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to LONGTERMINVESTORS, library-of-eq...@googlegroups.com, DAILY REPORTS, globalspeculators
Theme of the Day
US ISM manufacturing printed a 31-month high reading for November, thereby raising speculation over possible early QE-tapering by Fed
View Today
DXY:
The US Dollar index is hovering flat around yesterday's close of 80.93, holding on to most of yesterday's 0.3% rise. The US Dollar had strengthened yesterday as the ISM manufacturing reading unexpectedly rose to a 31-month high of 57.3, thereby adding to bets on early QE-tapering. Markets now look forward to US nonfarm payrolls data due later this week, for further cues. The intraday trend for DXY is bullish with support and resistance at 80.75 and 81.20 respectively.
EUR/USD:
Euro is currently trading at close to 1.3530 against USD, significantly weaker than the yesterday's high of above 1.36. This weakness might have come on the back of profit-booking or weak Spanish November manufacturing PMI reading. While Spanish manufacturing sector turned from expansion zone in October (50.9) to contraction (48.6) in November, German manufacturing PMI (52.7) was better than the flash estimates (52.5) last month. Besides, though French manufacturing sector continued to contract (48.4) in November, it was better than the flash estimates (47.8) but worse than October's reading (49.1). The final PMI Manufacturing index for the entire Eurozone (EZ) came in at slightly higher (51.6) than the flash estimate (51.5) released last week. The intraday trend for the Euro is bearish, with support and resistance at 1.3490 and 1.3580 respectively.
GBP/USD:
After touching an intra-day high of 1.6443 against USD yesterday, Sterling is currently trading at close to 1.6360, primarily because of the broad-based strength in the US Dollar, as UK economic data was better-than-expected. The manufacturing PMI rose to 58.4 in November, much higher than the market expectation of 56.1 and October's reading of 56.0. Today, construction PMI will be released, along with Halifax's house price data for November. These data releases will set the trend for GBP. According to technicals, the intra day trend for the GBP/USD cross is ranged with support and resistance at 1.6305 and 1.6410 respectively.
USD/JPY:
Japanese Yen (JPY) continues to weaken and is currently trading at 103.18 against USD, as against yesterday's close of 102.94. This is the lowest level in the past six months. Although a large part of JPY weakness is related with USD strength, extension of the slide in Japanese salaries in October might have contributed to JPY weakness. Regular wages (excluding overtime and bonuses) fell 0.4% YoY in October, marking its 17th straight monthly decline, according to labour ministry data released today. Falling salaries, amidst rising inflation is likely to increase pressure on Japanese households' finances. Technically, the intra day trend for USD/JPY cross is bullish with support at 102.65 and resistance at 103.50.
USD/CHF:
The USD/CHF pair is currently trading higher amidst Dollar-strength, hovering around 0.9091 vs. yesterday's close of 0.9087. On the other hand, the Franc gained slightly against the Euro as the Swiss National Bank reported yesterday that sight deposits (cash balances) of commercial banks with the SNB rose in the week ending November 29th, thereby suggesting a possible rise in cross-border inflows. EUR/CHF is currently trading at around 1.2305, lower than yesterday's high of 1.2324. Technically, USD/CHF is expected to trade bullish with support at 0.9060 and resistance at 0.9150.
AUD/USD:
The Australian Dollar is trading weaker vis-à-vis the US Dollar as the Reserve Bank of Australia (RBA) maintained a dovish tone in its policy statement today. The RBA said that that a lower currency was likely to be needed for the economy. Meanwhile, the benchmark cash rate target was kept unchanged at 2.50%, in line with expectations. AUD/USD is trading lower at around 0.9090 compared to yesterday's close of 0.9106. Technically, we expect AUD/USD to trade bearish with support at 0.9050 and resistance at 0.9130.
USD/CAD:
The Canadian Dollar is trading flat vis-à-vis the US Dollar albeit holding on to recent losses, with the USD/CAD cross hovering around 1.0640. Markets look forward to Bank of Canada's policy decision tomorrow, wherein the Central Bank is expected to maintain a dovish tone, thereby weighing on the currency. Technically, we expect USD/CAD to trade bullish with support at 1.0605 and resistance at 1.0680.
Sensex:
The Indian equities opened in the red this morning, tracking weak overseas cues. Sentiment today is likely to receive some support as markets factor in the lower current account deficit figure for Q2 FY2014, released post market hours yesterday. However, some profit-booking is likely, following three consecutive sessions of gains. Technically, the Sensex is expected to trade in the range of 20,650-20,950.
USD/INR:
The Indian Rupee opened marginally stronger at 62.29 this morning as against previous close of 62.31, aided by data that showed that India's Q2 FY2014 current account deficit narrowed to USD 5.2 bn (1.2% of GDP vs. 4.9% of GDP in Q1). However, the currency gave up its gains in subsequent trade tracking losses in other EM Asian currency peers. Going ahead, the upside is likely to be limited on higher crude oil prices and likely Dollar demand by banks on behalf of oil importers, given that the entire daily Dollar demand of PSU oil marketing companies (OMCs) is now back in the market. Technically, USDINR is expected to trade ranged with support and resistance at 62.10 and 62.41 respectively.
G-Sec:
The Indian Government bond yields are trading slightly higher this morning, tracking US Treasuries. The yield on the new benchmark 8.83% bond due 2023 is currently hovering around 8.75% vs. prior close of 8.74%. The narrowing of India's Q2 FY2014 current account deficit is likely to provide some support to gilts. However, intraday weakness in the Rupee is expected to keep gilts under pressure.
Oil:
WTI is trading higher this morning amidst speculation that US crude stockpiles probably declined last week, ahead of the inventory data from the American Petroleum Institute, due later today. Brent, meanwhile, is trading little changed, holding on to yesterday's 1.6% gain. The better than expected manufacturing PMI prints from countries such as China, US, UK and Eurozone, released yesterday, has boosted the oil demand outlook. Currently, Brent is trading at USD 111.43/bbl as against prior close of USD 111.45/bbl. Meanwhile, WTI is trading at USD 94.1/bbl vs. prior close of USD 93.8/bbl. Technically, Brent is expected to trade ranged between USD 110.00 -112.00/bbl.
Gold:
Gold prices are trading slightly higher this morning, albeit holding on to most of yesterday's 2.7% decline. Prices in yesterday's trade suffered the biggest one-session loss since October amidst rising concerns over the Fed's QE tapering timeline, following positive economic data from the US. However, investment demand, as reflected in the SPDR Gold Trust holdings, held steady for the 3rd consecutive day, thereby limiting the downside. Today morning, spot gold is trading at USD 1,222.4/oz vs. yesterday's close of USD 1,219.8/oz. Technically gold is expected to trade bearish between USD 1,205-1,235/oz.
Please find attached herewith a file containing the detailed analysis.
