STOCKS
Going into the meeting with Xi, the charts suggest that Trump is going to drive a hard bargain. The Shanghai (2567.44, -32.49, -1.32%), which we have been calling a “loss leader” for a while now, fell a decent bit yesterday, enhancing the strength of Resistance at 2650 and increasing the chances of a medium-term fall towards 2500-2450.
The Dow (25338.84, -27.59, -0.11%) saw consolidative trade between 25203-25479 yesterday, within a near-term rally that targets 25750-60. The relative outperformance of the Dow vis-a-vis the Shanghai since 22nd November is what suggests that Trump is not going to relent in the near term.
Meanwhile, the DAX (11298.23, -0.01%) consolidated (as expected) between 11400-200 but has potential to rise towards 11600+.
The Nikkei (22274, +0.05%) may also have to consolidate a bit before it finds the strength to break above 22500 and become more bullish.
In India, the Nifty (10858.70, +129.85, +1.21%) posted a good rise yesterday, closing well above 10800. It may well test 11000 over today-Monday and then enter into a bit of a sideways consolidation before an eventual break above 11000. Overall, India is outperforming the USA and China just now.
COMMODITIES
Gold, Copper and Silver show some bullish signs for the coming week. Crude prices recovered a bit yesterday after news stated expectation of Russia to likely agree on production cuts with the OPEC countries next week.
Brent (60.03) and WTI (51.50) look weak for the near term.
Brent (60.03) has scope of testing 56 on the downside which is the 200-Week MA as seen on the line chart. While this holds, we could possibly see a near term bottom in place with a decent rise back towards 65 and higher.
WTI (51.50) has support near 47.50-48.0 region as seen on the 3-day line chart which is likely to hold and push the price back towards 55 and higher.
Gold (1230.30) is trading at crucial level just now. A break above 1230, if seen would take it gradually higher towards 1240/50 next week. Fresh upmove could be seen on a sustained break above 1230.
Silver (14.39) has risen from levels just above 14 and while the rise continues, Silver could manage a break above 14.5 and target a rise towards 14.75 in the near term.
Copper (2.7945) is likely to move above immediate resistance at 2.80 and head towards upper levels of 2.85 in the near term.
FOREX
Dollar Index might be bearish towards 96.50-00 in the near term. USDINR could re-test 69.70 today, before bouncing back again towards 70.20.
Dollar Index (96.75) could possibly test support at 96.50 on daily candles by Monday. The dip next week could even extend till support on weekly candles at 96.20-00, after which it could bounce from there.
Euro (1.1396) is trading just below resistance on daily candles near 1.14. There seems to be some room for a rise till 1.15 next week on daily line chart. The 13 weeks MA at 1.1493 could provide some resistance in the next 1-2 weeks.
Dollar Yen (113.35) is likely to test immediate support on daily candles at 113 by early next week. If 113 breaks, then there is lower support near 112.25-00, which could restrict the downside for the next 1-2 weeks.
Pound (1.2783) came off from resistance at 1.285 on daily candles yesterday and could possibly move lower in the next couple of sessions towards 1.272-1.270 (seen as support on daily candles). If it doesn’t break below 1.27 next week, then we could see ranging between 1.295-1.270 for another couple of weeks.
Aussie (0.7320) is trading at resistance near 0.732 on daily candles. The 8 weeks MA at 0.7204 has held well this week and suggests chances of further bullishness in the near term. A dip, if it happens, might be restricted till support near 0.725 on daily candles.
Euro-Yen (129.18) : The 21 weeks MA at 129.32 needs to be watched – a week close today above that could indicate chances of bullishness towards 130 in the next week.
Dollar Rupee (69.845): After the sharp fall seen yesterday, Dollar Rupee could re-test 69.70 today, before bouncing back again towards 70.20. Failure to sustain above 69.70 could open up chances of 69.50/40 which looks less likely for today.
INTEREST RATES
After Powell’s speech the day before, the Fed Minutes suggested that while a Dec hike is a done deal, further rate hikes are not on a “pre-set path”. This suggests the Fed might be open to take cognisance of the decline in Crude in November and may therefore be open to the idea of fewer rate hikes.
Still, the US 2Yr (2.81%) continues to hold above 2.80% for now, lthough the 10Yr (3.03%) has dipped a bit from 3.05-06% the day before. The 10-2Yr Spread is down to 22bp again. The 5-2Yr Spread is only 3bp, with the 5Yr coming down to 2.84%. We really need to see the 2Yr dip below 2.80% so that the Yield Curve can steepen a wee bit.
The German 10Yr (0.32%) has important Support at 0.30%, with potential to move up towards 0.50% in the medium term. Should that happen, the German-US 10Yr Spread (currently -2.71%) could move up towards -2.65% or even -2.60%. Whether that will pull the Euro (1.1399) past 1.1400 will be interesting to see.
The Indian 10Yr GOI (7.6082%) seems to be falling vertically and may well test 7.55% soon enough.
