STOCKS
Sharp recovery seen in Dow (21899.89, +0.90%) yesterday on talks about renewed hope of the US Tax reforms. While the index remains above 21675, there is scope of re-testing levels near 22000 tonight.
Dax (12229.34, +1.35%) has bounced back from levels near 12000. It could test 12300 on the upside over today and tomorrow before again coming off towards 12100-11950 levels.
Nikkei (19475.85, +0.47%) continues to look weak just now and the downside chances of testing 19000 remains open. Also note that Dollar Yen may have an immediate support near 107.50 which if holds could produce a bounce in both dollar Yen and Nikkei in the near term. In that case, Nikkei may possibly delay a fall towards 19000.
Shanghai (3291.95, +0.06%) could re-test 3300/05 in the coming sessions before coming off sharply towards 3260. In the earlier cases where the index has tested 3300 levels in Nov’16 and Apr’17, it has reversed its trend thereafter. We need to be cautious at current levels and look for any change in the uptrend.
Nifty (9765.55, +0.11%) has been trading just above important support zone of 9750-9700 for the last 2-sessions. In case the index breaks below 9700, we could see a fall towards 9600 soon. Near term looks bearish.
COMMODITIES
Gold (1289) is hovering around its key physiological resistance of 1300 and if this resistance breaks, a quick bounce towards 1317-25 can’t be ruled out. Otherwise it remains in a sideways move which may take it to the support of 1275 and 1259. Silver (16.93) is also trading within the range of 16.50-17regions. Only a daily close above 17.05 could open up 17.50 levels.
Copper (2.96) is trading within the narrow range of 2.85-98. Only above 2.98, higher resistances of 3.05 and 3.12 can come into consideration. We will remain bullish on copper while it is trading above 2.85 regions.
We have U.S crude oil inventory today at 8.00 pm with an expectation of a shortage of 3.3MB. If the actual data will reflect the same then it will be the 9th consecutive week of shortage in U.S. oil inventory which could be beneficial for the whole energy pack. At the same time Brent (51.75) is trading within the range of 49.70-52.80.Only a close above 52.80 could open up 55 regions. WTI (47.50) is also trading within the range of 46.50-49 as well. We will remain bullish on Brent and WTI while they are trading above 49.70 and 46.50 regions respectively.
FOREX
The mentioned Resistance at 1.1830 on the Euro (1.1762) held beautifully yesterday, pushing the Euro down to 1.1745 in the European session itself. If the German-US 10Yr yield Spread (-1.81%) does not bounce from the Support at the current level, it can threaten the existing uptrend in the Euro.
Still, Euro-Yen (128.95) has been stable as Dollar-Yen (109.65) has risen alongwith the fall in the Euro, establishing 108.60 as a credible Support for now. Watch Resistance at 110.00 today. Break thereof can propel the market up to 110.70 else we may see sideways range trade between 110-109. Peeks above 110.00 could get sold.
The Pound (1.2821) has come down quite a bit in line with expectation, perhaps opening up chances of further decline towards 1.26.
The Aussie (0.7898) has dipped along with the Euro and could test Support near 0.7845-30, where it could find buying interest again. In the bigger picture The overall uptrend since the May ’17 low near 0.7319 remains in force but the Resistance at 0.80 needs to be broken in order to take the Aussie higher. Resistance above 3.00 on Copper could hold the Aussie down for a while.
We might see further strength in the Chinese Yuan (USDCNY = 6.6592) towards 6.6150. Dollar-Rupee remains stable between 64.10-25-40, as expected.
INTEREST RATES
The US yields are hovering around their crucial areas of supports. If 2.18 holds then the 10Yr (2.21%) could test 2.23% and 2.25% within few days of time.
Euro looks stable and there can be scope for upside if the German-US 2Yr Spread (-2.03%) and the German-US 10Yr Spread (-1.81%) bounce from current Supports in the near term and rise towards -1.97% and -1.75% respectively.
The Japan 5Yr (-0.09%) and the 10Yr (0.05%) are moving upwards.If this will continue then The Japan 30Yr (0.84%) might move upward towards 0.90%.
The UK yields had also rebound from their lows. The 10YR (1.08%) and the 20YR (1.63%) are stable at this moment, but both have scope of testing 1% and1.50% on the downside.
