STOCKS
Dow (20979.75, -0.01%) came off slightly yesterday but is almost stable near current levels. Resistance near 21170-21200 continues to hold for now; some sideways consolidation is possible in the coming sessions.
Dax (12804.53, -0.02%) is trying to inch up towards 13000 but movements have been very small and steady in the past few sessions. A small dip to 12700 is possible in the near term with an upside limited to 13000 just now.
Shanghai (3110.40, -0.08%) bounced back sharply to levels above 3100 and while the levels near 3020 holds, we could see a rise towards 3170 by next week. A fall below 3020 could be negated just now.
Nikkei (19822.19, -0.49%) continues to remain sideways in the 20010-19700 region and could remain so for some more sessions. No major movement expected unless we see a break on either side of the mentioned range.
Nifty (9512.25, +0.71%) has broken all near term resistances and is set to rise towards 10000 soon. While above 9500, first resistance could come near 9700-9800 levels. Near to medium term looks strongly bullish.
COMMODITIES
Bullion has shown some strength due to the recent weakness in Dollar Index. Gold (1242) is up from level near 1231 and could head towards 1250-60 in the coming sessions whereas Silver (16.87) has bounced back from support near 16.10 and could remain above 16.90 in the near term.
Copper (2.54) has found resistance at 2.54 levels. Only above 2.55, higher resistances of 2.65-72 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 levels as well.
Today’s U.S weekly crude oil inventory is important to see as it is able to trigger sharp movement in the energy market. Brent (51.20) is hovering around its pivot at 51 levels of the entire range of 49.54 to 52.80, whereas WTI (48.20) is trading between 47.15 – 49.20 levels. If the actual outcome of today’s inventory could not exceed the expectation (-2.5 MB), we could see a dip towards 50 in Brent and 48 in WTI in the near term. Else they could consolidate in their respective trading ranges in the coming sessions. The overall bias will remain bearish while Brent and WTI are trading below 53 and 51 levels respectively.
FOREX
Risk aversion due to increasing political risk in US continues to weaken the Dollar and now strengthens Yen along with Euro.
The Euro (1.1115) rise above 1.10 has weakened Dollar Index (98.82) considerably just as expected. The political risk taking the centre stage in the global markets has triggered bulk selling of Dollar and the break below 98.00 may push it to 96.50-00 in the next few days.
Euro (1.1115) has surged above 1.10 as expected and is very close to our initial target/resistance of 1.1130. A sustained move above 1.1130 may take it higher towards 1.1200-1.300 in the coming days.
Dollar Yen (112.45) has corrected due to the global risk aversion at this point and may test our support of 112.00 soon. For the scenario of sideways consolidation in 112-115 to come true, the support of 112.00 must hold. Otherwise, the decline may extend to 111.00-110.00.
Pound (1.2930) remains unchanged in its range of 1.2800-1.3000 in line with expectations. Repeat – with the medium term trend still up, a retest of the interim support of 1.2840-30 by the end of the week may trigger a sharp bounce.
Aussie (0.7423) is in a small contraction phase in the narrow range of 0.7380-0.7450 which may resolved in the next couple of sessions but as discussed previously, the larger downtrend is expected to resume for the target/support of 0.7300-0.7290 as the weakness persists below 0.7500 which may cap any short covering rally.
Dollar Rupee (64.08) mostly traded in the narrow range of 64.05-15 yesterday and may spend the next couple of sessions in 64.00-25 with a downside bias.
INTEREST RATES
The US yields have come down and could move lower in the next few sessions to test near term support levels. Overall the medium term looks bearish.
The German yields have risen slightly and is likely to break above immediate resistances in the next few sessions. The 10-2Yr (1.0920%) is bouncing from levels near 1.04% and could move up towards 1.15% in the near term.
The 10 Yr GOI yields (6.8422%) bounced back instead of continuing to fall further. The current bounce could take it back towards 6.88% before coming off towards 6.80-6.75% again in the longer run.
The German-US 10Yr (-1.87%) has risen sharply along with the rise in Euro to levels above 1.10. The yield spread could now be headed towards -1.75% while there is scope for further Euro strength in the near term.
The UK-US 10Yr (-1.18%) is trying to break above the long term resistance coming from May’16 and in case the yield spread manages to break and move higher in the near term, we could expect some more room on the upside for Pound in the near term.
