STOCKS
Dow and shanghai looks bullish for the near term. The other indices are trading near crucial reisstnace and support levels ad may taje a few more sessions to decide further course of direction.
Dow (21807.64, +0.25%) is holding above the immediate support as visible on the 3-day charts. While the index remains above 21600, we could see some stable sideways consolidation in the next few sessions.
Dax (12214.54, +0.75%) shot up ahead of the ECB meeting today. But as mentioned earlier, unless a sustained rise above 12200 is seen, we would have to consider a re-test of lower levels of 12000-11900 in the near term. A sustained upmove above 12200 could take it higher towards 12400.
Nikkei (19430.19, +0.37%) continues to trade above long term support near 19000, coming up from levels near June’16. A fall towards 19000 may take a few more sessions before we see a bounce back from there towards 19800 in the longer run.
Shanghai (3371.18, -0.42%) is eventually headed upwards targeting 3400 and higher in the near term. Price looks bullish just now.
We warn caution on Nifty (9916.20, -0.36%). Currently expecting a downside of 9700-9675 to hold in the medium term, the index may bounce back from there to keep the uptrend on. A break below 9750-9675 could initiate a sharp fall for the coming weeks. The Index could take a couple of sessions more to decide on that. Till then wait and watch.
COMMODITIES
Gold (1338) is hovering around its near term support of 1335 with no directional bias. As it is slowly getting overbought, a quick fall towards 1303 could be seen upon a breach of 1335 levels. Similarly Silver (17.98) is also trading within the narrow range of 16.90-18.25. The price is well supported by copper but a fall below 16.90 could open up much lower levels of 16.50 as well. Today we have ECB press conference at 6.00 pm IST which might add some more clarity into the price action of bullion.
Copper (3.15) is trading within the trading range of 3.12-3.26. The only concern in the short term overbought condition which could be resulted short term profit taking anywhere between 3.12-3.26 levels. But we will remain bullish on copper while it is trading above 2.88 levels in the medium term time frame.
We have U.S crude oil inventory data today at 8.30 pm with an expectation of a surplus of 4.1MB. We need to be cautious as a major surplus might cause drastic fall in the whole energy pack. Brent (54.08) is trading within the bullish channel of 50-55.60 since June 17 and we will remain bullish while it is trading above 50 regions on a weekly closing basis. But if you look at WTI (49.08), it is still within the bearish channel of 45-50 since march and a surplus in inventory could drag the price towards its support.
FOREX
Although the overall uptrend in the Euro (1.1924) remains intact, the upmove seems to be slowing down. If the ECB is again ambivalent on when the "taper" is likely to start, the market might offload some of the Euro Long positions it holds. The 1.1870-50 Support is crucial.
We also note that the German-US 10Yr Spread (-1.76%) trades lower, instead of rising towards -1.70%.
Our target of 92.00 on Dollar Index (92.19) was met yesterday. Although the overall downtrend remains in force while below 92.50, we are sensitive to chances of a reversal, given that there is Support also in the 92.00-91.40 region.
Dollar-Yen (109.11) saw a high near 109.40 in the US session yesterday. This decreases the chances of a breake below 108.25-15 and opens up chances of a fresh rise towards 110.
Cited Support at 129.00 has held well on the Euro-Yen (130.09) yesterday, producing a bounce from 129.35. Further upside from here towards 131 is possible, but will need a positive stimulus from the ECB (if it announces a date for the "taper") in order to rise further from here.
The Pound (1.3045) seems to be maintaining its recent strength after seeing a high of 1.3082 yesterday. A Week Close above 1.31 can lead to a further rise towards 1.33.
We maintain our target of 0.81 on the Aussie (0.7988) while the Support at 0.7950 holds.
The Chinese Yuan (USDCNY 6.5246) trades quiet now. Dollar-Rupee (62.10) came off from a high near 64.26 yesterday. It may well test 64.05-00 today.
INTEREST RATES
The benchmark US 10Yr yield (2.09%) is trading within the range of 1.97-2.12 . It could possibly touch 1.97 regions but that will be a highly oversold territory , thus we are not expecting further downside beyond 1.97 regions.
EUR/USD is hovering around above 1.1900 regions as the The German-US 2 Yr Spread (-2.10%) and the German-US 10Yr Spread (1.76%) are looking stable.Besides we have ECB press conference today at 6.00 pm IST, which may add some clarity towards the future price action in Euro.
Japan 10Yr yield (0.01%) is hovering near 0.00 regions while the 30Yr (0.81%) and the 5Yr (-0.14%) are almost stable at the time of this writing. No directional clarity so far but definitively yields are consolidating at these levels.
The UK 5Yr and 30Yr Gilt Yields (5Yr 0.44% and 30Yr 1.58%) had moved lower towards their respective supports. The UK 10Yr (1.02%) also failed to breach the immediate resistance of 1.8% and dipped a bit.
