STOCKS
Overall there is lack of directional clarity on major stock indices just now. It is quite possible to see ranged movements in the next few sessions before we get some confirmation of future direction.
Dow (21797.79, +0.06%) is likely to remain above 21600 for the next few sessions, trying to attempt a rise towards 22400 from where some rejection is possible.
Dax (12303.98, +0.06%) had moved up sharply last week and the initial resistance near 12200 has now turned into an important near term support. While above 12200, the index may trade within 12400-12200 region. A break above 12400, if seen could initiate a fresh medium term upmove.
Nikkei (19541.36, +1.38%) could face some rejection from immediate channel resistance at 19600. While below 19750-19600, a test of lower levels of 19000 remains on the cards.
Shanghai (3378.23, +0.39%) could trade sideways for some days as the index needs some base building for the bulls to gather more strength for the long term. While above 3300, Shanghai looks bullish. For the next one week trade within 3400-3300 region is possible.
Nifty (9934.80, +0.05%) may trade within 9850-10000 region over the next couple of days. Sideways consolidation is likely to continue for a few more days before we see a break out on either side to give more directional clarity for the medium term.
COMMODITIES
Gold (1341) moved lower to rectify its overbought condition, however the immediate trading range of 1326-1361 is intact so far. Similarly Silver (17.95) has also moved lower but still within the range of 17.40-18.05. We had told last Friday that "Please maintain caution at higher levels due to overbought nature". In the medium term,both Gold and Silver are out of their short term bearish channel but the supports of 1288 and 16.80-90 should hold to keep the bullish momentum intact.
Finally Copper (3.04) had responded to its short term overbought condition and moved lower. The short term trading range could be 3.00-3.16.
Brent (53.97) is trading within the bullish channel of 53.30-55.60 and we will remain bullish while it is trading above 50 regions on a weekly closing basis. WTI (47.80) has also moved higher and trading within the range of 47-50.
FOREX
Surprising gap-up opening at 108.26 in Dollar-Yen (108.40) today after the Low of 107.29 and Close at 107.78 on Friday. Although follow-through selling at lower levels was not seen on Friday, need to see if the market runs into selling in the 108.70-90 region over today-tomorrow. How the market performs today-tomorrow will set the tone for the week, possibly the month.
The Dollar Index (91.49) has recovered a bit from the low of 91.13 seen on Friday. If the bounce sustains, we may look for a test of 92.00-20 on the upside this week.
Minor profit-taking in the Euro (1.2016) after the high of 1.2092 seen on Friday. That said, the overall uptrend persists, with intra-week Supports seen near 1.1970, 1.1935 and 1.1895. The Euro-Yen (130.28) is likely to trade sideways between 129.40 and 131.00 for now. Overall trend remains bullish while above 129.40-00.
Strong rise in the Pound (1.3180) to a high of 1.3224 on Friday, in line with expectation of 1.3270.
It is a little disappointing that the Aussie (0.8045) saw a spike up to 0.8125 on Friday (we were targeting 0.82) but has not been able sustain the rally. We remain bullish, however, but have to keep an eye on Supports in the 0.8000-7965 region.
A bit of short-covering in Dollar-Yuan (6.5052) from a low just below 6.44. Need to watch a couple of days if the bounce sustains or not. Dollar-Rupee saw a low of 63.77 on Friday and closed low near 63.7850. But it is quoting higher near 63.95 on the NDF, replicating the gap-up move in Dollar-Yen. Need to see if it breaks above 64.00-10-20 over today-tomorrow.
INTEREST RATES
The benchmark US 10Yr yield (2.09%) rebound from its overbought territory. But we will remain bearish on 10Yr Yield while it is trading below 2.16 regions on a weekly closing basis.
EUR/USD moved marginally lower as the The German-US 2 Yr Spread (-2.02%) and the German-US 10Yr Spread (-1.75%) are range bound so far.
Japan 10Yr yield (-0.01%) hovering around near 0.00 levels while the 30Yr (0.81%) and the 5Yr (-0.16%) are trading marginally lower with no directional clarity.
The UK 5Yr and 30Yr Gilt Yields (5Yr 0.42% and 20Yr 1.53%) are trading below their respective supports. The UK 10Yr (0.99%)is also moved lower after it had rejected from 1.06% regions.
