STOCKS
There could be some corrective dips in the stock indices globally. Nifty, Dow, Dax and Shanghai could see some corrective dip while Nikkei looks stable just now.
Important resistances above current levels on the 3-day and weekly candles show that the immediate upside could be limited in Dow (26124.57, +0.23%) with a corrective dip soon on the cards. While the resistances hold, the index could come off again towards 26000-25500 levels in the near term.
Dax (12561.68, +0.27%) could fall to 12400 on the downside while the medium term remains to be bullish targeting levels above 12700. While immediate resistance on the daily candle at 12700 holds, a small corrective dip is possible in the near term.
Nikkei (22893.93, +0.20%) dipped back after rising sharply in the initial hour of trading today. While above 22850, if Nikkei struggles to move up in the near term, our expectation of a sharp rise in the medium term could be negated. We would wait for a confirmation as the index could well remain stable this week and start moving up beyond 23000 next week. For now bullish possibilities remain intact.
Shanghai (2759.62, -0.35%) could be stable just now but would find it difficult to move above 2800 in the near term. While below 2800, chances of a fall towards 2700 remains on the cards. A sustained breach above 2800 would be needed to trigger medium term bullishness.
Nifty (11691.90, -0.40%) could have possibly seen a high of 11760 this week. A slight dip in the near term would be more likely towards 11600-11550 levels.
COMMODITIES
Crude prices have risen on news of some indication that the Iran sanctions may limit supply globally without possibly hurting the demand from China. But the prices could face some rejection from resistance levels in a couple of sessions. With the EIA report yesterday stating a decline in the domestic supply by 2.6 mln barrels (for week ended 24th Aug) and earlier report of API stating a rise of 38000 barrels, some analysts feel that the data could tilt the crude prices towards bullishness in the near term.
Brent (77.39) and Nymex WTI (69.67) have both risen as expected and could move towards our mentioned levels of 78 and 70-71 levels in the near term. Note that both 78 and 70-71 levels are immediate resistances and if hold could again push prices down next week.
Gold (1212.90) and Copper (2.73085) are almost stable and could see some ranged movement with a slight downward bias in the next 1-2 sessions. Gold could trade in the 1210-1225 region while copper could be stuck in the 2.70-2.76 region.
FOREX
Some positive sentiment around Brexit talks helped the Pound rally yesterday. Euro also respected an important support, thereby suggesting that it could rise some more in the near term. The Rupee plunged to record lows against USD and might search for a new low in today’s session as well.
Euro (1.1701) Euro could not break below support near 1.165 on daily candles yesterday. Chances of an upmove to 1.175 seems to have increased now. Above 1.175, there could be an important resistance near 1.178, and then near 1.1825-1.185.
Dollar Index (94.57) : Contrary to expectation, Dollar Index has broken support near 94.7 on daily candles and now has lower supports near 94.3 and then near 94. Next few sessions could see a further downmove towards these levels.
Dollar Yen (111.64): Dollar Yen might now be starting to turn bullish towards 113 as it saw a high near 111.8 yesterday and looks set to break above 112.2 this week / by early next week.
Euro Yen (130.63): Chances of a break above 131 have again emerged for Euro Yen as Dollar Yen has finally gone above 111.5 and Euro Dollar was unable to break below 1.165. It might target 131.5 this week and then, levels near 132 next week.
Pound (1.3031): Pound has broken above resistance near 1.287 on daily line chart to see a high near 1.3038 already. The 1.303-1.305 zone is a crucial resistance zone, which if breached, would be bullish for Pound. Currently, the preference is for this resistance to hold.
Dollar Rupee (70.5950) : We might see Resistance at 70.70 in Dollar-Rupee today and then at 70.90 over the next few days. Supports seen at 70.40-20 for now.
INTEREST RATES
US GDP growth in Apr-Jun was revised higher from its earlier 4% estimate to 4.2%. This, along with new Treasury note auctions of approx $31 bn helped in raising the US 10 year yield slightly. Earlier, progress on a trade deal between US-Mexico had also helped in the US 10 year yield rising from the crucial 2.81% support . Earlier last week, the US Fed Chairman’s comments in the Jackson Hole Conference led some analysts to interpret that a December rate hike by the US Fed might get delayed to 2019. As we have been saying, we need to watch out for whether this belief grows stronger in the markets – if it does, then the May high of 3.125% for the US 10 year yield would be confirmed as the year’s top.
US 10 Year Yield (2.88%) : As mentioned yesterday, we would wait for a breach above 2.9% before we abandon the possibility of a downmove below 2.82% in this move. Current preference still remains bearish for the near term. A breach above 2.9% could however lead to another upmove to 3% and then, a dip from there.
Japan 30 year yield (0.84%) is again dipping from crucial resistance @ 0.85%.
Indian 10 Year GOI Yield (7.9176%) is nearing crucial resistance level. A dip from here towards 7.7% could take place. Alternatively, a rise beyond 7.95% is also possible. Preference between both alternatives is currently divided equally.
