STOCKS
Dow, Nikkei and Nifty looks stable for now and could be ranged sideways for a few sessions while Shanghai and Dax look bullish.
Dow (21182.53, +0.04%) is almost stable and could consolidate within 21200-21100 for a couple of sessions.
Dax (12713.58, +0.32%) could re-test levels near 12800-12900 in the coming sessions while above 12600. Near term looks bullish.
Shanghai (3155.62, +0.17%) is trading higher as expected and could move towards 3200 just now before a small corrective dip back to 3125 levels. Overall medium term looks bullish with possible interim corrections.
Nikkei (20063.84, +0.78%) is trading above immediate support near 19840 and while that holds, a few sessions of sideways movement is possible within 20250 and 19800 levels.
Nifty (9647.25, -0.17%) is in a pause mode and is consolidating below 9700 which could possibly extend towards 9620-9600 in the coming sessions. We do not look at levels below 9600 just now and expect a bounce back towards 9700 by end of next week.
COMMODITIES
Gold (127.19) has been hurt by the Dollar (97.30) strength and broken below the support of 1275, bringing 1247 to the downside into consideration.
Silver (17.29) has weakened after failing to sustain above 17.50-60 just as expected and now may test 16.91 to the downside in the next couple of sessions.
Copper (2.60) has strengthened considerably but as long as it stays below 2.66, the rise remains suspect As discussed yesterday, only above 2.66, higher resistances of 2.72-80 can come into consideration.
Brent (47.87) and WTI (45.64) are trading just above near term support levels and while the support holds, both could bounce back immediately. WTI could possibly try to test 45.00 before bouncing back towards 47.00 while Brent has already started to move up from support at 47.50 and could now be headed towards 49.00-49.50 in the next 2-3 sessions. Overall crude looks bullish for the near term.
FOREX
While keeping the rates unchanged as expected, ECB trimmed Inflation expectations through 2019, driving Euro lower. The Comey testament has been brushed off by the investors, boosting Dollar and UK is headed for a hung parliament, weakening the Pound. Overall Dollar strength.
The initial signal of an upside reversal in Dollar Index (97.30) is visible now and it may rise to 97.60-80 in a day or two. A break above 97.80 may fully confirm a near term reversal and open up higher levels of 98.40 and above. The bias turns bullish now with the support of 96.50 holding firm.
Euro (1.1195) has weakened from the higher levels exactly as discussed for the last few days. Technically it may decline further to the support of 1.1125-15 before any bounce can be considered but the German-US 2Yr (-2.08%) keeps the possibility of a recovery still open (Check Interest Rates section). Bias bearish but not with full conviction yet.
Dollar Yen (110.26) has bounced in line with expectations and may rise to 111.20 but as discussed yesterday, to negate the downside risk, it requires a break above 111.70. Till then, the larger trend remains down.
Pound (1.2746) has taken a major hit from the unexpected UK election results. With the initial shock digested, it may either grind in the range of 1.2700-1.2850 for a few sessions or continue the decline towards 1.2600 immediately. It may take one more trading session which is the more probable path.
Aussie (0.7532) remains indifferent to all the global events and untouched even by the general Dollar strength today. It may end the week in the range of 0.7500-0.7600.
Dollar Rupee (64.21) broke the range of 64.30-70 to the downside and now we have to watch crucial Support at 64.10. If that holds, there could be chances of sharp rise to 64.40-50 again. A break below 64.10, on the other hand, could lead to lower levels near 63.90
INTEREST RATES
The US yields are holding well above immediate support levels and could move higher in the near term as mentioned yesterday The 10Yr (2.19%) has moved up by 1bps and could target 2.25% while the 30Yr (2.86%) has moved up from 2.84% yesterday to head towards 2.92% in the near term. The 10-5 Yr (0.44%) may head back to 0.45%.
The Japan 10YR (0.06%) is coming off from immediate resistance and while that holds, could come off towards 0.05% in the near term. On the other hand, the 5Yr (-0.07%) has been rising much sharply in the last few session and looks bullish for the near term.
The German-US 2Yr (-2.08%) could test -2.15% on the downside before bouncing back from there while the German-US 10YR (-1.94%) is trading just above immediate support levels and in case the yield spreads bounce from current levels, it could possibly pull up Euro also along with itself. (Also refer to Forex section above)
The UK-US 10Yr (-1.16%) has come off sharply as expected pulling down the Pound also with it and if the yield spread continues to head towards support near -1.23%, we could see some more downside for the Pound in the coming sessions; else both could bounce back from current levels. (Also refer to Forex section above)
