STOCKS
Dow (20606.93, -1.78%) fell sharply yesterday over political worries in Washington. Support is seen near 20413 which could be tested before a bounce back towards 20777 is seen.
Dax (12631.61, -1.35%) also came off sharply instead of moving up towards 13000. It could test 12400 before bouncing back to higher levels.
Shanghai (3095.61, -0.28%) faced some rejection near 3120 but while above 3050, there is some scope of a rise towards 3145-3170 in the medium term.
Nikkei (19529.70, -1.44%) has come off exactly from weekly resistance near 20000 and while that holds a correction towards 19000 is possible in the coming sessions. Near term looks bearish.
Nifty (9525.75, +0.14%) looks bullish in the near term. A rise towards 10000 seems to be on the cards in the medium term.
COMMODITIES
Gold (1259) is trading at its yesterday’s high with an immediate support at 1249. If 1249 holds on a closing basis then sideways consolidation within 1249-1280 continues though the same is not our proffered view due to its overbought condition. Thus we need to keep a close watch on the price action in Dollar Index (97.44) which could give some cue on further Gold direction. We will remain bearish while it is trading below 1280 levels and a close below 1249 could open up 1230 levels as well.
We were expecting a bounce back in silver towards 16.90 levels since 11th May onwards as the scrip was highly oversold and yesterday Silver (16.90) made a intraday high of 17.03. Current trading range could be 15.70-16.90 with a bearish bias while silver is trading below 17.50 levels.
Copper (2.51) has found resistance at 2.54 levels. 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. We will remain bearish while it is trading below 2.65 levels.
Sideways consolidation in the broader ranges of 50.30-52.20 for Brent and 47.15-49.50 for WTI continues as expected. If they will manage to hold above their interim resistances of 52.20 in Brent and 49.50 in WTI, then it could implies strength in oil prices in the extreme short term time frame. Still, the bulls will be assured of strength of Brent (52.07) and WTI (48.94) only when a firm closing above 53.50 and 51.20 are made by both Brent and WTI respectively.
FOREX
The political turmoil in US continues to take its toll as Dollar cracks very sharply with the majors having their best day in quite a while.
Dollar Index (97.50) is cracking sharply in line with expectations and remains in course for our targets of 96.50-00. The best the bulls can expect at the moment is a consolidation after this sharp crack with 98.50 as ceiling but no bottoming sign is visible yet.
Euro (1.1156) has hit a high of 1.1174 so far, not too far away from our initial target of 1.1200 but at this rate of rise, even the higher target of 1.1300 may be met by the next week.
Dollar Yen (111.06) broke below 112.00 and tested the interim support of 110.50 in a sharp decline. This support area of 110.50-00 may arrest the decline for the rest of the week and a consolidation in 110.00-112.00 may be seen for a couple of sessions.
Pound (1.2964) has risen along with the other majors but the inability to break above the resistance of 1.3000 yet makes it a relative underperformer. While above 1.3000, higher targets of 1.3200-1.3400 open up, expect more sideways consolidation in 1.2850-1.3000 till the breakout materializes.
Aussie (0.7454) is out of the contracting range of 0.7380-0.7450 and closing in to the major resistance of 0.7500 which may hold in the near term and push it down once again. Only a successful break above 0.7500 may negate the possibility of seeing the downside targets of 0.7300-0.7290 and bring bullish options on the table.
Dollar Rupee (64.15) is trading at 64.37 in the NDF as the weakness of Rupee against all the majors propels it higher. In the near to medium term, the range has been established in 64.00-70 which may see a few more oscillations in the coming days. For these last 2 sessions of the week, the upside may be limited to 64.45-55.
INTEREST RATES
The US yields have come off sharply as expected. While the Dollar Index remains below 98 and moves down to lower levels, the US yields also would head to lower levels in the coming sessions.
The US-Japan 10Yr (2.20%) yield spread has come down to test immediate support just below current levels and if that holds, we could see a bounce back within the next 2-3 sessions. This could possibly indicate that there could be less downside for Dollar-Yen just now. But we also need to keep a close watch on the Nikkei, which has come off from a strong resistance.
The UK-US 10Yr (-1.17%) has broken above the long term channel resistance and could move higher in the near term, taking up the Pound also towards 1.30 and higher. Near term looks bullish.
The German-US 10Yr (-1.86%) and the Euro are rising sharply. While there is some more room on the upside for the yield spread towards -1.75%, Euro could test levels near 112.50-113.0 in the near term.
The German yields have all fallen a bit and looks bearish in the near term. Failure to sustain above immediate resistances confirm stronger bears to dominate in the coming sessions.
