STOCKS
The tax plan released by Trump yesterday proposed to sharply slash business taxes. It proposed to cut income tax rate from 39.6% to 35% , reduce corporate tax from 35% to 15% and to reduce the seven tax brackets for individuals to 3-tax brackets of 10%, 20% and 35% respectively.
The US stocks have not really moved up at the end f the session. Dow (20975.09, -0.10%) is testing resistance on the daily and 3-day line charts and could possibly come off in the near term. However, when looked at the candle charts, there could be some scope of rising towards 21200-21400 before starting a correction.
Dax (12472.80, +0.05%) could move sideways to create more scope of an upmove. For now 12532 is an important resistance and it could be tested in the next 3-4 sessions.
Shanghai (3112.40, -0.91%) has fallen sharply again coming down to test 3100 levels and looks bearish for the week. A break or bounce from levels near 3100 would decide the next course of direction.
Nikkei (19243.76, -0.24%) is stable just now but could head towards 19620 as mentioned yesterday. Immediate trend is up.
Nifty (9351.85, +0.49%) has been playing out in line with our expectation and could face rejection from resistance near 9400.
COMMODITIES
Muted price action had been seen in Gold (1266).Immediate supports are poised at 1260 and 1239 respectively. Buyers will take every dip as a further opportunity for buying while it is trading above 1239. 1285 could be a level where the price action has to be checked to assess the chances of further bounce to 1305 to 1330 levels.
Silver (17.43) is Oversold on the near-term charts and it is hovering around its crucial resistance at 17.45.A close above that could open up 17.80 levels as well. Immediate support is at 17.02 levels.
Copper (2.57) had failed to close above 2.62 levels. A close below 2.55 could open up 2.48 and 2.45 levels respectively. The bias would remain bearish while it is trading below 2.62-67 levels.
Brent (51.69) and WTI (49.42) have been well supported due to decrease (-3.6M) in U.S crude oil inventory and near term Oversold condition. In a major downtrend like this, the bounces are generally seen as fresh shorting opportunities by the big money with the speculators excited with the fast movement. While we have been expecting a bounce from 51.69 to53.80 in Brent and 49.42 to 51.50 in WTI , we prefer to wait for higher levels to create fresh short positions.
FOREX
Nothing has changed much after the Trump tax plan came out as a page full of bullet points denied all the necessary details to understand anything clearly about it and told of nothing new. It remains to be seen if the BOJ and ECB meet today can trigger any major moves.
Dollar Index (98.89) still hovers just above the make or break support of 98.50 but requires a rise above 99.35 for a confirmed reversal signal and Euro (1.0911) has again come off the highs after being rejected from the major resistance of 1.0950, keeping open the possibility of a downward correction to 1.0840 and 1.0700. Today’s ECB meet may turn out to be a market driver.
It has been another quiet session for Pound (1.2870) in 1.2750-1.2900 as expected which may continue for the last 2 sessions of the week too.
Dollar-Yen (111.22), just as expected, has stalled after hitting a high of 111.77, bang in the middle of our target/resistance area of 111.50-112.00 as it waits for the BOJ meet conclusion due in a few minutes. Support remains unchanged at 110.00.
Aussie (0.7487) has tested and bounced exactly from the lower end of the range of 0.7450-0.7600. The lack of downside momentum may push it up to 0.7550 once again before any large directional move emerges.
Dollar-Rupee (64.12) has resolved the range of 64.20-70 to the downside and now, as long as the resistance of 64.35-45 holds, the path of least resistance points down. Initial support comes at 63.80 which may be revised later to 63.60-50 if needed.
INTEREST RATES
ECB Policy meet is due today. Markets await to watch if there is any indication of an eventual stimulus reduction that Draghi may signal today. The German yields could come off in the near term as they are headed towards near term resistances. The 10Yr (0.35%) could move up towards 0.40% in the coming sessions.
The US yields have fallen slightly. The 5Yr (1.84%), 10YR (2.31%) and the 30YR (2.97%) are down from previous levels of 1.86%, 2.33% and 2.98% respectively. The yields could start coming off again in the near term.
The German-US 2Yr (-1.98%) has come off and is testing the earlier resistance turned support near current levels. A bounce from here could trigger some more strength in Euro in the near term. We need to keep a close watch for further directional cues.
