STOCKS
Stocks have bounced after the FED hiked rates by 25bps in line with market expectations.
Dow (20950.10, +0.54%) has bounced from just above support near 20800 and could head towards 21000-21200 in the near term.
Dax (12009.87, +0.18%) on the other hand has also risen but needs to break above the 12090 level to turn immediately bullish. Some consolidation in the 11930-12090 region is possible before it moves up sharply.
Nikkei (19551.58, -0.13%) is up too but is stuck within the 19400-19600 region. Looking at the 3-day and weekly charts, there is some scope of rising towards 20000 in the medium term.
Shanghai (3260.37, +0.57%) has broken the 3250 resistance contrary to our expectation and could possibly head higher towards 3275-3300 while above 3250.
Nifty (9084.80, -0.02%) could possible trade below 9130 for sometime before breaking on the upside. Near to medium term looks bullish with targets of 9130 and 9280 on the upside.
COMMODITIES
Overnight weakness in Dollar index (101.31) has boosted almost all the commodities across the board. Gold (1224) has broken its bearish channel resistance of 1220. Next level of resistance is at 1240-45.The bias will be bearish while it is trading below 1240.
Silver (17.44) is also hovering around its resistance of 17.45. A close above that could open up 18. We have US Unemployment data at 6.00 pm ISt, which may influence the prices of silver and copper.
Copper (2.67) was unable to close above its pivot at 2.72 of its recent trading range of 2.55-83. We will remain bearish while it is trading below 2.72-75.
Brent (52.14) and WTI (49.11) both had moved higher in line with our expectation. They are still within their trading ranges of 50-52.50 and 46-50 and may consolidate within these levels for few more sessions. We will remain bearish while Brent and WTI are trading below 53 and 50 levels respectively.Thus the possibility of a decline towards supports can’t be ruled out
FOREX
The Fed raised the rate by 25 bps as expected but the Dollar weakened as the Fed didn’t accelerate its timeline for future tightening. All the majors are have strengthened considerably against the Dollar.
Dollar Index (100.61) has broken below the major channel support at 101.00 after the Fed meet and if any immediate recovery is not seen within the next two sessions from the support of 100.40, then the major support at 99.00 returns into consideration.
Euro (1.0727), contrary to expectations, bounced back strongly to 1.0750 levels with the major resistance of 1.0835-70 not too far away. It may trade in the range of 1.0600-1.0850 for the next few sessions.
Dollar-Yen (113.44) negated the bullish bias with a break below 114.50. Currently it is testing the support of 113.10 below which comes much lower levels of 112.00- 111.70.
Pound (1.2268) has surged on the back of the global Dollar weakness and tested the upper end of the near term range of 1.20-1.23 but it still requires a firm break above 1.23 to open up higher levels of 1.2410-50.
Aussie (0.7686) has broken out of the near term range 0.75-0.76 to the upside and now it trades close to the long term resistance area of 0.7750-0.7850. This long term resistance area is a very significant make or break zone which, if overcome, may determine the path for the next few months but it is still not clear if Aussie will manage to break above 0.7750-0.7850 immediately or not.
Dollar-Rupee (65.69) is trading at 65.35 in the NDF market, much below the closing price of 65.69. It remains to be seen if the support of 65.20 holds and triggers a bounce towards 65.80-90. Otherwise much lower levels of 64.80 will come into consideration.
INTEREST RATES
The FOMC March-meeting resulted in a 25bps rate hike as the markets had expected. But some surprise has come in as the FED sticks to 3-hikes this year as mentioned in the December meeting. People were expecting either a faster pace or 4-rate hikes this year. The US bond yields tumbled as the treasury bonds rallied immediately after the news flashed.
The US yields came off sharply from immediate resistance levels as mentioned yesterday. The 5Yr (2%), 10Yr (2.49%) and the 30Yr (3.10%) are trading lower than previous levels of 2.11%, 2.59% and 3.17% respectively.
The US 10-5Yr (0.49%) rose sharply and could be headed towards 0.50-0.52% in the near term.
The US-Japan 10Yr (2.41%) has come off in line with our expectation of a fall from medium term resistance levels. While the yield spread continues to move down, we could see the fall in Dollar Yen in the medium term.
The US-UK 10Yr (-1.29%) has bounced sharply indicating some up-move in Pound while immediate support near 1.21 holds. But note that the longer term still looks potentially bearish and the immediate bounce in the yield spread and Pound could be short lived.
The German-US 2YR (-2.13%) is heading towards resistance near -2.10% which if holds could push back the yield spread towards -2.15% or lower in the medium term.
