STOCKS
Dow (21553.09, +0.10%) is trading below crucial resistance near 21600 and while that holds, a small dip back to levels near 21500-21400 is possible in the medium term. Only on a sustained rise above 21600, would we negate the immediate fall and shift our focus on higher levels. Till then we wait and watch for price confirmation.
Dax (12641.33, +0.12%) could move higher and face an initial rejection from levels near 12800 before pausing for sometime. Overall near to medium term looks bullish. A rise towards 12800 is expected in the coming sessions.
Shanghai (3214.25,-0.12%) is trading slightly lower today but while above 3190, near term looks bullish towards 3240-3250 levels.
Nikkei (20122.34, +0.11%) is almost stable and is trading above immediate support near 20100. A rise from here is expected in the coming sessions. The fall in USDJPY in the last few sessions is keeping the Nikkei stable. In case the Nikkei bounces back from current levels, it could pull the currency pair also with itself to higher levels.
Nifty (9891.70, +0.77%) opened with a gap up yesterday and kept moving up to test 9900 much faster than we had expected. The rally to 10000 could be achieved possibly by the next week itself if the current momentum continues to play out.
COMMODITIES
The recent trading ranges for Gold (1215) and Silver (15.60) could be 1188-1231 and 15.20-16.10 respectively. Both of them are in a neutral trading zone and we will be assured of strength in Gold and Silver only when a firm and sustainable closing above 1231 and 16.50 are made by both of them. Otherwise a failure to close above those levels may push them towards 1200 and 15.20 levels respectively.
Muted price action had been seen in Copper (2.66), trading within the same 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.
We have consecutive shortage of 7.3, 3.2 and 6.3 M B in U.S oil inventories for last three weeks and at last, the movement in Brent (48.40) and WTI (46.03) during yesterday has been comparatively in line with that.From the previous week’s low of 46.28 (Brent) and 46.38 (WTI), both of them rallied to 48.40 and 46.03 respectively. Despite the lack of momentum, with the higher lows formation in the last few days, bulls are slowly gathering momentum. As discussed earlier, the upside possibilities remain open till the supports of 47.75 (Brent) and 45.60 (WTI) holds.
FOREX
Lots of data today. US CPI and Retail Sales at 12:30 GMT (18:00 IST) and US Industrial Production at 13:15 GMT (18:45 IST). Currencies might be quiet till then, as the EU Trade Balance during the day might not move the market.
Dollar-Yen (113.40) dipped to 112.65 overnight, but has bounced well from there and may try to move higher towards 114.00. If successful, it would open up chances of 116 later in the month. Failure to move up today could pull Dollar-Yen down towards 112.50 and lower next week.
The Euro-Yen (129.31) had seen a sharp decline to 128.50 yesterday and has bounced well from there. But, it has to rise past 130 today in order to make further headway next week. Else, there might be chances of seeing a fall towards 127 as well.
In this context, the Euro (1.1405) perhaps depends a lot on Euro-Yen. Euro has seen good profit-taking on Longs near 1.1480 this week and trades at a crucial juncture just now. Failure to move up past 1.1440 today would make it vulnerable to a dip towards 1.1350-00 next week.
Perhaps the biggest thing in favor of the Euro is that the German 30 Yr has broken well above a long-term declining trendline Resistance coming down from level near 3.9% in 2011.
Dollar Index (95.75) remains weak below 96.00 and the major support at 95.50-40 is back in focus now. To confirm the bullishness of Euro, Dollar Index needs a breakdown below 95.50-40. In case, 96.50 holds, the Dollar bulls can attempt a rise above 96.00. Keep an eye on the direction of the break.
Aussie (0.7735) is trading at a 4-month high as it tests the long term resistance zone of 0.7700-75 above which comes 0.7830-50. The resistance of 0.7700-75 may hold for now and trigger a correction. Caution warranted for the bulls.
Contrary to our expectation, Dollar-Rupee (64.45) dipped to 64.35 at the Open itself, perhaps adjusting for expectations of an interest rate cut on 2nd August, on the heel of the 1.54% CPI release on the previous day. The price action further reduces the chances of upside beyond 64.70-80 and increases the chances of eventual dip below 64.40-35 to target 64.15 initially.
INTEREST RATES
The US yields are trying to consolidate at lower levels. The 5YR (1.89%), 10YR (2.35%) and the 30Yr (2.91%) are all trading marginally higher and if these levels hold them we might see some reversal during next week.
