STOCKS
Dow (21409.07%) is almost ranged for now. No major movement expected on either side. We may see a sideways trade within 21250-21550 region for a few days.
Dax (12437.02%) has been trying to move above 12500 but has not been able to sustain a break on the upside. As mentioned yesterday, 12500 is crucial levels to keep an eye on and only a sustained break above 12500 would initiate a fresh rally towards 12600 in the near term. Else a fall back to 12300 is possible. 2-3 sessions of sideways trade within 12500-12300 looks likely.
Shanghai (3193.89, -0.29%) came down to test 3197 as expected and could bounce back towards 3220 in the next couple of days. There could be some interim dip towards 3190 too before we see a bounce.
Nikkei (20132.38, -0.31%) is almost stable. There is room on the upside towards 20300 but may take a few sessions to reach there. Overall near term looks bullish.
Nifty (9786.05, +0.15%) opened at a high of 9830 but came down sharply to close at 9786. Immediate support is now visible at 9750 and while that holds, we could see a rise towards 9900 in the near term. Near to medium term looks bullish.
COMMODITIES
Nothing new to add as Gold (1218) and Silver (15.89) are trading within the range of 1188-1231 and 15.20-16.10 respectively. We will remain bearish on Bullion while they are trading below 1250 and 16.50 levels. We think the sideways modes within these ranges are expected to remain unchanged, and a bounce towards there resistances can be seen due to near term oversold condition. Today we have Fed Chair Yellen Testifies at 7.30 pm IST which could bring more clarity to determine the future path of Dollar Index and Bullion as well.
Copper (2.68) moved marginally higher in line with our expectation and trading within a range of 2.66-2.78. Only above 2.78 higher resistances of 2.85 can come into consideration. In the medium term 2.55-57 are going to be a strong support and we will remain bullish while it is trading above those levels.
Both Brent (48.17) and WTI (45.77) had moved up and closed to intra-week resistance at 48 and 46 respectively. Today we have U.S Crude oil inventory (8:00 pm IST) with an expectation of a shortage of 3.2M B. If the actual outcome could match the expectation then there will be a decent chance of producing a bounce towards 50 (Brent) and 48 (WTI). Otherwise a surplus in overall inventory could bring bearish possibilities into consideration.
FOREX
As expected, Euro (1.1480) has moved up to and past 1.1460, but faces crucial long-term Resistance in the 1.1520-40 region now. Market sentiment is turning very bullish with voices calling for 1.27-30. Therefore, it would be good to be cautious and not buy the Euro at these levels.
A hint of profit-taking is seen in Euro-Yen (130.27) which saw a high near 130.77 yesterday, short of our target of 131.00, and now trades a little lower. So, as mentioned, we have to be careful about fresh Euro Longs.
Surprising decline in Dollar-Yen (113.46), breaking below support at 113.75 cited yesterday. High was only 114.50 yesterday, well short of our target of 115.00. It seems a lot of people might now be caught with expensive Longs. Need to see how the market handles crucial medium-term Support at 113.15 now. A break thereof, if seen, would lead to 112.50 also.
With this, the Dollar Index (95.60) is edging towards 95.50-40, as expected. The trend is strongly bearish, targeting 94.75 at least, possibly lower.
Within all this Dollar weakness, the Pound (1.2845) has been unable to strengthen. It now trades in the 1.2850-40 Support region mentioned yesterday and needs to stage a strong bounce from here to avoid a deeper decline towards 1.2800-2750. Chances are 50-50 only.
The Aussie (0.7649) has spiked up to 0.7664 today as the Support at 0.7600-7575 mentioned yesterday held well. There might be chances of further strength up to 0.7700 at least, as Copper also looks potentially bullish.
Very importantly, the Chinese Yuan (USDCNY = 6.7880) has strengthend since yesterday, negating the chances of weakness towards 6.82. All this put together might cap upside for Dollar-Rupee near 64.65-70 today.
INTEREST RATES
The US 10-5Yr differential (0.44%) seems to have broken above the medium term channel resistance and in case it sustains, it could rise higher towards 0.46% in the next few sessions.
The US yields by themselves are almost stable but may have some more room on the upside as seen in the longer term charts before falling sharply thereafter. The yields are heading towards long term resistances and could move up in the next few sessions.
The German-US 10Yr (-1.81%) and the German-US 2Yr (-1.98%) have moved up as expected and could continue to rise in the coming sessions pulling up Euro with itself.
