STOCKS
Equities are all mixed. Dow is in a correction phase while Dax and Shanghai looks bullish for the near term. Nikkei could bounce back from support levels while we need price confirmation on nifty for immediate directional cue.
Dow (20924, -0.14%) has possibly entered into a short term correction phase which could extend towards 20800-20750 levels as mentioned earlier.
Dax (11966.14,+0.06%) has taken immediate support near 11928 and if that holds, it could inch up towards 12090 or higher in the near term. Overall trend is up.
Nikkei (19252.13, -0.48%) is trading low and could re-test levels near 19000 before bouncing back from there towards 19400-19600 levels again.
Shanghai (3238.46, -0.12%) is slowly moving higher and heading towards our expected 3250-3275 levels. Near term looks bullish.
Nifty (8946.90, -0.18%) is at crucial juncture and could decide its further course of movement by the end of the week. A break on either side of the 8800-9000 region would give a directional confirmation for the near term.
COMMODITIES
Gold (1217)has moved lower in line with our expectation and trading at the lower band of its trading range of 1217-1274. The upward trend line support since Dec 16 has been broken. A close below 1217 could drag the price towards 1183. We will remain bearish until it is trading below 1250.
Silver (17.54) also broke its crucial support of 17.60.Immeidta supports are at 17.45 and 16.60. Bias will remain bearish until it is trading below 18.
Copper (2.71) is trading around its crucial support of 2.60. A close below that could open up 2.53 and 2.45 respectively.
Brent (56.61) and WTI (52.80) both are trading within their narrow ranges of 55-57.60 and 52.45-55. We have US Crude oil inventory data at 9.00 p.m IST. An increase in weekly inventory could open up lower levels for both Brent (53.54) and WTI(51 / 49.65) respectively.
FOREX
Very muted price action in all the majors before the ECB meet on Thursday, 9th March’17.
The Dollar Index (101.77) price action has narrowed down in the range of 101.50-102.00 in the last couple of sessions and may remain quiet till the ECB meet tomorrow. Uptrend remains intact above the major support at 101.20.
The volatility in Euro (1.0568) has been crashing down and it may keep the currency in the range of 1.0500-1.0630 till the ECB meet on 9th Mar’17 though no significant movement is expected even after the meet.
Dollar-Yen (113.81) is in a sleep mode just like the other majors and no immediate deviation from the range of 113-115 is expected.
Pound (1.2207) may consolidate in the wider range of 1.2150-1.2300 for a few sessions before resuming the major downtrend.
The RBA decision of maintaining the status quo had no visible impact on Aussie (0.7603). The next few sessions may see the currency stuck in the range of 0.7530-0.7630 with the volatility coming down.
Dollar-Rupee (66.67) may test the major support 66.50-40 in the near term in a gradual decline but an increase in volatility is expected on Friday with the Exit polls coming out.
INTEREST RATES
We need to keep a close watch on the yield spread between US, UK and Germany as they are moving in line with the movement in Euro and Pound and could give some clarity on immediate direction of the currency pairs.
Fresh fall in the German-US 2Yr (-2.22%) and increased momentum on the downside suggests that the fall could extend towards -2.25% to -2.30% in the near term. In that case we could see a fall in Euro (1.0566) towards 1.05 or even lower in the coming sessions.
Looking at the crashing US-UK 10Yr (-1.33%), it would not be a surprise if the yield spread falls towards -1.40/45% and drags Pound towards 1.21-1.20 levels in the medium term.
The US yields continue to rally and is on the verge of breaking above immediate resistances. . The 5Yr (2.05%), 10YR (2.51%) and the 30Yr (3.11%) are trading 2-3bps higher and looks bullish for the near term.
The UK 5YR (0.57%) continues to rise sharply, faster than the 10YR (1.19%) and the 20YR (1.72%) yields. The UK 10-5Yr spread (0.62%) has bounced a bit and could recover towards 0.70% in the near term.
