STOCKS
Signs of tightening liquidity is visible as the central bank of China refrained from injection short-term funds into the banking system. This could have led to a fall in stock prices yesterday. Shanghai (3245.91, -0.22%) came off slightly yesterday but is testing important support on the daily charts. A bounce back towards 3275 and higher could be expected in the near term.
Strong US Consumer confidence data seem to have boosted a rise in Dow (20701.50, +0.73%) which rose from levels near 20520 yesterday. A rise back towards 21000 may be expected in the next couple of sessions.
Dax (12149.42, +1.28%) looks bullish for the near term. There is scope of rising towards 12220-12300 levels in the medium term.
Nikkei (19197.35, -0.03%) could move up towards 19400 and higher in the near term. Cues from the US-Japan yield spread indicate some up move in the near term. But on a medium term, Nikkei remain consolidative within 19600-18600 region.
Nifty (9100.80, +0.61%) is holding well above immediate support near 9000. A couple of sessions could be spent in the 9000-9200 region before a fresh rally is seen. Below 9000, supports are seen near 8990 and 8960 respectively. Overall near term looks bullish.
COMMODITIES
Gold (1248) is trading below 1264, which is the upper band of its recent trading range of 1213-1266. A close below 1239 could open up lower supports at 1213 and 1200 respectively.
Silver (18.07) is also trading within the range of 17.81-18.35.In case of any fresh buying momentum in copper above 2.70 could restrict the downside in the near term for silver. The trend is neutral in the near to medium term time frame for bullion thus sideways consolidation could be seen.
We would like to repeat our forecast dated 23rd March-17 on Copper (2.66). “Copper (2.62) found support at 2.57 levels. While 2.57 hold, a bounce to the interim resistance 2.68-70 can be seen. 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 the chances of a close above 2.70 have increased.”
Both Brent (51.45) and WTI(48.54) have found support and trading within the range of 50-52.80 and 47-50.30 respectively. This bounce was expected and it may continue for a few sessions more. We will remain bearish while Brent and WTI are trading below of their resistances of 52.8 and 50.30 respectively. Market will remain volatile today as U.S. weekly crude oil inventory data will be published at 8:00 p.m IST.
FOREX
The US consumer confidence in March has surged to a 16-year high, pointing to fresh momentum in the economy and boosting Dollar. Pound is hurt by the UK PM signing the letter to trigger Brexit formally.
In line with expectations, Dollar Index (99.72) has bounced after making a low at 99.85, right in our support zone of 99.00-98.50 and a break above 99.90 may extend the bounce to 100.70-101.00.
Euro (1.0818) has reversed from 1.09, a bit short from our target of 1.10 as both the German-US 2Yr & 10Yr have turned down (Check Interest Rates section). A break below the immediate support 1.08 can confirm a near term reversal to the downside and open up lower targets of 1.07. The price action now at 1.08 may be the decider for the week.
Dollar-Yen (111.23) has bounced from 110.00 on the back of worse than expected Japan retail sales data and the general Dollar strength in the last session. It remains to be seen if the immediate resistance at 111.50-60 can be overcome to open up 113.00 to the higher side. A failure near 11.50-60 can resume the major downtrend and trigger the lower targets of 109.40 and 108.50 again.
Pound (1.2411) has crashed from 1.2600, a bit short of our target/resistance of 1.2650-1.2700 and now the support 1.2370-60 is being tested. Most of the possible damage from the Brexit has been discounted by the price but a break below 1.2360 may drag the currency much lower.
Aussie (0.7646), after a brief foray below the support of 0.76, has bounced back on firmer base metal prices (Check Commodities section). The sideways consolidation in the range of 0.7600-0.7750 is not expected to change immediately.
Dollar Rupee (65.04) has opened up lower target/support of 64.80-60 with a closing below 65.20. Immediate resistance comes at 65.20 now.
INTEREST RATES
The US yieldshave moved up slightly and could continue to move higher for some more sessions before re-testing important resistances. 3.20%, 2.6% and 2.1% are the respective resistances on the 30Yr (3.0350, 10Yr (2.43%) and the 5yr (1.98%) which could be tested in the coming sessions before again falling off from there.
The US 10-5Yr (0.45%) is testing support near current levels and could bounce back over the next couple of sessions to rise again towards 0.475%. this could indicate a sharper rise in the 10yr yield compared to the 5yr.
The German-US 2YR (-2.01%) has faced some rejection just below the resistance near -1.95%. While this holds, the upside for euro could be limited just now and we could see a small corrective dip in both Euro and the yield spread.
The German-US 10YR (-2.04%) is holding well for now and this could push the yield spread towards -2.10% in the coming sessions.
The US-Japan 10YR (2.36%) has bounced from levels near 2.30% and could move higher towards 2.4% in the near term. This could possibly pull up Nikkei and Dollar-yen in the coming sessions.
