STOCKS
Dow and Dax may remain range bound with some possibility of moving higher in the medium term. Nikkei is trading above support and looks bullish while Shanghai may fall in the near term.
Dow (20090.29, +0.19%) and Dax (11549.44, +0.34%) closed at slightly higher levels. While Dow could remain in the 20200-20000 region for at least the next couple of sessions, Dax could test 11680-11820 region while support near 11400 holds in the near to medium term.
Nikkei (18875.57, -0.19%) is trading just above support near 18650 and if that holds, the index could bounce back towards 19000-19200 levels in the near term. But we need to keep a close watch on Dollar-Yen (112.13) which if breaks below 111.70 could pull down Nikkei with itself.
Immediate resistance on Shanghai (3141.53, -0.38%) is holding well for now and we could possibly see a fall towards 3125-3100 before pausing.
Nifty (8768.30, -0.37%) looks potentially bullish towards 8900 and could well move up in the next few sessions. All eyes on the RBI policy meet today which could also possible trigger an up move in case the central banks cut rates by 25bps.
COMMODITIES
Gold (1234.90) is stalling near our target/resistance of 1240 with no sign of fatigue yet but the highly overbought state of the metal and the stronger possibility of a reversal in Dollar in the near term warrant caution. In case, it rises and sustains above 1240, then much higher levels of 1280 may come into consideration but for now that remains the alternative scenario.
The bullish momentum in Silver (17.7290) remains intact above 17.60-50 which may push it to 18.00 or even 18.40 but any weakness in Gold may affect this precious metal too.
Brent (54.52) and WTI (51.53) are testing their immediate supports right now below which the chances of our preferred upside breakout from their respective 6-week ranges of 53-58 and 50-55 may weaken in the near term.
Copper (2.663) is bouncing back from the immediate support of 2.61 and may trade sideways in the range of 2.61-2.70 for the next few days before the next trending move.
FOREX
The initial signs of a bullish reversal in Dollar are visible but further confirmation required. Rupee will be dependent on the RBI meet today more than the global cues.
Dollar Index (100.31) has given the initial signal of a reversal to the upside in line with expectations but still needs further confirmation in the form of a break above 101.00. The Dollar bulls need to keep it above 100.15-00 to keep the chances of testing 101.00 open.
Euro (1.0685) has lost the upside momentum and the near term path depends on its success to hold above 1.0650 levels. If it manages to stay above 1.0650, then it may consolidate sideways in 1.0650-1.0800 for the next few sessions but a break below 1.0650 may drag it down to 1.0550-25 levels.
Dollar-Yen (112.12) has recovered above 112.00 just as expected and the downside may be arrested in the near term with chances of a rally to 114-115 getting slightly stronger now despite the downtrend still in play.
Pound (1.2473) had broken below the near term support of 1.24 but bounced back sharply on the back of an external member of the UK’s Monetary Policy Committee advocating a rate hike in the near future. The currency may trade sideways in the modified range of 1.2350-1.2700 for the coming few sessions.
Aussie (0.7638) is stuck in the narrow range of 0.76-0.77 for the last 3 sessions and but another fresh high near 0.7750 may be seen by the end of the week.
The near term path for Dollar Rupee (67.41) may be set by the RBI meet today and we prefer to wait and watch till the dust settles.
INTEREST RATES
The US 10-5Yr spread (0.54%) has come off from resistance levels and could fall towards 0.52% in the coming sessions. This could possibly indicate that the 10YR (2.38%) may fall in the near term towards 2.25% while the fall in the 5YR (1.84%) could be less compared the 10Yr yield.
The 30-5Yr (1.17%) and the 30-10YR (0.63%) are trading well above the horizontal supports and could move up towards 1.25% and 0.75% respectively in the near term.
The Japanese 30YR (0.881%) has been steadily rising since Jul’16 and could test resistance near 0.90-0.95% where it could see some correction towards 0.8-0.7% before again moving up. The 10Yr (0.10%) could face some rejection near 0.15% which could lead to a fall towards 0.10-0.00% in the medium term.
The UK yields are falling sharply. The 5YR (0.46%), 10Yr (1.39%) and the 20Yr (1.87%) could possibly pause just below current levels and move up a little this week.
