STOCKS
Globally stocks are mixed. China looks negative while Europe and US looks potentially bullish. Japanese and Indian stocks could remain ranged in the near term.
Dow (21012.28, +0.03%) is almost stable and is trying to slowly inch up towards 21050-21100 in the next few sessions. Overall we may see a test of decent resistance near 21200 in the near term.
Dax (12694.55, -0.18%) saw it’s first dip in the last 12-13 sessions. If the dip continues, we may see a fall towards 12600-12500 levels before again rising back to test 12800 in the near term. A break above 12800 could take it higher towards 13000 but it could take some time.
Shanghai (3062.38, -0.53%) is trading below our expected 3075 levels and while that holds, we could see a fall towards 3050-3000 in the near term. Only a sustained recovery above 3100 could negate the near term bearish possibility.
Nikkei (19868.25, -0.14%) saw its first dip in the last few sessions from levels below resistance near 20000. While that holds, a short dip to 19600 is possible in the coming sessions. Unless we see a break above 20015, we may not expect a further rise just now.
Nifty (9314.05, +0.31%) could trade within 9400-9300 for a few more sessions before deciding further course of direction. For now we may expect a rise to 9400 over today and tomorrow.
COMMODITIES
Muted price action has been seen in Gold (1229) as it is trading within the narrow trading band of 1220-31. If these levels hold on a closing basis then sideways consolidation within 1220-1260 continues. Need to keep a close watch on the price action in Dollar Index (99.01) which could give some cue on further Gold direction. We will remain bearish while it is trading below 1256-60 levels and a close below 1220 could open up 1186 levels as well.
Silver (16.19) is highly oversold in short term chart and a bounce towards 17 levels is highly anticipated. But we will remain bearish on silver while it is trading below 17.50 levels.
Copper (2.48) has found resistance at 2.54 levels. Only above 2.68, higher resistances of 2.80 can come into consideration. In the medium term 2.44 are going to be a strong support now but a close below that could open up 2.40-35 ;eves as well.
The energy segment is showing no sign of near term recovery from its recent fall. The interim resistance of 49.20 in WTI and 51.30 in Brent might be tested within couple of sessions. As discussed during last week, the preference may remain bullish in the extreme short term due to oversold condition but the overall bias will remain bearish while Brent (49.84) and WTI (46.87) are trading below 53 and 51 levels respectively.
Brent-WTI 3 Days spread is at 2.89, which may find resistance at 3.00 levels and could come down towards 2.00. Gold-WTI spread (26.39) also may find resistance at 27.00 levels and we could see 24.5 levels within few days of time.
FOREX
No fresh triggers in the market and the majors may settle in moderate ranges in the near term. Dollar Yen has broken out of a 5-month long channel after worse than expected earnings in Japan. Labor cash earnings for Mar’17 came at -0.4% against an expectation of a rise of 0.5% and the Feb’17 figure of +0.4%.
Long liquidation in Euro (1.0930) has driven it lower but the bears still need a break below 1.0900-1.0880. Otherwise, another bounce towards 1.1000 from the support can’t be ruled out. The chances of sideways consolidation in 1.09-1.10 for a few sessions are a distinct possibility with a breakout from this range required for a directional move.
Dollar Yen (113.20) has broken above the resistance of 113.00 and tested the next minor resistance of 113.39 above which the rise can extend to 114.60-115.00. Bias bullish.
The weakness of Euro and Yen have pushed Dollar Index (99.11) higher but unless a break above the resistance of 99.50 is seen, the bullishness can’t be relied upon. In case, Euro begins to oscillate in the range of 1.09-1.10, Dollar Index may follow suit by trading sideways in the range of 98.50-99.50 for the next few sessions.
Pound (1.2942) continues its pause mode with the immediate resistance coming at our target of 1.3000 and immediate support at 1.2900 followed by 1.2840. Bias remains bullish with a fair possibility of horizontal trading in 1.2840-1.3000 in the near term.
Aussie (0.7361) is gradually negating the chances of any good recovery as it extends the decline due to the weakness in commodities. 0.7300 is in consideration now as the next downside target but it remains to be seen if it manages to trigger a bounce or not.
Dollar Rupee (64.31) is trading at 64.34 in the NDF at the moment and we still wait for a breakout above 64.40 before the higher levels of 64.70-75 can be considered. Till then, the chances of a retest of 64.20 and 64.00 remains open.
INTEREST RATES
The US yields have moved up as expected and looks bullish for the near term. The 5Yr (1.91%), 10Yr (2.38%) and the 30Yr (3.02%) are up from 1.88%, 2.35% and 2.99% respectively and looks bullish in the rest of the sessions this week.
The UK yields have risen well in the past few sessions and may head higher in the near term. The Japanese yields have also risen and could head higher in the coming sessions. There is some room on the upside for at least the next 4-5 sessions.
The German-US 10Yr (-1.96%) and the 2yr (-2.00%) are almost stable while the Euro seems to be much volatile now. It has come off from resistance near 1.10 and while that holds, the yield spreads could remain stable. The 10Yr yield spread may come off towards -2% but the 2Yr yield spread may still have some room on the upside.
The Japan-US 10Yr (2.34%) is moving up taking the Dollar-Yen to higher levels as expected. We could see some more rise in the near term.
The 10Yr GOI (6.9282%) has come off in the last 2-3 sesisons from resistance near 7% and while that holds, we could see the fall extend to levels near 6.90% or lower in the near term.
