STOCKS
Sharp rise seen in the Dow Jones. Nikkei, Dax and Shanghai are potentially bullish. Nifty may face some rejection in the near term.
Dow (20504.41, +0.45%) has risen sharply and is headed towards 20600-20800 levels as mentioned yesterday. While the Dollar Index continues to strengthen above 101, we could see some more rise in the Dow Jones in the near term.
Dax (11771.81, -0.02%) is almost flat. A break above 11820, could take it higher towards 11930-12000 levels in the medium term. The index looks potentially bullish for the near term.
Nikkei (19473.50, +1.22%) has opened higher today possibly because of some recovery in the Dollar-Yen. The broad sideways range of 18600-19600 is still intact and Nikkei may test the 19600-resistance in the next couple of sessions. A break above 19600 is important to turn further bullish in the medium term towards 19900-20100 levels.
Shanghai (3216.80, -0.04%) could test immediate resistance on the daily candles and see slight dips before rallying towards 3300. Overall it may move up along the trend-line resistance.
Nifty (8792.30, -0.14%) has paused near 8800 levels and is hanging around without any clear direction just now. There is room for consolidation for another 2-session after which it has to resolve on either side. A rise if seen could take it to another 100-200 points higher towards 8900-9000 followed by a sharp correction. Else the index could come off from current levels to re-test 8700 and lower in the medium term.
COMMODITIES
Gold (1226.46) is in a shallow corrective mode in the range of 1220-1240 but may test the medium term support near 1215-10 in the next few sessions.
Silver (17.9240) remains in an uptrend with no real momentum. Unless a sharp break above 18.10 is seen soon, a correction to 17.50 may emerge in the next few sessions.
Brent (55.66) and WTI (52.89) are trading exactly at the midpoint of their respective ranges of 53-58 and 50-55 with no directional bias and this horizontal movement may continue for a few more days.
It turned out to be a false breakout for Copper (2.746) above the major resistance of 2.80 and it may remain stuck in the range of 2.70-85 for the next 5-10 days.
FOREX
Dollar has been boosted by the Fed Chair Yellen stating that more rate hikes could be appropriate in the coming months and the hikes wouldn’t be dependent on Trump administration’s fiscal policies.
Dollar Index (101.27) has broken above the immediate resistance of 101.00 and opened up 101.75-102.00 for the current week where a small correction can be expected.
Euro (1.0572) has been in a gradual decline for the last few sessions and may test the support near 1.0530-00 levels by the end of this week.
Dollar-Yen (114.40) has broken above the resistance of 114.30 but the required momentum to take it higher to 115-116 is yet to be visible. The near term trend remains firmly up which may push it higher slowly.
Pound (1.2455) has weakened a bit due to the broader Dollar strength but the horizontal movement in the narrowed range of 1.2400-1.2600 continues which at most may expand to 1.2350-1.2700. Repeat – from a larger perspective, it must be noted that any Brexit related issues are not impacting the currency that much.
Aussie (0.7669) remains in the contracting range of 0.76-0.77 for the 10th session but may break out of the range soon enough. Repeat – while the trend is still up, the proximity of the major resistance near 0.7750-0.7800 warrants caution as the chances of a sudden reversal can’t be ruled out.
There is some scope of Dollar Rupee (66.92) testing lower levels of 66.80 today before again bouncing back towards 66.90/95. Crucial movement would be a break on either side of the 66.80-67.07 region which would decide the further course of the movement.
INTEREST RATES
Overall the yields are mixed. US yields are rising and could find some resistance above current levels while the Japanese yields have some more room on the upside. The German yields could see some fall in the near term.
The US yields continue to rise towards resistance. The 5Yr (1.97%) is up from 1.92% while the 10YR (2.48%) and the 30YR (3.07%) have also moved up from 2.44% and 3.04/5 respectively. The 30Yr may face immediate resistance at 3.10% while the 10Yr also has resistance at 2.50%. The yields are expected to fall in the coming sessions.
The US 10-5YR (0.51%) has not been able to see a bounce from levels near 0.5250% and is now heading towards 0.50% or even lower.
Sharp rise in the US-Japan 10YR (2.38%) from levels near 2.28% has pulled up Dollar-Yen (114.38) from levels near 113.25 seen yesterday. While the spread moves up further, the currency pair could see a rise in the near term.
The Euro has been coming off as indicated by the fall in the German-Us 2YR (-2.04%) and the German-US 10Yr (-2.12%) and unless we see a pause in the spreads, it is difficult for the Euro to pause just now. Near term looks bearish. (Also refer to FOREX section above)
