STOCKS
Overall global equities show signs of bullishness for the coming sessions.
Dow (25119.89, +0.22%) has scope of testing 25250 on the daily candles and may test further upside of 25600 in the longer term as seen on the 3-day candles. Overall near to medium term looks bullish with a possibility of a slight dip from 25250 before resuming the longer term uptrend.
Dax (12661.54, +0.80%) moved up after spending stable and quite sessions in the last 2-days. Dax looks bullish in the near term with an upside target of 12800-13000 levels.
Nikkei (22901.07, +0.90%) has finally broken above 22800, giving bullish signals for the medium term. 22800 is now an important support and while the index trades higher, it could easily attempt 23000+ levels in the coming sessions. Bullishness in Nikkei could also pull up Dollar Yen towards 114 (Refer to FOREX section below)
Shanghai (2810.10, +0.43%) continues to trade in a stable manner and while above 2750, the index could be stuck below 2850 in the next few sessions. This week could see a ranged-trade in the 2750-2850 region before the index attempts a break above 2850 in the medium term.
Nifty (11008.05, +0.65%) bounced from just above 10900 yesterday to resume its uptrend. While the 10850-10900 support region holds, Nifty could attempt to test 11100 in the next few sessions. Upside target of 11200 remains intact for the medium term.
COMMODITIES
Commodities are in a sharp downtrend and under strong bear influence. Could see lower levels in the near term before starting to rise afresh. Crude prices continue to fall on increased supply and a likley reduction in demand from China. Libyan production of crude oil is rising, as is Russian output, and Saudi Arabia is pumping record volumes which is also keeping Crude prices on a downtrend.
Nymex WTI (66.94, -1.67%) has room on the downside towards 65-66 region which could be tested in the coming sessions before starting a fresh rise in the medium term. The current fall if extends towards 65 would pull down Brent also to lower levels. Near term looks bearish.
Brent (71.86, -0.42%) has immediate support near 71 and further down near 69-70 region which is likely to hold and push the prices back to higher levels in the medium term. The next few sessions could remain bearish and see a test of the mentioned supports. We do not see bearishness below 69 just now and would expect an upmove to resume soon.
Gold fell sharply ahead of Powell’s semi-annual testimony yestreday, betting on the Fed raising its key interest rate twice more in 2018, with more than 60% of speculative positions on CME interest-rate derivatives, forecasting a hike to 2.5% or above by year’s end. This favored a strong Dollar and thereby took Gold prices to below $1240 yesterday.
Gold (1228.20, +0.07%) came off sharply to test lower support near 1225 and while that holds, an immediate bounce from here is expected over today-tomorrow. Else, Gold could be vulnerable to further fall towards 1200.
Copper (2.7580, +0.40%) may remain stable while above 2.70. Note that 2.70 is an important support and while that holds, the price could start moving up in the medium term towards 2.90. A break below 2.70, if seen could indicate signal for a long term bearish sentiment.
FOREX
Euro (1.1653): Euro moved up till 1.1745 yesterday (in line with our expectation), but dipped before testing resistance (1.176-1.177) on daily candles. The preference for the next 2-3 sessions is bearish with a test of support on 3 day candles near 1.16 looking likely.
Dollar Index (95.01): Dollar Index bounced from the 8 weeks MA near 94.3-94.4 yesterday and is now looking bullish towards 95.5. A marginal rise in US yields due to optimistic comments from the US Fed Chairman has helped in the Dollar’s strengthening. In the next few sessions, its previous high of 95.53 would be a crucial level. A breach of that is not preferred currently, but if it happens, it could be quite bullish for Dollar strength.
Dollar Yen (112.93): Dollar Yen is breaking above interim resistance near 112.9 on weekly candles. Looking at the 3 day line chart, a test of 114 seems imminent in the next 2-3 sessions. Bullishness in the Nikkei suggests that Dollar Yen could remain bullish till atleast 115 over the next 1-2 weeks.
Euro Yen (131.60): The 55 week MA near 131.58 continues to provide decent resistance to Euro Yen in its upmove towards 133. However, as mentioned yesterday also, this resistance should break in the next 1-2 sessions as the Dollar Yen moves up towards 114.
Pound (1.3110): Pound saw a significant fall yesterday to a low near 1.3070. It is testing horizontal support on weekly candles, which might hold for another week, before a break of support possibly takes place. Pound looks bearish in the medium term.
Dollar Rupee (68.455): Look for a broad range of 68.15-70 over the next week or so, with a bit of a bearish bias.
INTEREST RATES
After US Retail Sales rose decently, the Fed Chairman’s optimistic comments on US growth led to a further rise in US yields. However the rise in short term yields (specially the 2 year yield) was most pronounced as the likelihood of a rate hike in the September Fed meeting is very high now. The US 10-2 year yield curve has flattened to a near decade low at 0.25%. As mentioned yesterday, a fall towards 0.2% by early August is quite possible for the spread.
US 10 year yield (2.87%), 30 Year (2.97%), 5 Year (2.77%), 2 Year (2.62%)
The German – US 10 year yield spread (-2.59%) has against expectation broken interim support on medium term chart.. We are expecting the 10 year spread to not dip below -2.6%.
