No major cues to change outlook:
It is consolidation phase across asset classes ahead of 2014 year end. DJIA index steady at set focus range of 17600-18100, while US 10Y bond yield is volatile at set 2.10/2.15-2.35/2.40% consolidation zone. Gold is in back-and-forth mode at inner-ring of set trading zone of 1135/1160-1210/1235. DXY remained firm driving Euro below 1.2350 (from set resistance zone of 1.25-1.26) and JPY into 120. The most expected crash in Brent Crude was seen into 65-68. The sideways mode is largely driven by macroeconomic fundamentals, monetary stance and lack of optimism on the way forward. Most cues favour dollar strength, risk-neutral appetite between equity & bonds and commodities supported by cheap-to-acquire valuation. What next?
No major surprises in store to trigger range break-out in the near term till 1st week of January 2015; risk can be unsustainable downside break if year-end profit-booking unwind exceeds demand. Let us retain focus in DJIA index at 17600-18100, US 10Y bond yield at 2.15-2.40%, DXY at 86.75-89.75, Euro at 1.2050-1.2550, JPY at 118-124, Gold at 1135-1260 and Brent Crude at 65-75; overshoot either-way not expected to sustain.
Moses Harding
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