STOCKS
Dow and Dax look strong while the other indices may trade sideways or try to come off a bit in the near term.
Dow (22203.48, +0.20%) is trading higher, breaking the previous high of 22200. If the rise sustains, the index could rally towards 22300-22400 soon.
Dax (12540.45, -0.10%) is stable and could move higher towards 12750-13000 in the medium term as mentioned yesterday. Also note there could be a slight pause near 12675 levels.
Nikkei (19826.84, +0.10%) is trading slightly lower but overall looks bullish towards 20000-20100 in the coming sessions. However, we could see some sideways movement above 19750 for sometime.
Shanghai (3360.12, -0.34%) made an intra-day low of 3345, but has not been able to sustain those levels today. A sustained break below 3350 is seen could take the index down towards 3325 in the coming sessions.
Nifty (10086.60, +0.07%) is stable just below immediate resistance near 10140 and while that holds, a small dip from current levels is possible. Only on a break above 10140, we would look for fresh bullish possibilities just now.
COMMODITIES
Brent (55.24) saw a high near 55.99 yesterday and might try for higher levels as well if it manages to remain above near term Support near 54.65. The WTI (49.68) may also try to move up towards 52 in the coming weeks if it manages to remain above 49 now.
The Gold-WTI ratio (26.88) has been dipping from long-term Resistance at 28.51 at the beginning of the month. Need to see if it holds above near-term Support at 26.00 or not.
Gold (1335) has bounced from 1319.50 yesterday. There can be some debate as to where it has Support now – whether just below 1320 or deeper down near 1310. The bearish possibility of 1300 mentioned yesterday might be a little overdone.
Copper (2.964) stalled in its downtrend a bit yesterday but is likely to continue to lose ground towards 2.90.
FOREX
August US CPI came in at 1.9% yesterday, compared to expectation of 1.8% and 1.7% in July. This sent the Euro (1.1911) down momentarily to 1.1836 and Dollar-Yen (110.18) up to 111.04. The Dollar Index (92.13) rose to 92.66.
However, as it turns out, the Euro remained above Support at in the US session itself, in line with expectation. And then today’s early morning missile firing by North Korea pushed it up further. The Yen also strengthened and the Dollar Index came down well below 92.50 again.
We now need to watch the German-US 10Yr Yield Spread (-1.77%) of course. This has held above the Support at -1.79% and is indicative of Euro strength, which can move up to 1.1950+ again. Likewise, the Dollar Index can come down towards 91.80 or lower.
Dollar-Yen (110.18) may be ranged between 110.70-109.70 today. The Euro-Yen (131.19) saw a dip to 130.50 yesterday and remains well below the Resistance at 132.00. Expect a range of 132.25-130.00 for the next few days.
The Pound (1.3389) surprised by jumping up after the BOE hinted at a rate hike to a high of 1.3405. However, it would be good to be wary of long-term Resistance between 1.3415-65.
The Aussie (0.7995) continues to hold above Support at 0.7950 and has decent chances of seeing 0.8025 over the next two-three days.
Increasing chances that Dollar-Yuan (USDCNY = 6.5476) will move up towards 6.60 over time. In Dollar-Rupee, we see 60% chances that the Range Resistance at 64.20 will hold good today.
INTEREST RATES
UK Yields had been rising since the beginning of the week, possibly in anticipation of a hint of a rate hike by the BOE. But, there is Resistance near the current levels on the 20Yr (1.746%) and on the 10Yr (1.23%). So, it might seem that the rate hike prospect is priced in for now.
Looking at the larger trend in the German 30Yr (1.22%), UK 20Yr (1.746%) and Japanese 10Yr (0.02%) yields, there are Resistances available just overhead on all of them.
The US 10Yr (2.18%) and US 30Yr (2.76%) have not moved up much after the slightly higher than expected US CPI data. Resistances at 2.25% and 2.80% remain valid and intact for now. The 2Yr (1.36%) has moved up a bit compared to 1.34% earlier.
Let us see if US yields move up further from here. The market will possibly go into wait and watch mode ahead of the FOMC meeting on 20th September, next week.
