STOCKS
Dow (21611.78, -0.13%) could inch up gradually towards resistance near 21800 in the coming sessions before seeing another leg of sharp correction towards 21600. Near term looks bullish.
Dax (12447.25, -0.04%) is stuck just above the near term channel support and while that holds, a ounce could be expected in the next couple of sessions. Only on a break below the support levels of 12400, we would shift our focus to lower levels of 12300-12200.
Shanghai (3237.94, -0.21%) has come off a bit after testing resistance near 3250 and while that holds, a short dip towards 3220 is possible before resuming the rally towards 3260 again.
Nikkei (20093.46, -0.25%) is stuck in the 19900-20200 region since the beginning of the month. While Dollar Yen trades lower, it would be difficult to see a sharp rise in Nikkei and we could possibly see some movement in the 19900-20200 for the next few sessions too. A break below 19900 could initiate some corrective dip in the medium term.
Nifty (9873.30, -0.27%) could see a sharp correction in the coming sessions after testing important resistance of 10000-10050 levels maybe next week itself. The correction from 10000 could take it lower to levels near 9800-9700 over the medium term. This is our preferred view for now.
COMMODITIES
Gold (1245) and Silver (16.33) are hovering around the second crucial Resistance of 1246 and 16.50 respectively. A break above 1245 is necessary for gold to remain bullish towards 1260 for the near term else a fall below 1230 could take it lower towards 1220. Silver is trading within the range of 16.20-16.50 and a close above 16.50 could open up 16.90 levels as well.
Muted price action had been seen in Copper (2.71) for last couple of trading sessions. It is trading within a range of 2.66-78. Only above 2.78, higher resistances of 2.80 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 (49.25) and WTI (46.80) are trading within the ranges of 48-50.20 and 45.80-48.30 respectively. We will remain bullish in near term while Brent and WTI are trading above 48 and 46 on a weekly closing basis. Only a close below those levels could bring the near term bearish possibilities into consideration
FOREX
Sharp 200 pip upmove in the Euro after the ECB meeting and press conference as Draghi said that in September, the ECB will start discussing tapering the ongoing QE which is expected to run till December at least. The market is building in chances of the Taper starting from Jan ’18 itself.
The Euro (1.1625) rose to 1.158, a little short of the 1.1713 horizontal Resistance, which was the high seen in Aug ’15. If this Resistance continues to hold, we could see a dip towards 1.1450 again over the next couple of weeks. A straight rise past 1.1713 is also a possibility and will trigger a lot of stop loss buying if it happens. We will wait and watch.
Resultant weakness in the Dollar Index (94.30) now targets 93 over the next couple of weeks. This has pulled down Dollar-Yen (111.97) with it, with chances of testing 111.00 next week. Strong bounce possible from the 111.00-110.50 region, though.
The Aussie (0.7880) has retreated quite a bit from the high of 0.7988 seeen yesterday, in line with the "couple of days of rest" suggested yesterday. This could bring the Aussie down to 0.7800 next week. We shall have to assess its fresh direction from there.
Strength in the Euro has caused Dollar-Rupee to open lower near 64.35, after having peeped up above 64.40 yesterday.
INTEREST RATES
Draghi indicated a continuation of the asset purchase programme which is likely to continue at least till December and further said that they would discuss on when to wind it up in the September meeting of the ECB.
The German yields continue to fall and have least reacted to the ECB meeting yesterday. The 10YR is trading at 0.53% compared to 0.55% yesterday and could come off a little more towards 0.49% before pausing.
The US yields are also headed downwards as expected. The 30Yr (2.83%) is headed towards 2.80% while the 10Yr (2.27%) could come off towards 2.20/23%.
The US-Japan 10Yr (2.19%) has little room on the downside just now and could bounce back in the early sessions next week possibly pulling up Dollar Yen along with itself. 2.16% could act as a decent near term support.
The German-US 10Yr (-1.74%) is testing immediate support and while that holds, it could bounce back to higher levels.
