) has seen a strong surge yesterday and remains bullish for the longer term.

Asian currencies like the Won (1205) and the Singapore Dollar (1.1417) continue to strengthen and still have some juice left in them. Dollar-Rupee had closed near 48.23/24 yesterday and might see 48.10-00 today.

INTEREST RATES

3M USD LIBOR was set at 0.29%. Yields on US Treasuries have remained largely unchanged. There has been a relatively sharp decine in yields for the near end of the curve. The yields for 3M Treasuries have fallen 4 bps to be quoted at 0.09% while the 10Y and 30Y yields have remained unchanged at 3.46% and 4.26% respectively.

Yield curve on JGBs have over the last several weeks been turning steeper as the near end of the curve is in a downtrend and the farther end is in the uptrend. Interesting to note that yields for different maturities are trending in opposite directions.

Kshitij Consultancy Service
http://www.fxthoughts.com