STOCKS
Dow (25064.50, -0.53%) saw a slight dip yesterday as daily candle resistance near 25250 seems to be holding. The current dip could extend towards 24750 before resuming the up move.
Dax (12686.29, -0.62%) has immediate support near 12650 and while that holds, the index could gradually move up towards 13000 in the near to medium term.
Nikkei (22652.42, -0.49%) is also down a bit but could again move up from 22600 back to higher levels of 23000. A break below 22600, if seen could indicate near term bearishness targeting 22400 or lower on the downside. Watch if immediate bounce is seen from current levels.
Shanghai (2774.62, +0.075%) may test 2750 on the downside before bouncing back again towards 2800-2850 levels in the medium term. Overall sideways trade in the next few sessions looks more likely.
Nifty (10957.10, -0.21%) is stuck in the 11100-10900 region since the past 5-sessions. While above 10900, upside chances still remain open towards 11200 which is a near term resistance from where a sharp corrective dip seems possible. For now we may expect support near 10900 to hold.
COMMODITIES
Nymex WTI (68.10, -0.21%) and Brent (72.56, -0.03%) are stuck just above immediate support levels. Brent could spend some time in the 74-71 region with important support in the 71-70 zone. WTI on the other hand has room on the downside till 66.0-65.50 levels which is likely to hold in the medium term. We could see some initial dip or range-trade for a few sessions before the crude prices moves higher.
Gold (1217.70, -0.51%) is looking weak just now and could fall towards 1200 or even lower in the coming sessions.
Copper (2.6995, +0.15%) has also been falling and has surprised with a break below immediate support near 2.70. The fall if continues, could pull down Shanghai also in the near term. Downside targets of 2.60-2.55 is a medium term possibility.
FOREX
Euro (1.1649): Against our expectation, Euro dipped further to test the support on 3 day candle chart (1.1575: earlier mentioned as 1.16) and has again risen from there. As mentioned yesterday, 1.1715 continues to be a crucial resistance level, whose breach could take Euro higher towards 1.18+. A break below 1.1575 would open up lower support near 1.15-1.145 on daily line chart. 1.149 corresponds to the 89 weeks MA as well and could be a strong support in the next 1-2 weeks.
Dollar Index (95.17): Dollar Index tested a 1 year high (95.65) yesterday and then dipped, possibly after Trump’s comments that he is unimpressed by the US Fed’s rate hikes. It has moved above horizontal resistance on daily line chart and could target channel resistance near 96 in the next 1-2 weeks. A rise towards 96 could correspond with Euro falling towards 1.15. With crucial support for the Euro near 1.15, Dollar Index might also face resistance near 96 (or, 97).
Dollar Yen (112.44): Dollar Yen saw a low near 112.06 yesterday. We are still bullish on Dollar Yen towards 114 (resistance on 3 day line chart). Dips, if they happen, might be restricted till support on weekly candles near 111.5. After a test of 114-115 in the next couple of weeks, Dollar Yen could become bearish.
Euro Yen (130.98): Euro Yen could dip a little more to test support on daily line chart near 130.0-129.5 in the coming week. If this support breaks (less preferred), it would be quite bearish for Euro Yen.
Pound (1.3017): Pound saw a low near 1.296 yesterday and thereby tested support on 3 day and weekly candles. Previous support near 1.3050 might now act as resistance for the Pound as it possibly becomes bearish in the weeks ahead.
Dollar Rupee (69.05): Crucial Resistance at 69.10 on Dollar-Rupee for today. There is a chance it might hold, producing a dip to 68.90-80. BUT, if it breaks, then we see 69.50.
INTEREST RATES
US yields have again dipped after Trump’s comments that he wasn’t too impressed by the US Fed’s rate hikes.
US 10 year yield (2.845%), 30 Year (2.966%), 5 Year (2.74%), 2 Year (2.595%):
US 10 Year yield has again dipped to test the horizontal support zone near 2.84%-2.82%. A break of this support would be important to make the 10 year yield bearish towards our forecasted target of 2.70%-2.65%.. A breach above 2.9% on the other hand, could negate the downside possibility. Recent US economic data releases have continued reflecting a strong US economy, which supports a rise in yields. A lot could hinge upon whether USA would go ahead with the proposed tariffs on $200 billion worth of Chinese imports – if that happens, a flight to quality by investors and a consequent fall in yields would be very likely.
US 10 year – Japanese 10 Year yield spread (2.808%) looks like it could dip towards 2.75%-2.70% in the next 1-2 weeks..
With the Japanese 10 Year yield (0.037%) looking like it could dip from resistance on short term chart towards 0.025%-0.03%; a fall in the US Japan spread indicates that the US 10 Year could also be bearish below 2.8%.
