Daily Market Review for Friday, August 1st 2014

Daily Market Review for Friday, August 1st 2014

NIFTY

Key Levels: High at 7837/Low at 7438

Euro-zone turbulence ensnares Indian stocks
The lack of determination in the issue of monetary policies at central bank level hit also the Indian stocks. The NIFTY is expected to reach 7438, the most important support level in about 3-4 trading days. TitanTrade’s expert on the Indian sub-continent sees the Indian main index correction as a normal movement over almost 3 months of growth. The trading channel that NIFTY uses right now is wide enough to support the news from Euro-zone.Even in India where the Central Bank has been rising aggressively the interest rates over the past months the concerns about economic growth are on the rise. There have been 13 successive increases in bank rates in the last 4 years in India and the story does not seem to stop here. Contractions in the manufacturing and services sector are the best proof that, until now, the accommodation put in place by the central bank did not do its job properly. Also, the risk on higher inflation is substantial. The technical indicator ADX shows increasing risks of a major correction for the NIFTY, movement supported also by the fundamental analysis.The Chief Trader here at TitanTrade says that the trades for NIFTY should be launched in the market as soon as possible as the downward motion is almost always violent and the negative momentum the index has right now signals an acceleration of pending sales orders. Down

Key Support Levels at: 7605/7542/7438

Key Resistance Levels at: 7762/7837
USD/CNY

Key Levels: High at 1.5434/Low at 1.5281

Manufacture sector slowing down

The HSBC Manufacturing PMI (Purchasing Managers Index) for July disappointed with a value of only 51.7 while the expected value was 52. This is very bad news for world’s largest manufacturer and producer. Weak expansion of purchasing activity, slowdown in new orders and decreasing output are the main culprits for this weak number.The economic improvement the Central Government promotes has disappeared or maybe it was never there in the first place. The policy makers are continuing with targeted easing and the expected result is that the cumulative impact of these measures to be filtered in the next months and maybe amount to the recovery. TitanTrade’s Chief Analyst sees no clear signs of improvement in the economy and expects the Yuan to continue losing strength versus the USD. USD/CNY is currently near 6.1766 and the expected result of the negative economic data is the pair reaching 6.1950 over the next 2 weeks. With a currency rate that’s set by PBOC (their central bank) the volatility will be limited but, slowly and surely the pair should reach the resistance level. TitanTrade recommends all clients take advantage of this medium term investment opportunity. The current trading volumes are increasing and should do so for the next weeks. Up

Key Support Levels at: 6.1998/6.1714/6.1743

Key Resistance Levels at: 6.1825/6.1872/6.1950
GBP/CHF

Key Levels: High at1.5434/Low at 1.5281

Swiss banking systems gets a run-down

The impossible happened: the Swiss banking system was downgraded by Moody’s from stable to negative. “The outlook on Switzerland’s banking system has been changed because the likelihood of support for senior creditors from the Swiss government in the event of need is diminishing.” Over the past two years the Swiss authorities have made significant
progress in implementing a credible and flexible resolution framework that includes provisions for burden-sharing with senior creditors. These developments further increase the probability of a downward adjustment of Moody’s current systemic support assumptions for Swiss banks. The recommended currency paid to trade in this moment is GBP/CHF, says Chief Analyst, Oscar Duval at TitanTrade. The reasons for this choice are the pegged value of approximately 1.2 for EUR/CHF and the recent inactivity in USD/CHF. The designated resistance level to be reached is 1.5434. Moody’s downgrades comes after the Swiss government already bailed out UBS and CS from the national budget but have already given up their stake in those banks. TitanTrade specialists expect fear and panic to ensue within the investors and depositors in the Swiss banking system, feelings that would snow-ball into a CHF selling frenzy. Up

Key Support Levels at: 1.5281/1300/1.5312

Key Resistance Levels at: 1.5403/1.5434