STOCKS
Dow (25414.10, +0.68%) has clearly broken above 25250, indicating near term bullishness. While the upside momentum is in place, the index may move up towards 26000 or higher in the near term.
Dax (12579.33, -0.87%) seems to be in a whipsaw mode just now trading in the 12800-12500 region without an immediate directional clarity. While above 12500, a rise towards 12900-13000 seems possible. Else the index could drop sharply towards 12300-12200 levels in the medium term.
Nikkei (22592.23, -0.097%) has dipped slightly but could trade in the 22600-23000 region for the week. Thereafter a break on either side would trigger the further directional move next week. Currently Nikkei is trading at important levels and is yet to decide on the upcoming direction.
Nifty (11132, -0.021%) and Shanghai (2892.26, -0.39%) were both stable yesterday with no major movement. Trade in the 11200-11000 region in Nifty is likely to continue in the coming sessions while Shanghai could test resistance near 2950 before coming off from there.
COMMODITIES
Nymex WTI (69.40) and Brent (74.41) are gradually trying to move up and while the rise sustains, WTI could move up towards 71-72 while Brent could test 76+ levels in the near term.
Gold (1232.40) if sustains a rise above 1230, could head towards 1240/50 in the next few sessions. Overall near term looks bullish.
Copper (2.8395) could dip to 2.80 before again resuming the uptrend towards 2.90 and higher. Near term looks bullish.
FOREX
Dollar Index (94.165): Dollar Index is trading slightly below support near 94.2 on daily and 3 day candles. We have been expecting this support to hold in the near term and for the index to rise towards 95-96 in the next few weeks. A decisive break below 94 could negate the near term rise to 95-96. The ECB meet’s outcome today could be the decider on this.
Euro (1.1736): Euro is testing resistance near 1.174 on daily and 3 day candles. 1.174 is also the 13 weeks MA and a breach of the same could make Euro bullish towards 1.185 and higher up towards the 21 weeks MA near 1.195. However, it might all depend on the ECB meet today. If the policy statement gives any indication that the 1st rate hike might happen anytime before Dec ’19, it could result in Euro strengthening. If instead, the indication is for a rate hike around Dec ’19, we could expect the Euro to become bearish towards 1.16.
Dollar Yen (110.76): Dollar Yen is trading slightly below support near 111 on daily, 3 day and weekly candles. There is interim support near 110.5 on daily candles and near 110 on weekly candles. Dollar Yen might still bounce back from these supports back towards 112.
Euro Yen (129.99): As per expectation, Euro Yen did test support near 129.4 on daily and 3 day candles yesterday and now seems to be rising from the support. If we assume that Euro could strengthen after the ECB meet today, near term targets of 1.18 on Euro and 111 on Dollar Yen provide a target near 131 on Euro Yen, which is likely in the next 1-2 sessions.
Pound (1.3202): As per expectation, Pound is very close to resistance on daily candles near 1.32. If the Euro strengthens towards 1.18 today, we might just see the Pound breach resistance near 1.32 and move higher. The 89 weeks MA near 1.3128 is also giving decent support to the Pound. This upmove could be a temporary upward correction in the broader downtrend for the Pound.
Dollar Rupee (68.785): Support at 68.70-65 on Dollar Rupee could break on the back of strength in the Yuan. A hold of the support however would take Dollar Rupee towards 69.10.
INTEREST RATES
News of the US President having succeeded in getting some trade concessions from the EU have lifted US yields. This is in addition to the bullish impact (on yields) of the speculation that the Bank of Japan might be rethinking its interest rate targets.
As mentioned yesterday, German 10 year yield (0.4%) is rising towards resistance near 0.45%-0.50% on short term chart and the ECB meeting today might help in this upmove. However, if the ECB’s policy statement has a dovish tilt, the German 10 year yield might not rise till 0.45% and may instead drop towards 0.3%-0.2% again.
Repeating yesterday’s comment on Japanese yield spreads: Japanese 30-5 Year yield spread (0.90%) has broken above resistance on medium term chart and could now find higher resistance near 0.92%-0.93%. Similarly, the Japanese 10-5 yield spread (0.187%) has also shot up from support and is testing crucial resistance on short term chart. If this resistance breaks, it might be a signal of further bullishness in Japanese 10 year yield.
US 10 year yield (2.96%), 30 Year (3.09%), 5 Year (2.84%), 2 Year (2.66%): The US 10 year yield is moving in the 2.95%-3.00% resistance zone. The longer the 10 year yield stays below this zone, the greater the chances of another correction towards 2.80%-2.75%.
