STOCKS
23250-23200 levels are still open for the Dow (24083.83, +0.25%) while the index trades below 24500. Dax (12422.30, -1.02%) is down sharply and may come off towards 12100 if it does not bounce back immediately from 12300. Near term looks bearish for both Dow and Dax.
Watch resistance near 22600 on the Nikkei (22333.91, +0.53%). Currently trading within narrow region, Nikkei may inch up towards 22600 before coming off from there sharply. Near term could be stable to bullish but overall the index looks bearish for the longer run.
Shanghai (3089.18, -0.92%) is likely to remain trapped in the 3050-3150 region for a few more sessions. Range trade could continue in the near term.
Nifty (10570.55, -0.41%) is stuck near the 10600 region and is unable to decide which direction to take up for the medium term. While some consolidation may continue this week, some fresh trigger could be seen in the early sessions of next week.
COMMODITIES
Brent (74.42) is trading above 74 just now but while the resistance near 76.0-76.5 holds, there could be some pause in Brent. A break above 76.50, if seen by next week could open up chances of testing 78 on the upside. Else some consolidation followed by a dip is possible by next week.
Nymex WTI (68.41) has important near term support at 67 which if holds could push the price to higher levels of 69.0-69.5. For now 69.50-67.0 could be the trade region for the coming sessions.
Gold (1325.20) dipped in line with our expectation and could test 1310 on the downside. Support near 1310 is likely to keep the price stable for the medium term. Need to watch price action at 1310. A break could open up chances of 1290-1280 in the longer term.
Copper (3.13) is stable since the last few sessions stuck within the 3.18-3.12 region. While the price could continue to remain so for the next few sessions, bias is on the downside towards 3.10 or lower.
FOREX
Dollar index (91.17) seems to have decisively breached the 90.5-91.0 zone, thereby breaking crucial resistances on all charts (daily, 3 day and weekly). This recent strengthening of the Dollar might have been aided by the upmove in US yields, which in turn, has happened due to positivity around US economic growth. Our Apr ’18 Euro report’s forecast of medium term Dollar bullishness after May/Jun seems to be happening earlier. The ECB meeting later today could be important. Any increase in hawkishness from the ECB could still pull the Dollar down. Let’s wait and watch.
Euro (1.2172): Euro is again testing the lower end of the crucial 1.225-1.215 zone and seems to be turning bearish for the medium term. Crucial supports on 3 day and weekly candles seem to have been broken decisively. The ECB meeting later today could be the final decider of whether the Euro will bounce back from 1.215 or not. Right now, it seems increasingly unlikely that the Euro will gain any significant strength from here. Our Apr ’18 Euro report’s preference for bearishness in the Euro after May/Jun looks likely to happen earlier.
Dollar Yen (109.37) : Dollar Yen has risen past the 21 WMA (108.95) and looks like it could now target levels near 110. This rise has been in line with our Apr ’18 Yen report. In the same report, we had expressed preference for Dollar Yen to turn bearish after testing 110 (max 110.5), which is seen as the previous high reached in Feb beginning.
Euro Yen (133.14) has continued to stay near 133 as our predicted moves in the Euro (towards 1.225) and Dollar Yen (towards 108.5) didn’t happen. In the near term, Euro Yen could stay below 134 if the Dollar Yen dips from 110.5 and if the Euro moves below 1.215. Next month could see Euro Yen dipping to 131 or even lower.
As mentioned yesterday as well, Pound (1.3941) seems to be pausing in its downmove towards crucial long term support level near 1.385 on weekly line chart. We are however expecting it to test this level by next week possibly. If this support also breaks, Pound could turn very bearish in the medium term. However, our preference is for it to hold, in which case, we could see a rally towards long term resistance level of 1.46 in the weeks ahead.
Dollar Rupee (66.9050): Could see 66.70 today. Then 67.20. Then correction of 50-70 paise.
INTEREST RATES
The US 10 Year Yield and 30 Year yield are both breaking respective resistance levels near 3% and 3.2%. The ECB meeting today could be an important determinant for the course of US yields. As mentioned yesterday, any hint of hawkishness from Draghi could be negative for US yields. This recent upmove in US yields has happened on back of positive sentiment around the US economy’s growth (reflected in various data releases of the last 2 weeks). In addition, Crude’s rise towards 75 has also played its part in increasing inflation expectations and fuelling the rise in yields.
US 10 Yr Yield (3.03%), 30 Yr (3.21%), 5 Yr (2.84%), 2 Yr (2.48%):
The US 2 year yield (2.48) is pausing in its upmove towards 2.50% and could see a dip towards 2.40% soon. \
The US 5 Year yield could have its upside restricted by 2.9% in the coming month.
The 10 Year yield (3.03%) has not come off from 3% and is now looking likely to move towards 3.20% over the course of the next month and half.
As we have been saying, the 30 yr yield is breaking crucial resistance near 3.2% just when the 10 year yield broke the 3% level. It could now see an upmove towards 3.4%-3.5% in the coming month and half while the 10 Year yield moves towards 3.2%.
