STOCKS
Dow (21374.56, +0.22%) has been moving in line with our expectation as mentioned yesterday and could head towards our target of 21600 in the next 3-4 sessions.
Dax (12805.95, +0.32%) made an intra-day high of 12798 yesterday but came off sharply from there. Note that 13000 is a crucial near term resistance which if holds could push back the index towards 12400 again. Only on a confirmed break above 13000 could we become more bullish on Dax.
Shanghai (3132.56, +0.06%) closed near 3130 in line with what we had mentioned yesterday. A bounce back towards 3170 is on the cards for the near term.
Nikkei (19797.46, -0.43%) has bounced from immediate support near 19755 and while that holds, the index could rise back towards 20100 in the near term.
Nifty (9618.15, +0.12%) also came down to almost support levels near 9570 before again bouncing back to levels above 9600. While 9570-9550 holds, there is still scope for a sharp bounce towards 9700.
COMMODITIES
Muted price action had been seen in Gold (1267), as it remains in a slow corrective move which may take it to the support of 1242 but if the support holds, a quick bounce towards 1307 can’t be ruled out. Silver (16.97) is also hovering around its resistance of 16.95. A close above that could open up 17.60 as well.
Copper (2.57) is trading within the narrow range of 2.56-2.68. Only above 2.68, higher resistances of 2.84 can come into consideration. We will remain bullish on copper while it is trading above 2.55 regions on a closing basis.
On 10th of March, 2017, we had written in MB that ‘Immediate support for Brent is at 45.42 and WTI at 44. We would not be surprised if we will see these levels within a few weeks of time” and those levels have almost come. At the same we had also warned yesterday that irrespective of oversold condition, a less than expected negative inventory (actual -1.7 vs. expected -2.3) could bring the bearish possibility again into consideration and the same had also happened. Now, considering the short term oversold sate, we may see some profit taking rally in Brent (47.02) and WTI (44.70) towards their respective resistances of 51.25 for Brent and 47 for WTI respectively. But the trend is still bearish in the medium term time frame. Any corrective bounce may face extreme selling pressure at the higher levels and could open up lower levels like 42 and 42.60 for both Brent and WTI respectively.
FOREX
The Fed hiked the rates as expected and laid out plans to trim the $4.5 trillion balance sheet. Dollar weakened briefly but the bullish reversal chances remain open.
Contrary to expectations, Dollar Index (96.94) made a fresh low at 96.32 before bouncing back near 97.00 but the technical picture hasn’t changed much as the upside reversal chances remain open but requires a break above 97.20-30 to confirm it.
Euro (1.1218) invalidated our Triangle pattern and registered a fresh high at 1.1296 but the stiff rejection at the higher levels imply inherent weakness which would be confirmed on a break below 1.1160.
Dollar-Yen (109.55) was rejected exactly from our resistance of 110.35 to a fresh low at 108.80 but the sharp recovery suggests that the Dollar bulls are still at play. The downside looks limited to 108.00 but a break above 110.35 may take it to 111.00 initially above which comes 113.00.
Pound (1.2740) briefly tested the major resistance 1.2800 but the failure to sustain the higher levels keeps the trend weak. Immediate support comes at 1.2600.
Aussie (0.7602), contrary to expectations, surged above 0.7600 on the back of much better than expected employment data (+42k against expectations of +10k in May). It is not clear at the moment if it will be able to test the higher resistance of 0.7700-50 levels without a correction and we prefer to wait for 1-2 sessions for clarity. Trend remains up with immediate support coming at 0.7550-20.
Dollar-Rupee (64.30) is trading at 64.30 in the NDF right now, totally indifferent to the Fed policy. It remains to be seen if the ECB meet today can move it. Repeat – the support of 64.30-20 is expected to hold and push it back to 64.60-80.
INTEREST RATES
The US yields moved lower and entered into the oversold territory. The 10Yr (2.13%) is trading at its crucial support and could bounce from these levels. The 30YR (2.77%) is also hovering around its crucial support of 2.79 and a close above that could open up 2.88 and 2.94 levels respectively .
The Japan-US 10YR (2.08%) is trying to break below immediate support levels and in case it falls sharply, could pull down Dollar-Yen with itself in the coming sessions. .
The German-US 10Yr (-1.91%) and the German-US 2YR (-2.06%) have bounced from immediate support levels and are heading towards medium term resistances which if holds, could again push off the yield spreads to lower levels. Euro could move up or remain stable in the next couple of sessions before falling off to lower levels.
