Dow Jones (13248.44, +0.60%) has closed in the green for the fifth consecutive day. It is at the 13250-300 resistance regions and a firm close above this will be positive for a rise towards 13700. Immediate support is seen near 13100 level. FOMC will be in focus today.
All A-Pac are in positive with Australia (4606, +0.55%), Hang Seng (22446, +0.55%), Taiwan (7682, +0.90%) except New Zealand (4000.25, -0.64%). Mood remains positive as US continues to trade in the positive territory and also the general expectation in the market is that the fiscal Cliff issue could get resolved.
Shanghai (2081.19, +0.31%) is up again and is nearing its crucial 2100-25 resistance region. The break of this Resistance will push it into a very positive territory and it will also signal an improvement in the underlying economic situation as well
Nikkei (9567, +0.44%) has inched higher again and we continue to remain positive on the index. It is targeting 9800 while it remains above 9400. Dollar-Yen is also broadly bullish.
Nifty (5898.80, -0.17%) saw an intra day dip but found support to bounce back and close flat to negative. It seems to be consolidating between 5950-850 range with an overall bullish bias. Even if 5850 is broken, the downside can be restricted to its next strong support near 5750.
COMMODITIES
All the commodities are trading flat ahead of the OPEC and FOMC meet.
Nymex Crude (85.97, +0.21%) continues to trade at the support (86-85). Tough to say if it will move to 80 or will bounce from here. But looking at the bigger picture oil can start an up move from current or form 80.00 levels.
Brent (108.37, +0.33%) continues to trade in a down trending channel on the daily charts. If at all a dip is avoided resistance is seen near 111-12. Dip to 103 is preferred, broadly looks weak.
Gold (1712,+0.14%) and Silver (33.09, +0.22%) both continue to trade flat. A dip to 1685-75 and 32.50-20 respectively cannot be ruled out. Gold continues to look good for the longer term and Silver is in the 35.50-26 range.
Copper (3.69, +0.07%) continues to trade near 3.70-73 resistance on the break of which 3.90 looks likely. Over all looks positive. Immediate support is seen near 3.60
CURRENCIES
The Risky assets seems to be gaining momentum slowly as the market is expecting the Fed to announce further stimulus in its meeting today. If Bernanke disappoints the market with no addditional stimulus, then there can be a sharp fall in the risky assets in the US session today. We will have to wait and see. The Dollar-Index (80.05) fell further and has the threat of seeing 79.70-50 on the downside once again.
The Euro (1.3011) has risen above 1.3000 and can now target 1.3100-30. The outcome the FOMC meeting will decide whether the Euro is going break its 1.3130 Resistance and rise further to 1.3250 or not. Dollar-Yen (82.55) is retaining its 81.70-82.80 sideways range within its overall uptrend which can target 84-85 on the upside. The Euro-Yen Cross (107.41) is gaining momentum and is rising within its 106-108 range. Our bias is bullish to see a break and rise above 108 towards 112 in the coming days.
Dollar-Swiss (0.9318) is coming down slowly and can fall to 0.9250 if the immediate Support at 0.9300 is broken. The Pound (1.6117) remains strong and can test 1.6150-200 today. The bigger picture is much more bullish for a test of 1.6500-6600 on the upside. Aussie (1.0527) has risen above 1.0500 as expected and can now target 1.0550-600 on the upside after which a pull back is possible.
In Asia, the USD-SGD (1.2203) remains mixed and ranged between 1.2190 and 1.2230. Dollar-Rupee (54.2650) had closed lower yesterday and can dips to test its 54.15-00 Support region.
INTEREST RATES
The Spanish 10Yr yield has come off 10 bps to 5.46% from the earlier 5.56% level. This has brought down the Spain-German yield spread by 11bps to 4.14% from its important 4.25% Resistance level. The crucial 4.25% Resistance has held and there are good chances for the spread to fall below 4% and move down to 3.75%-3.50% from here. This is good for the market.
The US 10yr yield has risen by 4bps and is at 1.65%. Resistance is there near currrent levels which needs to be broken for it to rise further. Else the downside will remain open for a test of 1.50% which we have been expecting for some time.
The US Fed meeting is today and the market is expecting it to increase the asset purchases to $45 billion from the current $40 billion per month.
IMOH, Patrick E.
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