STOCKS
Dow (26252.12, +0.16%) was stable yesterday No major movement expected just now. Trade within 26000-26500 is possible in the near term.
Dax (13414.74, -1.07%) came off from 13600 to re-test 13400 again in a single session. While above 13400, there could be chances of a rise towards 13600 or higher again in the coming sessions; else a fall back to levels near 13300 or lower would be expected.
Nikkei (23721.28, -0.92%) has come off a bit as weakness in dollar brings down USDJPY to levels below 110. A fall back towards 23600-23500 is possible in the coming sessions while the Dollar Yen trades lower.
Shanghai (3545.36, -0.40%) is slightly down today but is likely to hold below immediate resistance near 3570 as seen in the 3-day candles. 3510-3570 could be the region of trade for a few sessions. Only on a breaka above 3570, we may look at higher levels of 3600.
Nifty (11086.00, +0.02%) and Sensex (36161.64, +0.06%) were unable to sustain at intra-day highs yesterday. It would be important to see where the indices close today. Another leg of rise, if seen today could take the indices to new highs else some consolidation can be expected for a few sessions. Note that a maximum upside of 11400 on Nifty and 36750 is what we may consider on the upside. While below these levels, we still look for a sharp correction that could begin soon; else a break above 11400 and 36750 respectively will force us to review our targets.
COMMODITIES
Brent (70.90) and WTI (66.16) have both risen sharply and is currently trading above our earlier mentioned resistance levels at 70 and 65 respectively. Both are looking strongly bullish just now as the US stock inventory declined. Also supply restrictions from a group of producers of OPEC and Russia are expected to last throughout 2018 and that could be supportive of crude bullishness. Also the weakness in the US Dollar combines to aid a rise in the Crude prices.
Gold (1359.70) did not stop near 1345-1350 and has moved up beyond the interim resistance contrary to our expectations. While above 1350, a rise towards earlier high of 1374 looks possible in the next few sessions. Gold looks bullish.
Copper (3.2275) tested almost levels of 3.10 yesterday but has now recovered to levels above 3.20. While the rise continues, we may see the price heading back towards 3.25-3.30 in the near term.
FOREX
Dollar Index (89.069) has dropped even further after the US Treasury Secretary indicated from Davos that the US likes a weak dollar since it helps in trade. Although there was an attempt by the White House to undo the damage, the Dollar is now trading weaker against all major currencies. On the daily and weekly line charts, we see some support near 88.5. This should hold in the near term. The ECB meeting today would also be important in determining how the Dollar Index behaves in the near term.
Euro (1.2423) against our expectations has broken resistance near 1.2320-1.2330 on the daily candles. The crucial resistance near 1.25 on the weekly line charts might not be tested in the near term, as a dip from current levels can be expected. The ECB meeting could well be an important factor which brings about some consolidation in the Euro.
Contrary to what we expected, Dollar-Yen (109.13) is trading below support on daily candles (near 109.5). The next few sessions will give some clarity on whether it goes back above this support and respects it, or, drops further to test support near 108.75 on the weekly line charts.
Euro-Yen (135.57) continues its movement in a very narrow range of 135.3-135.7, just below 136. As mentioned yesterday, we might have to wait for a couple of sessions to get more directional clarity on whether it will first drop to test support near 134 on daily candles or, resume its rise towards resistance at 137.
Pound (1.4273) has also strengthened against the Dollar and has now broken resistance on weekly candles near 1.41-1.42.We will have to wait and watch if some near term strengthening of the Dollar can pull Pound back below this resistance level near 1.42.
Dollar Rupee (63.5025) has also dropped marginally in morning trade, reflecting Dollar weakness. It could now see a drop towards 63.40 today.
INTEREST RATES
US 10 Yr (2.6428%), 30 Yr (2.9259%), 5 Yr (2.4267%) & 2 Yr (2.0721%) are again all up as the recent volatility in US yields continues. US 10 Yr might just have found a support near 2.61%-2.62% and could now attempt to rise higher while it stays above this level. The 30 Yr might look to respect resistance near 2.92% in the near term.
Japanese 10 Yr (0.088%) has gone back up again after yesterday’s drop in response to the Bank of Japan’s apparent dovish stance. It is broadly continuing its ranging between 0.07% and 0.089%, which might continue for some more sessions. The ECB meeting today could again bring about some shift in the bond market sentiments and hence it should be watched closely.
