STOCKS
While the talks of US planning to add another $257 bln worth of tariffs on Chinese goods goes on, the stocks remain weak globally. There could be some corrective recovery seen from long term support levels just now but overall weakness may continue to loom in the medium term.
Dow (24442.92,-0.99%) is trading above 24000 and while that holds, a few sessions of ranged movement in the 24000-25000 region is possible. A break above 25000-25250 is needed to negate further fall and bring back the bulls into the picture. While Dow trades below 25000, it could well break below 24000 in the medium term. For now we expect 24000 to hold.
Dax (11335.48, +1.20%) moved up yesterday to test levels above 11400. While the support near 11000 holds, Dax has scope of rising towards 11700-11800 in the medium term. Only a fall below 11000, if seen would bring in fresh weakness in the index, but that looks unlikely for now.
Nikkei (21307.23, +0.74%) is trading in a clear near term down channel and looks bearish while below 21600. Downside target is seen near 20800-20500 in the longer run which could be tested on a rejection from 21600.
Shanghai (2546.93, +0.19%) looks weak and is likely to come off towards 2400 in the next 1-2 sessions. Immediate resistance is now visible near 2650-2600 and while that holds, some more sessions of ranged/downside movement is possible in Shanghai.
Nifty (10250.85, +2.20%) is also trading within the near term channel downtrend as seen on the daily candles and while below 10400, bearishness towards 9800-9700 persists. Our earlier mentioned support at 10000 has held well producing a decent bounce yesterday but it may not sustain in the medium term.
COMMODITIES
Crude prices have dipped.
Brent (77.06) has come off from resistance as mentioned yesterday. While 78 holds, the price could fall back towards 75-74 in the near term.
WTI (67.03) is likely to trade in the 66-68 region for the week, both being important levels in the near term. A break on either side thereafter would determine further course of direction for WTI.
Gold (1230.20) and Copper (2.7290) have fallen a bit from levels seen yesterday.
Gold is holding below 1240 for now and could see some ranged movement in the 1240-1220 region. This is likely to continue this week without any major movement.
Copper has crucial support near 2.65 which could produce a bounce in the coming sessions pushing the price higher towards 2.80-2.85 levels. This week could see a test of 2.65 on the downside.
FOREX
Yuan has weakened below its Dec ’16 low against the Dollar. Watch resistance near 1.1425 on Euro and near 73.50 on USDINR.
Euro (1.1382) hasn’t been able to move above resistance (earlier support) on weekly candles near 1.142 yet. While below 1.142, the bias remains bearish for the next 1-2 weeks. On daily candles also, there is immediate resistance now near 1.1425 which might keep the upside capped in this week.
Dollar Index (96.64) has immediate support near 96.5-96.6 on daily candles. While above 96.5, the uptrend looks intact with a possibility of targeting levels near 97.2 in the next 1-2 weeks.
Dollar Yen (112.67) might face some resistance from the 21 days MA at 112.69 and also near 112.9. While below 112.9, it could move down towards 111.5 in the next couple of weeks.
Euro-Yen (128.24) tested support on weekly candles near 127 last week and is currently rising from there. However, while below immediate resistances near 128.5-129.0 on daily candles, it could again re-attempt a test of 127 in this week.
Pound (1.2810) has important supports in the 1.28-1.27 zone, which could push it up towards 1.30-1.31 in the next couple of weeks. A break below 1.27 would however be very bearish.
Aussie (0.7087) : While above 0.705-0.706, Aussie could move up towards 0.715 by next week.
Dollar-Yuan (6.9642) has breached its Dec ’16 high of 6.9633 and while above 6.95, could now move higher towards 6.98 in the next 1-2 weeks.
Dollar Rupee (73.445) – Dollar Rupee could come off from 73.50 to test lower levels of 73.20. A break above 73.50 if seen could open up chances of 73.80 on the upside.
INTEREST RATES
The US 10 Year (3.10%) could move up slightly more towards 3.13%-3.14% in the next few sessions, before again coming off from there. It could move down towards 3% over the next couple of weeks.
As mentioned yesterday, The US 10-5 yr yield spread (0.16%) is trading at immediate resistance near current levels and if that holds the spread could come off towards 0.15% or lower in the coming sessions.
The German-US 2 year spread (-3.44%) could continue moving higher towards -3.40% in the next 1-2 weeks.
The German-US 10 year spread (-2.71%) could also see an upmove towards -2.65% in the next 1-2 weeks.
