STOCKS
Aah, the Bulls are putting up a spirited fight and while there is still time before they beat back the Bears, it could be that the Bulls are already attracting Smart Money.
The Dow (24527, +0.64%), DAX (10929, +1.38%), Nikkei (21728), Shanghai (2602, +0.02%), Nifty (10737.60, +188.45, +1.79%) and Sensex (35779, +1.79%) are all in the green, some more than others.
Of these, the DAX (10929) and Shanghai (2602) remain more vulnerable than the others while below 11200 and 2650 respectively, but might be able to avert a decline if they manage to remain above 10700-600 and 2575 respectively. But, they still have to do hard work in order to break higher.
The Nikkei (21728) and Dow (24527) may have established relatively strong Supports at 21000 and 24250 respectively. Of course they also have to work hard and may take time to become properly bullish. At the same time, it might not be correct to sell these two.
That the Nifty (10737.60, +188.45, +1.79%) moved up strongly, digesting two pieces of “bad” news (Urjit Patel’s resignation and the BJP’s defeat in the state elections), is suggestive of good long-term strength. Immediate Resistance is seen at 10850 and we have to allow for a broad range of 10300-850 for the next couple of weeks. An early break above 10850 is also a possibility, but might be a little less probable.
COMMODITIES
Commodities continue to remain sideways. The current phase is the ranged phase before a sharp movement in the near term.
Watch crucial resistance near 1260 on Gold which when holds could push the Gold (1248.90) price towards 1230. Silver (14.83) also is trading just below resistance near 14.90-15.00 levels. A rejection from resistance levels could push Silver back towards 14.25-14.00 levels in the near term.
Copper (2.7777) is likely to rise towards 2.80/85 in the near term. While above 2.70, view remains bullish.
Brent (60.48) and WTI (51.41) continue to remain steady. EIA mentioned a much smaller draw in inventory than API’s expected 10.18 mb for the week ended 7th Dec’18. Russia has said that it will reduce its production slowly and gradually as per the decision made with the OPEC in the meeting last week. Crude prices are likely to remain stable today also.
FOREX
Overall major currencies are in a ranged and contracting phase where small movements are likely to be seen in the near term. A week of this ranged phase is likely to continue before any sharp movement is seen in the medium to long term.
Dollar Index (97.07) faced some rejection from immediate resistance at 97.50 as seen on the daily candles. The movement is narrowing in the 97.50-96.75 region where the index could trade for the next 3-4 sessions before a sharp break on either side is seen in the longer run.
Euro (1.1370) has moved up a bit. Support near 1.1330 is holding for now. Trade region for the rest of December is likely to be 1.15-1.12. Slow and narrow movement is expected signaling a sharp rise after the Christmas season probably. Before that, the sideways consolidation is likely to continue.
Dollar Yen (113.46) is headed higher towards 114 from where a rejection towards 112.50 is expected in the coming week. Overall broad range of 114-112 is likely to hold for the next 1-2 weeks.
Euro-Yen (129.01) could test 129.50 on the upside before coming off from there back towards 128. Ranged view could be seen in the coming week between 129.50-128.00.
Pound (1.2622) is clearly in a channel downtrend as seen on the daily candles. While below 1.27, there is scope of falling further towards 1.25-1.24 in the near term. Only a sustained break above 1.27, can we negate a fall to 1.24 in the near term.
Aussie (0.7228) could move up towards 0.7260-0.7300 levels in the near term. While above 0.7150, price looks bullish in the near term.
Dollar Rupee (72.02) is likely to open lower today and could well test 71.60 on the downside before again rising back towards 72.00. Some stability is likely to be seen in Dollar Rupee today. NDF trades at 71.84 just now, indicating a fall in Dollar Rupee in the morning hour.
INTEREST RATES
Good show. The 5-2 Spread, which was going at between -1bp and -3bp for the last few days has moved up to 0bp, with the 2yr and 5Yr both quoting at 2.77%, the 5Yr moving up to 2.77% (from 2.75%) while the 2Yr has dipped to 2.77% (from 2.78%).
Let us see if the Curve manages to avoid fresh inversion when the Yields fall again, as they are likely to do after moving up a bit more ahead of the FOMC meeting next week.
ECB meeting today. The German 30Yr (0.86%) and 10yr (0.28%) have been falling, breaking below earlier supports and could be headed lower. The 5Yr (-0.26%) has bounced a bit from Support at -0.30%. The Curve is getting flatter there.
The 10Yr GOI (7.4112%) came back down yesterday. As mentioned yesterday, maybe we can see some stability between 7.40-60% now. That said, the longer term trend points downward towards 7.2% and lower, especially after the November CPI has come in even lower at 2.33% last evening.
