STOCKS
Another good day for Equities yesterday. Evidence of stronger than expected bullishness, which could extend some more in the near term. Trump delaying the tariffs on China by two weeks can support the bullish sentiment. Within this, the Nikkei could have the highest bullish possibility (if it materializes), as compared to, say, the Dow, which could run into profit-taking nearer to the FOMC Meeting next Wednesday (18th).
Contrary to expectation, the Nikkei (21785.67, +187.91 +0.87%) rose well past 21550 yesterday and looks strong on the Daily and Weekly Candles now. There is now an increased chance of a rise towards 22000. Dips could be shallow and might be bought.
The Shanghai (3013.20 +4.39, +0.15%) saw a small dip yesterday and might want to test Support in the 2975-50, from where a rally towards 3100 could start
The Nifty (11035.70, +0.3%) may still rise to test 11100 and then come off a bit from there towards 10980-900. At the same time, can there be chances of a rise past 11100 while above 10700? Good battle going on between bulls and bears for ownership of medium term trend. Keeping an open mind on both sides might be good.
The KOSPI (2049.20, +17.12, +0.84%) is testing downward channel Resistance at current levels on the Weekly Candles. Need to see today whether it runs into profit-taking or breaks higher. Watch.
The Dow (27137.04, +227.61, +0.85%) has rallied well past 27000 and can well rise towards 28000 ahead of the FOMC next week, but might run into profit-taking there.
The DAX (12359.07, +90.36, +0.74%) has indeed risen past 12350 and could test 12500, which is an important Resistance on the Weekly Candles. May see profit-taking there.
COMMODITIES
Gold and silver, though holding on to their supports are not gaining momentum. Strong equities are capping the upside in both gold and silver and keep them vulnerable for further fall. Copper remains range bound and the bias is bearish for it to break the range on the downside. Oil has declined sharply on reports that the US is in discussion to ease the sanctions on Iran.
Gold (1493) is managing to hold above 1485 but is not gaining momentum to rise past 1500. A strong rise past 1500 is needed for it to move further higher towards 1510 and 1520. While below 1500, gold is vulnerable to break 1485 and fall to 1465-1460.
Silver (18.08) is facing resistance at 18.25 and can dip to 17.75-17.70 while it trades below it. Only a strong break above 18.25 will negate the chances of the above mentioned dip and in turn will take silver higher to 18.55 and 18.65.
Copper (2.63) continues to oscillate between 2.60 and 2.65. The bias is negative for it to break 2.60 and fall to 2.58 immediately and 2.55-2.53 eventually. A strong rise past 2.65 is needed to move further higher towards 2.68.
As expected, Brent (61.35) has declined towards 61.30. Support is now at 61 and while it holds, a bounce to 62 and 62.40 is possible. But, a strong rise past the 62.40-62.45 region is needed for it to move further higher which looks less likely now. As such, Brent is likely to test 60 and even lower levels again in the coming days.
Contrary to our expectation, WTI (56.30) has declined sharply breaking below the supports at 57.30 and 57.10 which we had expected to hold. Immediate resistance is now at 56.40 while below which a test of 55.60 and 55.30 is likely.
FOREX
Dollar index has risen above a key resistance and has turned bullish in the near term. Euro has resistances ahead which can cap the upside and drag it below 1.10 again. The outcome of the ECB meeting today will be a key driver for the currency today. Dollar-Yen has come closer to a key resistance which if holds can trigger a corrective fall. Pound remains mixed and range bound. USDCNY has declined below 7.10 and remains bearish in line with our expectation to test 7.0680-7.0650. Dollar-Rupee can break 71.50 and fall to 71.40-71.34.
Dollar Index (98.64) has risen above 98.55 which was capping the upside over the last few days. While above 98.55, a rise to 99 and 99.25 can be seen in the near term.
Contrary to our expectation for a rise to 1.1090-1.1100, Euro (1.1013) tumbled to a low of 1.0985 yesterday and is bouncing from there. Immediate resistance is at 1.1020 and cluster of resistances are in the 1.1030-1.1035 region which can cap the upside now. A fall to 1.0950-1.0925 is possible while it remains below 1.1035.
As expected Dollar-Yen (108.03) has extended its upmove towards 108. A key resistance is near current levels at 108.15 which may hold on its first test and trigger a corrective fall to 107.5. However, a strong break above 108.15 will increase the bullish momentum and will pave way for a test of 108.7 and 109.
EUR-JPY (118.98) has recovered sharply from the low of 118.3 yesterday. The near-term view is mixed with equal chances of a rise to 119.60-119.90 and a fall to 118.3 from current levels.
Aussie (0.6870) has been consolidating between 0.6850 and 0.6880. A breakout on either side of this range will decide whether the pair is going to test 0.6900 on the upside or fall to 0.6800 on profit booking.
Pound (1.2344) continues to oscillate between 1.23 and 1.24 and looks mixed. As mentioned yesterday, a strong rise past 1.2385 will be bullish for the pair to test 1.2440 and even 1.2500 in the near term.
USDCNY (7.0983) has declined below 7.10 as expected and keeps our bearish view intact to test 7.0680-7.0650 on the downside in the short term.
This could aid the Dollar-Rupee (71.6550) to break 71.50 and fall to 71.40-71.34 in the near term. Resistances for the pair are poised at 71.75, 71.77 and 71.82.
INTEREST RATES
The US Treasury yields continue to move higher. They have room to test their near-term resistance which will have to be seen if they can breach these hurdle. The German yields have dipped slightly and could be waiting for the outcome of the ECB meeting today which would set the trend for them going forward. The 10Yr GoI has risen past a key resistance and is bullish to rise further.
The US 2Yr (1.68%), 5Yr (1.61%), 10Yr (1.76%) and 30Yr (2.23%) have moved further higher. The 30Yr has risen above the resistance at 2.21% mentioned yesterday while the 10Yr is heading towards its resistance level of 1.80% as expected. The 30Yr has room to test 2.28%-2.29% on the upside.
The German 2Yr (-0.84%) 5Yr (-0.83%), 10Yr (-0.56%) and the 30Yr (0.01%) have dipped slightly. The resistances at -0.55% on the 10Yr and 0.03% on the 30Yr seems to be holding well. The outcome of the ECB meeting today will set the trend going forward. We will have to wait.
The 10Yr GoI (6.6799%) risen sharply yesterday breaking above 6.65% and is now bullish to test 6.73%-6.75%. Support will now be in the 6.65%-6.63% region.
