STOCKS
Almost all major indices have bounced from immediate support levels and could move up for at least the next 2-3 sessions.
Dow (20578.71, +0.85%) has bounced back from support near 20400 as expected. A rise towards 20700 is a possibility in the near term.
Dax (12027.32, +0.09%) is also up from levels near 11930 and could move back towards 12100-12200in the coming sessions if this holds.
Shanghai (3175.86, +0.12%) has moved up from 3150 and is testing important resistance near 3175-3180 levels. In case 3180 produces a rejection, we could see a re-test of 3150 and may be even lower. A sustained break above 3180 is needed to ensure a rise towards 3225 for the near term.
Nikkei (18585.31, +0.84%) is also trading higher while the support near 18227 holds good. At the same time also note that we could see a slight dip from 18650-18745 region in the near term which could possibly bring back the price towards 18230.
9160-9075 is an important near term band for Nifty (9136.40, +0.36%). A break on either side would decide the next course of movement. We should be prepared to a see a fall towards 9000 in case of a break below 9100-9075 levels. But while 9100-9075 holds, we prefer a bounce back to higher levels in the medium term.
COMMODITIES
Muted price action had been seen in Gold (1281).Correction towards 1260-65 can be expected due to near-term overbought condition. We have been expecting 1260 to hold for some time as buyers are taking every dip as a further opportunity for buying. 1301 could be a level where the price action has to be checked to assess the chances of further bounce to 1328 to 1350 levels.
Silver (17.98) had also moved lower in line with our expectation. Immediate trading range could be 17.70-18.35. We think that the corrective phase could be restricted till 17.60-70 levels due to near term oversold condition.
Copper (2.54) has been stuck in the range of 2.50-2.66. A close below 2.50 could open up 2.48 and 2.45 levels respectively. Gradual buying at 2.45-48 levels can’t be ruled out due to near term oversold condition. Only above 2.66, higher resistances of 2.72 -80 can come into consideration.
Brent (53.06) and WTI (50.30) both had moved lower in line with our expectation. They are within their trading ranges of 52.20-53.60 and 50.30-51.70 respectively. Brent may consolidate within these levels for few more sessions though the possibility of a decline towards supports can’t be ruled out, but a close below 50.30 could drag WTI towards 48.36 levels. We will remain bearish while Brent and WTI are trading below 53.60 and 51.70 levels respectively.
FOREX
Dollar Index (99.74) is hovering around its pivot of 99.80 of its entire trading range of 98.80-100.75. If it breaches its pivot then we might see 100.45-80 within 3 to 5 trading sessions.
Euro (1.0716) was rejected from levels near 1.0770 yesterday. We could see a pause in Euro today trading within the 1.0770-1.0680 region. Looking at the German-US 10Yr yield spread (REFER TO INTEREST RATES SECTION BELOW) there could be some possibility that further upside for euro could be limited just now.
Pound (1.2799) is in a pause mode after the recent sharp rise from levels near 1.25. We may see trade within 1.2750-1.29 for the next 2-sessions. 1.29 may act as a decent resistance for the coming sessions.
Dollar-Yen (109.215) could test 109.50-110.08 levels before dipping back to 109-108.5 levels again. Overall some sideways consolidation might be on the cards for the coming sessions.
Aussie (0.7526) could move up towards 0.760-0.761 in the next 2-3 sessions before again coming off towards 0.7450 levels. As mentioned yesterday, the 0.76-0.7450 region could hold for a few more sessions.
Dollar-Rupee (64.56) could open near resistance at 64.70/80 today and may see a dip in the later hours of the session today. It would be important to watch if the pair moves above 64.70/80 or comes off from there to reinforce 64.40/30 on the downside.
INTEREST RATES
The US yields have moved up as expected. We could see some more rise in the near term.
The German-US 2Yr (-1.97%) and the 10Yr (-2.00%) have risen. The 2Yr yield spread has broken above immediate resistance level whereas the 10yr spread is testing important resistance at current levels. In case the 10Yr spread comes off from current levels in the early sessions of next week, we could expect a dip in Euro also in the neat week.
The UK-US 10yr (-1.19%) is trying to come off from a long term channel resistance and while that holds, we could see a fall towards -1.25%. in that case Pound may either consolidate sideways or come down in the near term.
The 10YR GOI may rise towards 6.95-7% if it breaks above 6.90%. Else a fall towards 6.85 or lower is possible.
