STOCKS
The US markets are up ahead of the Tax reform statement from Trump today. Dow (20996.12, +1.12%) looks bullish and could head towards 21200 in the near term. Markets await to see what tax reforms would be done and how and when this would play out.
Dax (12467.04, +0.10%) continues to sustain above 12390 but is close to an immediate resistance near 12532. Only a break above 12532 could bring in further upside and indicate a fresh bull move; else a sharp recovery from 12532 is possible in the near term.
Shanghai (3149.19, +0.47%) is trying to rise from levels above 3100 and if it sustains we could see a recovery towards 3175. Else some sideways consolidation in the 3150-3100 is possible in the near term.
Nikkei (19231.92, +0.80%) is headed towards 19620 in quick succession as Dollar-Yen continues to move up sharply. While there could be some scope of a rise in Dollar-Yen towards 112, Nikkei could be bullish for the coming sessions.
Nifty (9306.60, +0.96%) closed above 9300 in line with our expectation and could face crucial resistance within the 9300-9400 region. This could be a near term top and a sharp fall towards 9100 could follow soon.
COMMODITIES
As mentioned earlier, we see chances of a corrective decline in Gold (1265) that can target 1260-65 at least. Our preferred scenario that the support at 1260-65 will hold is continuing to work well enough for now. The Support region may be expanded to 1239. At the same time, the Resistance at 1305 also looks strong in the near term. As such, we may see some more sideways movement between 1239-1305 early next week.
Silver (17.59) is Oversold on the near-term charts and while the market remains above 17.39, there will be chances of an eventual bounce that can break above 17.80. If that happens on a closing basis, a further rise to 18.33 may be seen swiftly.
Copper (2.57) has been stuck in the range of 2.50-2.67. A close below 2.50 could open up 2.48 and 2.45 levels respectively. Only above 2.67, higher resistances of 2.72 -80 can come into consideration. The bias would remain bearish while it is trading below 2.70-72 levels.
Brent (51.96) is trading within the range of 50-52 while WTI (49.41) is hovering around at our preferred supports of 48.80 levels. If these two rise further due to their near term oversold condition, then 52 levels for Brent and 50.80 levels for WTI would come into consideration .We have U.S Oil inventory data (Forecast: -1.1M Barrels) at 8.00 p.m today, which may add some more clarity towards the price action.
FOREX
The markets wait for Trump to introduce a new tax plan today, cutting the corporate tax to 15% from the existing 35%. Also the BOJ and ECB meet tomorrow can play a crucial role.
Our expectations of a major reversal in Dollar Index (98.78) will be either confirmed or negated within the next 24 hours as the combination of the Trump Tax policy announcement tonight and the ECB meet tomorrow will set the near term path. Chances of a whiplash around the major support of 98.50 before a turnaround can’t be ruled out. While first signal of a bullish rise comes on a break above 99.35, this bullish scenario has to be discarded on a sustained move below 98.50.
Euro (1.0938) is testing the higher resistances of 1.0930-50 contrary to expectations already but it remains to be seen if it manages to rise past and stay above 1.0950. As long as 1.0950 holds, the possibility of a downward correction to 1.07 remains open but on a firm break above 1.0950, the bearish option has to be reconsidered. The picture should be clear by tomorrow.
Pound (1.2840) continues its sideways consolidation in 1.2750-1.2900 with an apparent indifference to the global events and it may remain quiet for the rest of the week too.
Dollar-Yen (111.24) has rallied towards our target of 111.50-112.00 just as expected. Near 112.00 it may stall for a couple of sessions before deciding the next course of action. Immediate support comes at 110.00.
Aussie (0.7515) keeps oscillating in the range of 0.7450-0.7600 as expected but if the interim support of 0.7500 holds today, then a contraction can be seen in the price action which may give birth to a sharp trending move next week, direction unclear at the moment. Wait and watch.
Today’s session is going to be crucial for Dollar-Rupee (64.26). In case the market continues to remain above 64.22-18 AND rises above 64.40, we could be looking at chances of a strong rise in Dollar-Rupee. On the other hand, in case the market breaks below 64.22-18, then a further decline towards 64.00-63.80 may take place. Wait and watch.
INTEREST RATES
The US yields have risen sharply. The 5Yr (1.86%), 10YR (2.34%) and the 30YR (2.99%) are trading higher from 1.83%, 2.31% and 2.95% respectively. Near term looks potentially bullish. The 10Yr could move up towards 2.40% while the 30yr could test 3.0-3.10% in the coming sessions.
The German-US 2Yr (-1.97%) and the 10Yr (-1.96%) have fallen slightly. But we need a confirmed break below -2% to impact the Euro to move on the downside.
The German yields are by themselves heading towards immediate resistance levels and could come off a from there in the early sessions next week.
