STOCKS
Dow (26145.99, +0.57%) is overall stable and trying to move up from here. The index is in the near term up trend and may move up towards resistance near 26500. Immediate support is seen at 25750.
Dax (12055.55, +0.19%) has moved up in the last 2-sessions and may continue to rise towards 12200-12300 in the near term., Initial support near 11900 has held well for now and could keep the index higher for at least the next 4-5 sessions. Channel resistance is visible near 12300 on the daily candles.
Nikkei (23042.83, +0.97%) has moved up sharply and is heading towards 23000 resistance. This would be the 4th time that the index is approaching 23000 since May’18. Failure to break above 23000 could take it back towards 22200; else a break above could trigger a sharp upmove in the medium term.
Shanghai (2683.38, -0.12%) bounced back from 2650 but a break above 2700-2750 levels is necessary for the index to continue to rise in the near term. Unless a sustained rise above 2750 is seen, we cannot negate further bearishness in shanghai in the near term.
Nifty (11369.90, +0.73%) while above 11200, may move up towards 11800-12000 in the near to medium term. View is bullish for the next few sessions.
COMMODITIES
Brent (78.34) has resistance near 81 on the 3-day line charts and an eventual rise to test the resistance is possible in Brent. A fall below 78 just now could possible lead to a short term correction before resuming the upmove.
WTI (68.84) has also dipped slightly but looks bullish while above support near 66. A test of 72 or even 74 looks possible in the medium term.
The Brent-WTI spread (9.71) is coming off from resistance and could fall towards 8 in the medium term. This could indicate some corrective fall in Crude prices in the medium term.
Gold (1209.50) has also risen sharply and needs to break above 1220 to rise higher in the near term. Above 1220, we could see a test of 1240/50 soon.
Copper (2.6915) has risen sharply, respecting the long term support. While above 2.65, the prices could move up towards 2.75-2.80 in the near term.
FOREX
The Turkish Lira (6.127) strengthened after the Turkish Central Bank raised interest rates by 625 bps. Moreover Draghi’s optimism on Euro zone inflation has increased chances of Euro breaching the crucial 1.17 resistance. Could be bullish for INR too.
Euro (1.1692) breached the 1.165 resistance after Draghi sounded optimistic about the Euro zone inflation trajectory post the ECB meet yesterday. It is now at crucial resistance near 1.17. A breach could make it bullish towards 1.180-1.185. Looking at the bounce from 1.13 on weekly candles, the chances of a breach of 1.17 are high now.
Dollar Index (94.51) broke below support near 94.8 yesterday as US CPI in August came out below expectations. It has support now at the 21 weeks MA (94.40). A break below it would make it bearish towards 93.5-93.2, chances of which are quite high.
Dollar Yen (111.90) has breached resistance on daily candles. A rise towards resistance near 112.5 on weekly candles could now take place in the next week. A breach of 112.5 would then open up the upside towards 113.20.
Euro Yen (130.85) is breaching resistance near 130-131 on daily and 3 day candles. It could move higher towards the 55 weeks MA near 131.41 now. A rise towards 1.175 on Euro and 112.5 on Dollar Yen (as forecasted above) would make it breach the 55 weeks MA, which would be very bullish.
Pound (1.3113) has breached resistance near 1.31 on daily candles on broader Dollar weakness. It could now have some resistance provided by the 21 weeks MA near 1.3207 – a breach above this level would be very bullish for the Pound, making it target 1.34 in the weeks ahead.
Aussie (0.7189) has bounced from the long term support @ 0.71 and has important resistance on weekly line chart near 0.72. A breach of 0.72 could quickly take it towards resistance on 3 day candles near 0.73 – a breach of 0.72 could also suggest that it has bottomed out at 0.71.
Dollar Rupee (Wednesday Close: 72.19; Current Offshore NDF: 71.60) With the Turkish Lira and Euro strengthening yesterday, we might see a gap down opening in USDINR near 71.80-60. Increasing possibility of 72.91 having been the top.
INTEREST RATES
Although the ECB maintained status quo in its policy yesterday, Draghi’s optimism on the inflation trajectory has made the markets start expecting a rate hike in Sep 2019. Hence, inspite of the dovish policy and reduced growth forecasts, German bond yields haven’t dipped much.
German 10 year yield (0.42%) still looks like it could rise towards 0.45% in the near term. The German 5 Year yield (-0.15%) also looks bullish towards -0.10%. The 30 year yield (1.09%) could rise some more towards resistance coming up near 1.15%.
US CPI for August was below expectations with the month on month growth in Headline CPI being 0.2% instead of the expected 0.3%. However, this hasnt resulted in a sustained dip for US yields – maybe due to news on Wednesday suggesting that the US might be looking to reignite trade talks with China. More developments on this front could take the US 10 Year yield (2.97%) to the psychologically important 3% resistance. We currently don’t prefer the 3% level to be breached. Given the prevailing risk aversion amongst investors globally, we have been saying that the May high of 3.125% might have been the top for the US 10 Year yield for 2018 – currently we hold on to this view.
