STOCKS
Support near 21675 has held in Dow (21865.37, +0.26%) taking it up sharply to 21865. Narrow range trade is possible within 21900-21675 for a few more sessions before it decides on further direction.
Dax (11945.88, -1.46%) is trading near the lower limit of the 11940-12350 zone mentioned yesterday. Near term looks bearish and we could expect a fall towards 11700 soon.
While support on Dollar Yen holds near 108.00-108.15, it would be difficult for Nikkei (19468.73, +0.55%) to come down sharply just now. A sharp bounce back in the currency pair has helped Nikkei also to recover from yesterday’s low. But while the index trades below 19600, chances of a fall towards 19200 or even lower remains on the cards.
Shanghai (3366.73, +0.05%) is stable above 3350 and could possibly spend some time in a sideways consolidation before again moving up further. While above 350, the upside possibility remains open towards 3400-3500 in the longer term.
Nifty (9796.05, -1.18%) has not been able to break above 9950 and instead came off sharply yesterday to test immediate support near current levels. A break below 9795 could take it down towards 9600 in the next couple of sessions; else a bounce back towards 9900-9950 is again possible. The 9950-9750 region is important and a sustained break on either side would drive the next course of movement.
COMMODITIES
Gold (1318) is trading above 1300 due to the fresh weakness in Dollar index (92.24). Immediate trading range for Gold is 1280-1350 with a pivot at 1300. Gold is highly overbought in near term time frame thus we are not confident about the sustainability beyond 1350 regions at this moment. Similarly Silver (17.42) is also trading within 17.05-17.50, well supported by the bullish momentum in Copper. Both Gold and Silver are out of their short term bearish channel but the supports of 1280 and 16.90 should hold to keep the momentum intact.
Copper (3.11) looks on a firm footing while it is trading above 2.89 levels. Midterm resistances come at 3.12 and 3.25 regions respectively. The only concern is the short term overbought condition thus the Bulls are here by advised to take extra caution at current market price.
We have U.S crude oil inventory today at 8.00 pm with an expectation of a shortage of 1.8MB. This will be the 10th consecutive weeks of shortage in US oil inventory in a row thus we need to be cautious as a minor surplus might cause drastic fall in the whole energy pack. Brent (51.52) is trading within the range of 50.50-52.80 and WTI (46.33) of 45.50-49 as well and a daily close below 50.50 (Brent) and 45.50 (WTI) could resume the short term bearish trend again.
FOREX
As it turns out, easing of tensions over North Korea led to a strong bounce in Dollar-Yen (109.76) from an intra-day low of 108.25. Technically, the market did not close below the 108.60 level mentioned yesterday and the bounce is the strongest seen in the last 14 days. Immediate target for today is 110.20. A Day Close above 109.50 can lead us up to 110.50 firmly establishing a sideways movement as the dominant trend.
Fresh rise in Euro-Yen (131.44) past the 131.40 level mentioned yesterday adds overall confidence to the "Risk ON" trade. Immediate Resistance seen near 132.25. Medium term Support at 130-129 within an overall uptrend.
The Euro (1.1975) saw a high near 1.2070 and is seeing some profit-taking. Overall trend remains bullish with crucial Support at 1.18 now. Resistances come up in the 1.2075-2150 region.
The Pound rose to 1.2979, just short of our target of 1.30, and has come off a bit from there. We are not very clear about the outlook on Pound now. Immediate Resistance at 1.30, Support at 1.28. Trend unclear.
As mentioned yesterday, the Aussie (0.7993) has tested 0.80. Although there is 200-week MA Resistance near 0.80, further rise towards 0.81 is possible while the Support at 0.79 holds.
The Chinese Yuan (USDCNY = 6.5840) has strengthened some more, but may see a corrective bounce. Dollar-Rupee trades at 63.95/97 on the NDF, down from yesterday’s closing level of 64.02. Likely establishes sideways range trade between 63.80-64.20 as the dominant trend.
INTEREST RATES
The German-US 2 Yr Spread (-2.09%) and the German-US 10Yr Spread (-1.78%) both moved lower. If they will manage to rebound from current levels and could move up in the near term towards -1.97% and -1.75% then that could possibly pull up the Euro again in the near term.
The benchmark US 10Yr yield moved lower towards 2.10 in line with our expectation. There are rooms for further downside towards 1.97 if the US 10Yr will close below 2.09% on a daily closing basis
The Japanese 5Yr JGB (-0.14%) and the 30Yr JGB (+0.83%) are hovering around their respective supports, suggesting a possible bounce in near term time frame.
UK 5Yr and 30Yr Gilt Yields as they are also testing Supports near current levels (5Yr 0.42% and 30Yr 1.56%) and the 10Yr is trading at 1.00 regions as per expectation.
