STOCKS
Global indices look bullish in the near term except the Dow which could possible test some more levels on the downside before pausing.
Dow (20596.72, -0.29%) could possibly be on the verge of breaking below the daily channel support. The resistance on the 3-day and weekly candles seems to be holding good for now and while that holds, we could see a test of 20400-20000 levels in the near term.
Dax (12064.27, +0.20%) is clearly trading within the upward channel on the daily candle chart and while that holds, we could see the index move up in the near term. Immediate target if 12200 on the upside. Near term looks bullish.
Nikkei (18983.19, -1.45%) may continue to remain indecisive while it trades within the broad sideways range of 18600-19600. A bounce from current levels could be expected in case, Dollar-Yen also bounces back from immediate support. (Refer FOREX section below)
Shanghai (3275.78, +0.19%) has risen in line with our expectation almost heading towards our first target of 3300. A break above 3300 could take it towards resistance near 3400. Near term looks bullish.
Nifty (9108, +0.24%) bounced back well in the last sessions and could continue to move up towards 9200 and higher in the near term.
COMMODITIES
Fresh weakness in Dollar index (99.30) has boosted bullion significantly. Gold (1256) has broken its bearish channel resistance (since Sep 16) at 1248-50 and could move towards 1267 and 1307 respectively.
Similar kind of chart has been formed in silver (17.89) also as it is trading ab resistance around above its pivot of 17.45. The possibility of a rise towards 18.33 levels can’t be ruled out.
Copper (2.60) is trading within a range of 2.57-2.70. Only above 2.70, higher resistances of 2.80 can come into consideration. In the medium term 2.55-57 are going to be a strong support now and a close below that could open up 2.55 and 2.49 levels respectively.
Oil prices dipped again as rising U.S. drilling activity outweighed talks that an OPEC-led production cut initially due to end in mid-2017 may be extended. We think that prices may receive some support (Specially Brent at $50) from talks between OPEC and other producers, including Russia in order to prop up the market. Considering the short term oversold sate in Brent (50.75) and WTI (47.34), we may see some profit taking rally towards their respective resistances of 52-53 for Brent and 48.50-49.80 for WTI respectively. But the trend is still bearish in the near to medium term time frame. Any corrective bounce may face selling pressure at the higher levels.
FOREX
The collapse of the healthcare bill legislation by the Republicans not only signalled a setback for Trump but raised questions about the ability of the President fulfil his other promises including a boost in the infrastructure spending and tax cuts. Not a good position for Dollar.
Dollar Index (99.29) is very close to the major support area of 99.00-98.50 as expected and some short covering from the area leading to a bounce towards 100.00-40 this week can’t be ruled out.
Euro (1.0845) is trading right at the resistance of 1.0850 following a bounce from our support 1.0750 and now may rise past 1.0850 for 1.1000 in the next few sessions, negating the immediate bearish possibilities.
Dollar-Yen (110.39) has turned out to be more impatient than expected as it continues its decline without any consolidation. Sustained trading below 110.50 may drag it down to 109.40 and 108.50 soon with resistance coming at 111.50.
Pound (1.2524) continues its gradual rise towards 1.2650-1.2700 with near term support unchanged at 1.2440-20.
Aussie (0.7625) is holding above the support of 0.76 as expected and may continue sideways trading in the range of 0.7600-0.7750 for a couple of sessions more.
Dollar Rupee (65.52) is trading at 65.40 in the NDF, almost at the midpoint of our range 65.20-70 which may remain intact for the week.
INTEREST RATES
The German-Us 2YR (-1.97%) is heading towards near term channel resistance near -1.95% and could possibly come off from there in the near term. But looking at the German-US 10YR (-1.96%) which has broken above the horizontal resistance coming from Mar’15 there is enough room on the upside. Although there is lack of clarity just now, but if the 2Yr yield spread come off, the upside for Euro could be limited in the near term.
The US yields have broken below the immediate support levels and are headed lower. The 5Yr (1.90%), 10Yr (2.37%) and the 30YR (2.98%) have all fallen and could test 1.80%, 2.30% and 2.90% respectively.
The UK 10-5YR (0.57%) is falling sharply and could be headed towards 0.50% in the near term.
The German yields are in a pause mode and could possibly come off in the near term. The 5Yr (-0.31%), 10Yr (0.41%) and the 30Yr(1.14%) are slightly higher but could possibly come down again in the coming sessions.
