Kshitij Consultancy Services
Morning Briefing Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
18 Feb 19. 0900 IST or 0330 GMT or 2230 EST
GOOD MORNING!
STOCKS

Asian markets have opened the week on strong note following a sharp surge in the US equities on Friday. Increased optimism on the US and China to strike a trade deal is also supporting the equity markets. Will the Indian equities which was beaten down all-through last week join the party this week, at least? We will have to wait and see.

The uptrend in the Dow Jones (25,883.25,+443.86, +1.74%) remains intact. The index can test 26,200 and 26,300 in the near term. The US markets are closed today on account of a public holiday.

DAX (11,299.80, +210.01, +1.89%) looks mixed and can trade in a broad range between 11,000 and 11,400 for some time.

Nikkei (21,273.16, +372.53, +1.78%) and Shanghai (2,730.98, +48.60, +1.81%) have risen-back sharply above the key levels of 21,000 and 2,700 respectively. A strong close above 21,170 today on the Nikkei will keep the doors open for it to test 21,700 over the short term. Shanghai is bullish for a test of 2,750.

Sensex (35,808.95, -67.27, -0.19%) and the Nifty 50 (10,724.40, -21.65, -0.20%) have crucial supports at 35,520 and 10,600 respectively. If the indices manage to sustain above these supports, a corrective rally to 36,250-36,450 on the Sensex and 10,850-10,900 on the Nifty 50 is possible this week.

COMMODITIES

Commodities are bullish. Gold, Silver and Copper seems to be gearing-up for a fresh rally after consolidating/correcting last week. Oil remains bullish and can inch higher in the short term.

Gold (1,323) is on the verge of breaching 1,325 which will then pave way for a fresh rally towards 1,350-1,360.

Silver (15.80) has risen well after testing its 15.60-15.55 support region last week. The outlook is bullish for it to test 16 and 16.20 in the short term.

The corrective fall in Copper (2.80) has found strong support at 2.75 last week. A break above 2.81 can take it further higher to 2.83 and 2.85. It will also keep the chances high of copper testing 2.87 and 2.88 going forward.

WTI (55.75) has support in between 55 and 54.5. While above this support region, a rise to 57 is likely in the near term.

Brent (66.15) has an immediate support at 65.60 a break below which can trigger a corrective fall to 64.5 and 64 before we see a fresh rally towards 68 and higher levels.

FOREX

US is closed today for President’s day. There could be some stable movement in the currency segment today unless domestic factors trigger any volatility. Euro, Euro-Yen, Pound, Aussie all look strong against the US Dollar just now and could head towards near term resistances in the coming sessions.

Dollar-Index (96.74) came off from levels below 97.50 instead of rising higher. While the US market is closed for the day, we could possibly see some follow through Dollar selling tomorrow, taking the index lower towards 96.50/00. Note on the upside 97.50-98.00 is an important resistance zone and while that holds, Dollar Index looks bearish for the medium term.

Euro (1.1318) rose back sharply from 1.1234 and while above 1.13, there is scope for rising towards 1.1375 on the upside which is also the 21-day MA. While we do not negate a fall towards 1.1250-1.1200 again, we wait to see if Euro faces rejection from 1.1375.

Euro-Yen (125.11) has bounced back as expected and while above 124.40, Euro-Yen looks bullish towards 126. Overall the next couple of weeks could continue to see ranged movement within 126-124 region before a sharp break on either side comes in.

Dollar Yen (110.53) is taking some support from 110.00-110.19 which could keep the pair above 110.20 for a couple of sessions. Near term charts look bearish indicating a possible fall towards 109.50 over the coming sessions while there is scope for rising towards 112 on the medium term charts. Note 21-Ma on the 3-day line charts could act as immediate resistance near 111.

Pound (1.2917) and Aussie (0.7157) have risen sharply on Friday, bouncing from levels near 1.2773 and 0.7057 respectively. Note immediate resistance on Pound near 1.2900-1.2950. A dip back to 1.2750 could be expected again in the coming sessions. Aussie is holding well above 0.7050 and while that holds, a rise towards 0.72 looks likely. Note that 0.72 is a medium term resistance which could push down Aussie back towards 0.70/69 in the longer run.

USDCNY (6.7550) is holding below immediate resistance near 6.78/80 and could come off to test 6.70 in the near term.

Dollar Rupee (71.32) should ideally come off looking at the weaker US Dollar but the strong correlation with Brent and the 10Yr GOI could be factors which if rise today could pull up Dollar-Rupee higher with itself. Note 71.50 is an immediate resistance on the near term charts. Indian markets are closed tomorrow for Shivaji Jayanti.

INTEREST RATES

The US yields could fall some more towards immediate near term support levels. The 2Yr (2.52%), 5Yr (2.49%), 10Yr (2.67%) and 30Yr (2.99%) could fall towards 2.45%, 2.43%, 2.60% and 2.95% respectively. Near term looks weak for the US yields. Note that the US market is closed today for President’s Day.

The German-JGB 10Yr (0.13%) is stable and could rise towards 0.15/16% in the near term.

The German-US 2Yr differential (-3.08%) is rising towards -3.10% from where a rejection is possible. The rise towards -3.10% could take Euro higher for the next 1-2 sessions at least before the currency comes off to lower levels.

The 10Yr GOI (7.5771%) has moved up towards 7.60% exactly as expected. While 7.60% holds, a short corrective dip towards 7.50/48% is possible before the yield resumes its rise towards 7.70%.


DATA TODAY

5:30 11:00 IN Trade bal
...Kshitij Expn -17.05 $ Bln ...Previous -13.08 $ Bln

10:00 15:30 EU Trade Bal
...Expected 16.4 EUR Bln ...Previous 15.1 EUR Bln

14:15 19:45 US Industrial Production
...Kshitij Expn 0.06 % ...Expected 0.1 % ...Previous 0.27 %

14:15 19:45 US Capacity Utilization
...Kshitij Expn 78.61 % ...Expected 78.8 % ...Previous 78.7 %

21:00 2:30 US TICS (Net foreign purch of long-term Sec)
...Kshitij Expn 33.48 $ Bln ...Previous 37.63 $ Bln


DATA YESTERDAY:-
--------------
JP GDP
...Expected 0.4% ...Previous -0.6% ...Actual 0.3 %

IN WPI
...Kshitij Expn 3.52 % ...Previous 3.80 % ...Actual 2.76 %

EU GDP
...Kshitij Expn 0.48 % ...Previous 0.22 % ...Expected 0.20 % ...Actual 0.19 %

US Retail Sales (MoM)
...Kshitij Expn -0.42 % ...Expected 0.1 % ...Previous 0.1 % ...Actual -1.2 %

US PPI ex Food & Energy (MoM)
...Kshitij Expn 0.29 % ...Expected 0.2 % ...Previous -0.1 % ...Actual 0.3 %

US PPI
...Kshitij Expn 0.34 % ...Expected 0.1 % ...Previous -0.2 % ...Actual -0.1 %



DISCLAIMER
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

WARNING !!
Visitors should be aware that Foreign Exchange transactions and trading are or can be subject to laws, rules and regulations of the country in which the entity undertaking the transactions is situated. It is incumbent upon the Visitors to keep themselves informed and abreast of the Laws they are (or would be expected to be) subject to and governed by, and act in accordance thereto.