STOCKS
Dow (21467.14, -0.29%) has tested a crucial long term resistance near 21500 which could possibly hold for the coming weeks. An upward extension if seen could take it to 21600, but this could form a near term top for now. A downward correction towards 21300 is possible in the near term.
Dax (12814.79, -0.58%) came off sharply from levels below 13000. Note that 13000 is a crucial medium term resistance and could possibly keep the index below 13000 for the coming sessions. But while the 13000 levels holds, we could see some movement in the 13000-12700 region.
Shanghai (3143.45, +0.11%) is almost stable while above 3120. Movement within 3120 and 3180 may continue for a few more sessions before the index starts to move up. For now the next couple of sessions could see a sideways consolidation.
Nikkei (20183.90, -0.23%) opened with a gap up and if it manages to break above 20300, it could move up sharply towards 20500-20600 levels.
Nifty (9657.55, +0.72%) was almost stable yesterday but looks potentially bullish for the near term while above 9600. A re-test of 9700-9710 is possible in the near term.
COMMODITIES
Muted price action had been seen in Gold (1247) as it remains in a slow corrective move which may take it to the support of 1230 but if the support holds, a quick bounce towards 1262 can’t be ruled out. Silver (16.49) is also moved lower in line with our expectation. A close above 16.50 could open up 16.95 levels within a couple of days. Both gold and silver are oversold in near term time frame.
Copper (2.55) is trading within the narrow range of 2.54-2.67. Only above 2.68, higher resistances of 2.84 can come into consideration, but a daily close below 2.55 could open up 2.45 and 2.35 levels as well. We wait for further directional clarity on a break on either side of 2.55 and 2.67 levels.
Nothing new to add as market is waiting for today’s U.S weekly crude inventory data (8:00 pm, IST) with an expectation of a shortage (-1.2 MB) in inventory. If the anticipation of -1.2 M Barrel of shortage will match the actual outcome then that could be beneficial for both Brent and WTI. Otherwise a surplus or a less than expected shortage could bring further bearish possibilities into consideration.As of now, Brent (45.95) and WTI (43.48) are trading below their respective supports of 46.68 and 44 with an immediate trading range of 43.50-46.70 for Brent and 38.72-44 WTI. If Brent and WTI manage to close above 47 and 44.50 in today’s post inventory session, another attempt for 49.62and 46.45 can be seen. As Brent and WTI are oversold in near term time frame, a shortage (either at per or more than the expectation) in US weekly crude oil inventory could activate short term buying momentum in the market.
FOREX
Persistent moderate hawkish stance by the Fed officials despite the recent soft US macro data keeps Dollar strong against all the majors.
In line with expectations, Dollar Index (97.72) has tested our resistance of 97.80 already and as long as it stays above 97.50, the rise may extend to 98.10-40 and then 99.00+
Euro (1.1135) has weakened from our resistance of 1.1215 and registered a fresh swing low at 1.1115 in the last session. A break below the support of 1.1100-1.1090 may increase the bearish momentum and in that case, Dollar Index may find it easier to climb above 98.00 levels.
Dollar-Yen (111.21) has hit a high at 111.78, close to our initial target of 112.00, before retreating for a normal correction. As long as the support of 110.60-50 holds, the uptrend remains intact and the targets of 112-113 remain unchanged.
Pound (1.2630) has met our downside target of 1.2600 in a single session following the continued concern of the BOE governor over the Brexit impact on the economy. The immediate downside may be limited to 1.2540 and a corrective bounce may emerge by the end of the week from either 1.2600 or 1.2550-40.
Aussie (0.7570) is testing our support of 0.7570-60 which may hold and push the currency back to 0.7625-50 levels.
Dollar-Rupee (64.50) may test the levels of 64.60-70 today and while the resistance of 64.70-75 is expected to hold, our view of continued "range trade" between 64.70-10 will be put to the test over the next couple of days.
INTEREST RATES
The US yields have dipped after rising sharply for the last 2-sessions. The 5Yr, 10YR and 30Yr are trading at 1.76%, 2.15% and 2.74% compared to previous levels of 1.79%, 2.19% and 2.79% respectively.
The US 10-5Yr (0.40%) yield spread is testing important support near current levels and could bounce back in the near term.
