Pranam,
Markets Today
Thursday, June 20, 2013
Today in Focus
· USDINR @ 60! It has become a reality as the market opened with a gap up, gaining more than Rs.1.2 to a high of 59.92. Sustaining above 60 will be a challenge and we expect knee jerk reactions on its upward journey. If it technically sustains above 60, we will see it go up further towards 61. Supports exist at 59.50-40 levels.
· Comex gold is down to $1340 levels after the FOMC meeting. A slide towards $1300 looks possible and any bounce will be taken as a selling opportunity. $1370 will act as a strong resistance on the upside.
· Domestic gold is trading weak but is blessed to have the weaker rupee by its side. The 8% depreciation in the INR has kept the domestic gold prices firm. Overall weakness is expect to set in soon and we expect bias to be negative. We have a active sell call in gold and advise trading on the same.
· Silver is still holding on to the 43500-44200 range. We continue to be of the view that only a close below 43500 or above 44200 will set the short term trend for the market.
· Crude inched towards $98.5 and has corrected after the FOMC rate decision to $96.5 levels. The Comex charts have now turned weak but the MCX levels remain firm. We expect any pullback towards 5800-20 to be a selling opportunity for downside targets towards 5700-5670.
· Copper has given its due respect to the $7050 level, only to breach and sustain below it to currently trade at $6880 levels. We have been continuously bearish on copper and advise selling on any rallies towards 412-414 for downside below 400 levels.
The FOMC impact!
· Globally, all we could hear/read over the last few days was that everybody was waiting for the all important FOMC meeting and Bernanke's speech minutes to unfold and provide some clarity about future liquidity scenario. The outcome of yesterday's meeting was --
1. The central bank is expected to continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year if the U.S. economy continues to show strength.
2. The U.S. economy is expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.
3. It will be appropriate to moderate the monthly pace of purchases later this year, and if the subsequent data remain broadly aligned with the current expectations for the economy, The Fed will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.
4. Jobless rate should have declined to near 7% from its current rate of 7.6% by the time bond purchases are halted. If its forecasts proved too optimistic, the Fed could stop reducing its bond purchases or even raise them again.
· In another development, preliminary HSBC PMI numbers showed that China's factory activity weakened to a nine-month low in June as demand faltered, heightening the risk of a sharper second quarter slowdown and increasing the heat on the central bank to loosen policy. The flash HSBC PMI fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction.
· China's economy grew at its slowest pace for 13 years in 2012 and so far this year data has been weaker than expected, bringing warnings the country could miss its growth target of 7.5% for this year, though possibly not by much.
· An interesting graphic from Reuters shows the Asset returns since the Fed first hinted at tapering its current $85 billion bond-buying programme at the testimony speech Bernanke gave in the Congress late last month –
Base to precious – All fall down!
· Gold fell for a fourth straight session on Thursday to its lowest level, since a 15% plunge in mid-April, after the U.S. Federal Reserve signaled it would slow the pace of bond purchases later this year. A scale-back of the $85 billion monthly asset purchases is likely to weaken support for gold prices, already down about 20% this year due to rapid outflows from exchange-traded funds and slowing demand in top consumers, India and China.
· LME copper slid to an almost seven-week low on Thursday, dragged down by the U.S. Fed action and and further evidence of slowing growth in China.
· WTI crude fell for a second day after U.S. stockpiles unexpectedly increased and the Fed impact. EIA reported an increase in stockpile crude oil inventory by 313,000 barrels against the forecasted decline of 500,000 barrels in previous week. The gasoline inventory also rose by 183,000 barrels thus leading to decline in crude prices.
· The Fed's bond buying has largely supported commodities by lowering the value of the U.S. dollar and making assets priced in the greenback cheaper for holders of other currencies. But following the latest Fed comments, the dollar has firmed.
!****!****!
Have a Gr8 Day,
Warm Regards,
۞ ALLIES FINANCIAL SERVICES
HQ: Mumbai, India.
Blog: www.AlliesFin.BlogSpot.com
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