Morning Dew - 19 March 2014

Fed In Focus

Eyes will be back on the Fed as the FOMC set to meet again on Tuesday and Wednesday.  While rates are expected to be held steady, the FOMC is expected to curb another US$10bn of bond buying to $55bn from $65bn.

Housing starts also dipped by 0.2% after a 11.2% increase in January. 

As data remains timid, the Fed is likely to taper another $10bn of its bond purchases when the FOMC meeting concludes on Thursday.

From Ukraine, Russia’s Vladimir Putin stated that Russia do not want to split Ukraine. 

On the domestic front, the Jokowi effect remains supportive for stocks, but the next big thing will be the naming of Jokowi’s running partner for the presidential election this year. There is the odds that PDI-P will want to see the legislative election results first before naming its candidate for the VP position.

Consumer Inflation

Housing starts barely changed in February, following a 11.2% decline in January. February’s 0.2% drop was below the consensus of a rise of 3.4%.

US consumer inflation was up by 1.1% in February. The figure was trailing the consensus.  In January, the CPI was also up by 1.6%. Excluding the volatile food and energy components, CPI were up 0.1%, matching the consensus.

Technically Speaking...

JCI slipped further to end near its support at 4,805.61, down by 1.45%. Tuesday had brought  the JCI towards its support at 4,805.61.

Recent peak-turned-support at 4,791 will be the nearest key support line for JCI, whereas another support will be at 4,665 as this was also the prior resistance-turned-support.

Next resistance is seen at 4,917, ahead of 5,000 which is the psychological resistance and subsequently the projection target at 5,063. While still a long-shot, the distant 5,653 price objective is now within radar.

Volume ticked down, as well as MACD and RSI which turned lower.

Day Ahead

The Jokowi effect may as well endure for a while, dampening the negative impact coming from global factors such as Ukraine and the prospect of China’s economy slowdown. The next big thing for the domestic affairs will be who to be chosen as the candidate for vice president accompanying Jokowi in the presidential election. Fed meeting will also be watched closely, especially whether the FOMC will signal any changes in its economic assessments and/or monetary policy.

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