STOCKS
Dow (25451.06, -0.30%) saw a slight dip but this is temporary and seem to be part of the normal correction within the overall uptrend that may target 26000 or higher in the medium term.
Dax (12860.40, +0.40%) tested resistance near 12900 and could move sideways for a couple of sessions before again attempting levels near 13000 and higher. In the medium term, there is scope for an upside of 13100. Overall Dax looks bullish towards 13100 in the medium term with small corrections.
Nikkei (22584.47, -0.56%) is coming off from 22800 tested last week and while important resistance near 23000 holds, there is scope for Nikkei to come off towards 22400-22200 levels in the coming sessions. A break above 23000, if seen in the medium term, would trigger bullishness in the longer run and drag Dollar Yen to the upside.
Shanghai (2876.83, +0.11%) is trading below the resistance zone of 2900-2950 and while that holds, some sideways consolidation is possible. In the longer term, we may expect Shanghai to move up towards 2950 and beyond.
Nifty (11278.35, +0.99%) looks bullish while above 11200. Need to see if the index opens higher and continues to move up today also. While bullishness persists we may see a rise towards 11400 before a dip from there is seen.
COMMODITIES
Nymex WTI (68.82, +0.19%) has immediate support on the daily candles and while that holds, an immediate fall below 68 looks unlikely. A rise from 68 is possible this week, targeting higher levels near 71. Near term looks bullish above 68.
Brent (74.22, -0.09%) has been stable in the last 3-sessions and could move up towards 76 from where a short dip is possible.
Gold (1228.80, +0.47%) could spend some time in the 1210-1240 region before trying to break on either side. A maximum downside of 1200 is seen in the near term followed by a rise which is expected to start soon.
While above 2.70-2.75, Copper (2.7885, -0.48%) is likely to move up towards 2.90-2.95 in the coming sessions. A re-test of 2.70 is possible while below 2.95.
FOREX
Euro (1.1650): Inspite of record US GDP Q2 growth figures, Euro did not weaken much on Friday since the data could not surpass expectations. The BoJ and FOMC meets this week could possibly weaken the Euro if there is a hawkish tilt to both the Central Banks’ policy statements. There is a chance that support at 1.16 could be broken this week and lower support near 1.150-1.145 (seen on daily line chart) – could be tested in 2 weeks time. The alternative scenario is that the Euro sees 1 more week of ranging between 1.1725-1.16 before deciding further direction.
Dollar Index (94.74): The FOMC meet this week could strengthen the Dollar Index as the overtones in the policy statement could be hawkish (rate hike not expected). If that happens, a rise towards 95.5 is likely. The 95.5-96.0 resistance zone is important and a breach above that is uncertain. If it happens, it could make the Index bullish for the next 1-2 months.
Dollar Yen (111.12): Dollar Yen is still trading near the trendline support at 111. Higher up, there is crucial resistance near 112.5 on weekly candles. Lower down, there are interim supports at 110.5 and 110.0. If the BoJ (in its meet over today-tomorrow) decides to bring in even slight tightening to its loose monetary policy (of which, there are some rumours), then it might lead to strength in the Yen and hence, a break below 110.
Euro Yen (129.47): Support near 129.4-129.2 on daily line and weekly line charts are holding for Euro Yen currently. However, we could see this support break in the next 2-3 sessions as the Euro could weaken while the Yen could strengthen. Below 129.4-129.2 there is crucial horizontal support on weekly line chart near 127 which could then be tested in 2 weeks time.
Pound (1.3099): Pound could be bearish towards 129 (channel support on daily candles in this week). A downtrend below 1.312-1.313 in this week would also make it break the 89 weeks MA, which could be a sign of further bearishness ahead.
Dollar Rupee (68.655): Dollar Rupee could range in the 68.50-69.10 zone in this week. Weakness in Yuan and Euro may impact Rupee strength negatively while a rising Nifty could be the lone source of Rupee strength.
INTEREST RATES
US 2nd Quarter GDP grew 4.1% which mostly met expectations (in some cases, was less than expected). Hence, inspite of being a record growth figure, it couldnt raise US yields much. US PCE growth in the 2nd quarter came in at 1.8% (less than the 2.5% growth in Q1) and might have also contributed to US yields seeing a slight decline.
The FOMC and BoJ meetings this week will be crucial for yields. Last week’s surge in global bond yields was primarily due to rumours that the BoJ might be thinking of bringing in some tightening to its loose monetary policy. Any such indication in its policy tomorrow could lead to a further bond selloff, thereby raising US and Japanese yields. Moreover, the FOMC is expected to be hawkish (although a rate hike is not expected in this meet).
Japanese 10 year yield’s (0.11%) breach of resistance on short-term chart near 0.09% could sustain if the BoJ indicates any tightening in tomorrow’s policy statement.
US 10 year yield (2.96%), 30 Year (3.09%), 5 Year (2.84%), 2 Year (2.67%):
The US 10 year yield’s 2.95%-3.00% resistance zone could become weaker if the BoJ tightens its policy this week. If that doesn’t happen, we could again see a dip towards 2.90%.
