STOCKS
Short term rise is possible in the Global equities as there are decent resistances above current levels. While these resistances hold, medium term could witness some more of a fall.
Dow (24635.21, +0.90%) is trading within the crucial 24250-24800 region and while below resistance near 24800, there is scope on the downside towards 24000-23750 levels. While above 24250, it could trade in the 24250-24800 region for a couple of sessions. Break above 24800-25000 is necessary to indicate further bullishness in the longer run.
Dax (12724.27, +0.95%) also have enough room on the downside towards 12300-12200 and these levels could be seen in the medium term on failure to bounce back immediately from current levels.
Nikkei (22458.93, +1.30%) is again headed towards resistance near 22800 and could face some rejection from there which could push back the index towards 22000 or even lower in the longer run.
Shanghai (3083.65, +0.28%) is almost stable. While above 3050, there is some scope that the index may rise higher towards 3100-3150 levels and move beyond. Else we could see some sideways consolidation in the 3050-3100 region for a few sessions.
Nifty (10696.20, -0.37%) has resistance near 10850 and while that holds, Nifty could trade below 10850, targeting levels of 10600-10550. Immediate rise to 10850 is possible in the next 2-sessions before a sharp fall is seen.
COMMODITIES
Brent (76.54) fell from levels near 79 and while the fall continues, we could see a test of 75.0-74.5 on the downside. Near term looks stable with some bearishness.
WTI (66.75) also looks bearish. If the price does not rise back immediately, we could see a fall towards 64.00-63.75 in the near to medium term. A bounce from 65.50 on the other hand could take it back towards 67-68 in the medium term.
Gold (1293.36) is ranged within 1290-1310 as expected. Only a rise above 1310 could indicate a medium term bullish view. While below 1310, downside chances of 1280-1270 remains open.
Copper (3.1034) is trading in the narrow range of 3.04-3.12. A break on either side could be seen soon. It would b difficult just now to predict which direction the price would take but an immediate fall towards 3.04 looks probable in the coming sessions.
FOREX
Dollar index (94.027) again tested the 13 days moving average near 93.7-93.8 on Friday. Our earlier projection of a dip towards the 21 days MA near 93.50 won’t play out if the Index respects support trendline on daily candles near 93.8-94.0. In that case, a rise towards 95 this week is possible. The upside / downside levels for the Dollar Index which, when broken, could confirm bullishness / bearishness in the medium term could be 95.5-96.0 and 93.5-93.0 respectively.
Euro (1.1687): Like the Dollar Index, Euro might also fail to test the 21 days MA near 1.178 and instead fall towards 1.155 in this week. The upside / downside levels for the Euro which, when broken, could confirm bullishness / bearishness in the medium term could be 1.178-1.182 and 1.140-1.135 respectively.
Dollar Yen (109.62) might be forming a downward channel on daily candles with resistance being near current levels of 109.6-109.7. The 13 day and 21 day MA could also provide resistance just below 110. However, there is a possible support trendline near 108.5 as well. While below 110, a break of 108.5 and then 108 could happen, thereby confirming medium term bearishness for Dollar Yen and resulting in a quick downmove to 106-105 (seen as crucial support on weekly candles). However, a breach of 110 would again open up levels near 111.5-112.0. A break of 108.5-108.0 seems slightly more likely given the BOJ’s recent tapering of asset purchases.
Euro Yen (128.14) has moved up further after testing support (124.62) in the downward channel on weekly candles last week. Although charts show scope for a further rise towards resistance near 129.5, we prefer bearishness for both Euro and Dollar Yen this week, which implies that Euro Yen could also target lower levels near 125.00-124.75.
Pound (1.3372): Our earlier projection of bearishness in the Pound might take some time to surface as it might move up towards 1.34 this week (resistance in downward channel of daily line chart). However, after that, we expect it to dip again and continue its gradual downtrend towards 1.30 (support on weekly candles). A break of 1.30 could imply continued bearishness in the medium term.
Dollar Rupee (67.06) : Dollar-Rupee may have Support at 67.00 today. But, it also has important intra-week Resistance at 67.45 this week.
INTEREST RATES
A strong jobs report and wages data in USA led to a rise in US Yields. There are some key data releases (like the US CPI) and also the FOMC meeting next week. Given that a rate hike is more or less certain and would already have been factored in, a significant rise in yields due to the expected rate hike might not take place.
Our May ’18 US Treasury report ( available on demand ) forecasts a near term dip in US yields towards medium term supports near 2.55% (10 Year), 2.9% (30 Year) and 2.2% (5 Year). Dips towards these levels would require some indications of dovishness from the US Fed in next week’s meeting. Let’s wait and watch.
Current yields: US 10 Year (2.92%), 30 Year (3.06%), 5 Year (2.77%), 2 Year (2.49%)
The US 10 year yield and 30 Year yield could possibly get some resistance from earlier support (now resistance) trendline on short term chart near 2.90%-2.95% and 3.10% respectively. This week might see muted movement in yields as the market would be waiting for the FOMC meeting next week. The EU Retail sales data tomorrow could have some bearing on German yields, which in turn could also directly impact US Yields.
Last week, the Bank of Japan had cut the size of its asset purchase programme by 20bn yen, which has led to a rise in Japanese yields. The Japanese 10 Year bond yield (0.05%) has moved up from 0.03% last week and could now move even higher to 0.06% (previous high seen in May).
