STOCKS
Dow (25986.92, -0.53%) has dipped slightly. Although there is some more room on the upside on the daily chart, the resistances on the 3-day and the weekly candle charts are likely to hold in the near term dragging the Dow to lower levels of 25500-25000.
Dax (12494.24, -0.54%) tested 12400 on the downside before again bouncing back to close higher. Resistance near 12650 is holding for now but there is scope for a rise in the medium term.
Nikkei (22827.79, -0.18%) has come off from 23000, the rise above 28500 being a false break on the upside. While below 23000, the upside could be limited and the index could possibly come off towards 22600-22400 levels in the near term.
Shanghai (2717.75, -0.73%) has fallen as expected and could continue towards 2650 support. Next 1-2 sessions look bearish.
Nifty (11676.80, -0.13%) has resistance on the 3-day charts near 11800 and if that holds, Nifty could see a dip to 11500-11400 before again bouncing back towards 11800.
COMMODITIES
Brent (77.95) has risen towards immediate resistance above 78 and this is likely to hold in the near term, bringing back the prices down to 76-75 soon.
Nymex WTI (70.24), on the other hand looks bullish and has scope of rising towards 72 before coming off in the near term. In the longer run, WTI looks more bullish than Brent.
Gold (1207.80) is likely to remain below 1225 just now. While the price looks likely to remain above 1200, there could be some chances of re-testing 1180 on the downside in the coming week.
Copper (2.69) has important resistance and is coming off from there. While below 2.70, the price may fall towards 2.65-2.62 in the near term.
FOREX
The Argentinian Peso (37.96) has crashed almost 33% from levels near 31.30 to 41.46 in the last 2 sessions. Moreover, the Turkish Lira (6.737) has weakened by 8%-9% in the last couple of sessions – both these developments could take USDINR towards 71.50 very quickly. A gap up opening for USDINR above 71 is possible.
Euro (1.1665): Although Euro has come off from levels near 1.1733, there are still some chances of it moving up beyond 1.175 over the next week. Above 1.175, there could be an important resistance near 1.178, and then near 1.1825-1.185. A decisive break below 1.163 would however negate the above view.
Dollar Index (94.73) : Dollar Index’s break of supports on daily and 3 day candles suggests that it could move down atleast till the 21 weeks MA (93.91) in the coming week. A decisive break above 95 could however negate that view for next week.
Dollar Yen (111.01): Against expectation, Dollar Yen again dipped from levels near 111.8, failing to cross above 112. There is immediate support near 110.9 and lower down near 110.50, and then, 110.20. The path of least resistance still points upward for Dollar Yen in the weeks ahead.
Euro Yen (129.49): Euro Yen has dipped back below 130 and now has crucial support near 129.25 on daily candles. A week close below the 21 weeks MA (129.60) would be an important medium term bearish indicator. However, let’s note that our next week’s forecasts for Euro and Dollar Yen are both bullish – thereby implying a possible retest of 130-131 for Euro Yen again.
Pound (1.3009): As per our expectation, the resistance zone of 1.303-1.305 is currently holding. Current preference is for this resistance to push Pound downward – however, if the resistance is breached, an upmove towards the 21 weeks MA near 1.3315 could be seen – which would be a crucial resistance level.
Dollar Rupee (70.745): Trading near 71.15-16 on offshore NDF. The Argentinian Peso’s (37.96) crash from 31.30 to 41.46 in the last 2 sessions seems to be affecting the Rupee adversely. Caution for a rise towards 71.50 if USDINR opens above 71.00 (high possibility).
Important Trigger in the immediate scenario could also be the Turkish Lira.
INTEREST RATES
Repeating yesterday’s comment: 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 haf helped in raising the US 10 year yield slightly. Ongoing progress on trade deals between US-Mexico-Canada is also leading to some positive sentiment which could help in a rise in US yields.
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 (2.85%) : Has dipped back towards 2.82% again. Only on a breach above 2.9% before will 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.
German 10 Year Bond Yield (0.35%) has again dipped from resistance near 0.4% and could move further lower now.
