STOCKS
Dow (22349.59,-0.04%) could be in the beginning on a small correction after the recent rally from levels near 21800 to 22400 levels. A test of 22200 or lower is possible before again resuming the long term up trend.
Dax (12592.35, -0.06%) almost went up to test the interim resistance at 12675 but came off to close at lower levels. While 12675 holds, the index may come off to 12500 or lower just now; a break above 12675 is necessary to move higher towards 12800. We prefer 12675 levels to hold just now.
Nikkei (20412.59, +0.57%) is unable to move above 20500 and could spend some time within 20200-20500 region before deciding on further direction. As mentioned earlier, 21000 and 20800 are long term resistances on the upside and there is not much scope for a potential rise in the longer term. Either the index could come off from current levels to test 20000, else it could try a re-attempt of levels above 20500.
Shanghai (3340.28, -0.37%) is moving down slowly. A test of 3320-3300 level is possible in the near term from where the index could move back to levels near 3380 again.
Nifty (9964.40, -1.56%) could test immediate support near 9900 on the daily candles from where a bounce back towards 10100 is possible. In case 9900 breaks on the downside, the next support levels would be seen near 9800 or even lower.
COMMODITIES
Gold (1292.36) could trade within 1290-1300 for a couple of sessions. Thereafter, equal chances of either moving up towards 1310-1315 or coming down to 1280 is possible.
Silver (16.89) could test decent support near 16.75 which if holds can push the index to higher levels of 17.20.
Brent (56.83) has moved up faster compared to WTI (50.57) which is almost stable near previous levels. WTI may remain below 51 for another session or two while Brent could move up to 57.45 in the near term. Crude looks positive just now but could soon enter into a corrective dip by the end of the week.
Copper (2.9415) may move up to 3.00 in the coming sessions. Trade within 3.00-2.90 is possible this week. Movements are expected to remain narrow.
FOREX
As it turns out, the Euro (1.1932) rose to 1.2005 on Friday, but was unable to sustain the rise, despite stability in the German-US 10Yr Spread (-1.81%). The overall uptrend is still intact, but the Support to watch has moved up to 1.1890, from 1.1850 earlier.
The Dollar Index (92.25) is trading slightly higher, but still remains below crucial Resistances at 92.50 and 93.00 for now. The downtrend remains intact while these hold.
Very good correlation is seen between the increase in the UK-US Yield 10Yr Spread (-0.90%) and the Pound (1.3525). The latter has found Support at 1.3438 for now and may try to move up towards 1.3630 this week, with potential for 1.38 later on.
Watch Resistance near current level on the US-Japan 10Yr Spread (2.25%). If this holds, it could limit the upside in Dollar-Yen (112.21) to the Resistance at 113.50 mentioned earlier. The Euro-Yen (133.86) looks bullish enough to try and rise towards 136.
Although a near term top seems to be in place on the Aussie (0.7953), we also note Support near 0.79, the 21-MA on the 3-day chart. A fresh bounce would need to be considered while that holds.
Dollar-Yuan (6.6020) has finally crosssed our target of 6.60 and can rise some more towards 6.61+. Dollar-Rupee (64.7950) has crucial Support at 64.70 today.
INTEREST RATES
US yields (30Yr 2.79%, 10Yr 2.26%, 5Yr 1.87%) stabilised a bit on Friday, near or just above their near term Resistance levels. This week will show whether they rise further or not. In the meanwhile, the US Yield Curve remains in a flattening mode with the US 10-5 (0.39%) and US 30-10 (0.53%) continuing to trend lower.
In contrast, the German Yield Curve is steepening, with the German 10-5 (0.7%) and German 30-10 (0.82%) looking more bullish. Yet, the German-US 10Yr Spread (-1.81%) appears to have broken its uptrend, as mentioned earlier. This is to be watched for its implication on the Euro.
UK Gilt yields (5Yr 0.76%, 10Yr 1.36%, 30Yr 1.83%) continue to rise/ trade above near term trend resistances, but could consolidate here for a while. Overall, the UK-US Yield 10Yr Spread (-0.90%) is rising, supporting the Pound.
In India, 10Yr GOI (6.6632%) is likely to remain below crucial Resistance at 6.7000-7250% with the government exerting pressure on the RBI to lower rates. The next RBI meeting is on 3rd October, next week.
