STOCKS
Dow (26017.81, -0.37%) is likely to test levels near 26200 as mentioned yesterday and could come off a bit from there. Dax (13281.43, +0.74%) moved up slightly today and could eventually test 13400 on the upside. Near term is bullish for both Dow and the Dax.
24000-24200 region is very crucial for Nikkei (23836.84, +0.31%). A sharp rejection if not seen from these levels could indicate fresh bullishness coming in for the medium term. Currently trading below 24000, the index needs to come off towards 23600 or lower in the coming sessions.
Shanghai (3493.26, +0.53%) has immediate resistance near 3510 and it could produce a rejection towards 3450 in the medium term. A break above 3510, if seen could take the index to higher levels of 3550 in the longer run. Watch price action near 3510.
Sensex (35260.29, +0.51%) and Nifty (10817.00, +0.26%) have tested the upside resistance near 10900 and 35600 respectively and is likely to come off in the near term. As mentioned yesterday, there is not much of an upside expected and prefer a sharp fall from current levels.
COMMODITIES
Brent (68.47) and WTI (62.98) have come off as expected. Weekly resistance on the Brent and 3-day resistance on the WTI has been holding well and Brent is likely to come off towards 67.70 or lower in the coming sessions. WTI on the other hand may test 62.50-62.00 on the downside. Near term looks bearish.
Gold (1329.83) is trading above interim support near 1325 and while that holds, the index could move up towards 1340-1345 again in the coming sessions. Near term looks bullish.
Copper (3.2075) may gradually move down to test 3.15 on the downside before bouncing back from there. Some narrow and ranged movement is possible below 3.30. Near term looks bearish.
FOREX
Dollar Index (90.504) has dropped after touching a high of 91 yesterday but is likely to now respect support near 90.4-90.5 as see n on daily line charts. The last 2 days have seen US yields rise to multi-year highs (see Interest Rates below), thereby reflecting a possible shift in investment from debt to US equities. This should be bullish for the US Dollar in the near term, keeping the Dollar Index above 90.4-90.5.
Against our expectations, Euro (1.2244) again rose instead of testing 1.21-1.215. However, with some bullish prospects ahead for the Dollar, we might see Euro range between 1.21-1.225 for the next 2-3 sessions. There is near term resistance on weekly candles near 1.225 which should hold for now.
Dollar-Yen (111.01) has been trading around 111 for the past 2-3 days and we could expect an upmove towards 112 in the next couple of sessions as the Dollar shows signs of strengthening.
Euro-Yen (135.96) has been inching towards 136 for the past 4-5 sessions and having finally seen a high of 136.02 yesterday, we can expect another week of slow upmove before it tests resistance near 137 on the daily candles.
Pound (1.3901) as expected, breached resistance near 1.385 on the daily candles once again and is now trading near 1.39. It might now look to test higher resistance near 1.41 on the weekly candles in the coming week.
The Aussie (0.8013) has finally moved past the important resistance of 0.80 on the weekly line chart. We might have to wait for a couple of sessions for this breach to be confirmed, in which case, the next target for the Aussie would be 0.82 (seen as higher resistance on the 3 day line chart).
Dollar-Rupee (63.8575) could come down towards 63.70/60 in the near term. The Dollar Index’s movement for the next few sessions could prove to be an important indicator for Dollar-Rupee. While the Dollar Index stays below 91, we might not see Dollar- Rupee go past 64.
INTEREST RATES
US yields have touched new highs as unemployment data in the US exceeded expectations and built on the positive sentiment created by yesterday’s Beige Book release by the Fed. As investors move from US debt to US equities, the 10 Year (2.6311%) has shot up past resistance on the short term chart near 2.61% much earlier than expected. Similarly, US 5 Yr (2.4231%) , US 2 Yr (2.0475%) & US 30 Yr (2.9089%) are all up. With such a rise in yields, we could however expect some inflow into US debt next week, leading to consolidation near current levels before the next rise.
The rise in yields have provided some pause to yield curve flattening with yield differentials between US 10 Yr – 5 Yr (0.208%) & US 30Yr – 10Yr (0.278%) rising and indicating that respective supports near 0.19% and 0.24-0.25% will hold for the time being.
Japanese 10 Yr yield (0.084%) is continuing its ranging between 0.07% and 0.088% on short term charts while the 5 Yr (-0.08%) and 30 Yr (0.83%) show some potential for further rise towards resistances at -0.1% and 0.85% respectively on the long term charts.
