STOCKS
Sharp fall seen in almost indices but this could be temporary. Shanghai, Dax and Dow could recover to extend further gains by next week while we need confirmed price action from Nifty for further direction.
Dow (21002.97, -0.53%) had broken above the 21000 resistance level but has come down now to trade lower. In case the index comes back below 21000, it would be difficult to continue the rally just now and we could see some correction towards 20750-20500 before a bounce is seen. Else, while above 21000, there is an upside potential towards 21300 and higher in the near to medium term. Note immediate support is seen near 20750.
Dax (12059.57, -0.06%) is almost stable but could rise some more towards 12100-12170 levels before seeing some dip. But also note that immediate resistance is visible on the daily candles which if hold, could prevent an immediate rise above 12090. Watch price action near current levels.
Nikkei (19538.15, -0.14%) is trading above 19480 and while that holds we may expect a stable movement within 19480-19750 region. On a medium term, the index may resolve on the upside.
Shanghai (3211.34, -0.58%) has fallen sharply, breaking the immediate uptrend in the daily candles. We may not expect a fall below 3175. A bounce in the early next week is possible taking it back towards 3250.
Nifty (8899.75, -0.51%) made an intra-day high of 8992 before sharply coming off from there to close below 8900. If the index is unable to break above 9000 just now, we could continue to expect a sharp fall from current levels. Else, a confirmed and sustained move above 9000 is necessary to turn bullish just now.
COMMODITIES
Recent strength in Dollar index (102.08) has impacted negatively across all the commodities. Gold (1232) has broken its pivot at 1247 of its entire trading range of 1215-1274. Immediate support is at 1230 and from there it may correct a little towards 1244. A close below 1230 could be trend reversal.
Silver (17.76) is also trading below its crucial support of 18 and hovering around its long term trend line resistance of 17.60. We have US Fed Chair Yellen speech at 11.30 pm IST, which may add some more clarity towards the future price action of Dollar Index and other commodities as well.
Copper (2.67)is also holding its crucial support of 2.60. Defiantly the bullish momentum become weak and a possibility of a decline towards 2.60 levels can’t be ruled out. US ISM Non Manufacturing PMI report will be published at 8.30 pm IST may add some more clarity.
Brent (56.59) was almost unchanged within its recent price range of 54.20-57.5 but WTI (55.76) has fallen yesterday and trading just above its crucial support at 55.45. A close below that could open up much lower levels towards 51.
FOREX
The surging probability of a rate hike in the 14-15 Mar’17 Fed meet (seen at 75% now) is keeping the Dollar firm against the other currencies though Rupee is guided primarily by the domestic factors and looking forward to the State elections result due next Saturday, 11th Mar’17. The Yellen speech tonight can affect the short term sentiment.
Dollar Index (102.07) has broken above 102.00 signaling strength and now may rise to the near term target/resistance of 103.00-20 with 101.75 providing support in the near term.
Euro (1.0522) is bouncing from the support of 1.05 levels in line with expectations but unless a break above 1.0600-20 is seen in the near term, the bears remain in control with the downside possibilities of 1.040-1.035 open.
Dollar-Yen (114.25) has been helped by the rise in Nikkei (Check the Equities section) and may test the near term resistances of 115.00-116.00 in the coming sessions after a break above the interim resistance of 114.60.
Pound (1.2272) has taken a pause at the lower levels after the sharp fall this week. Further consolidation may be seen near the interim support 1.2200 before it declines further towards 1.2100-2085 levels.
Aussie (0.7553), contrary to expectations, has sharply fallen below 0.7600 levels and may test the near term support zone 0.7520-00 levels before any interim pause can be seen but in this downleg, lower levels of 0.7450 are expected before any considerable bounce emerges.
Dollar-Rupee (66.71) may end the last session of the week in the range of 66.60-90 with minor chances of seeing either 66.50 or 67.00.
INTEREST RATES
Markets await Yellen’s speech tonight. News states the probability of a March rate hike has increased to 75% compared to the previous 40%.
The German-US 2Yr (-2.17%) had shown slight bounce yesterday but has continued to fall thereafter. Overall the trend is downwards and the yield differential may fall towards -2.20% indicating that the fall in Euro may not be over yet.
The US-UK 10Yr (-1.29%) is down by 1bps and unless it sees a bounce from current levels, we could expect some more room on the downside for Pound.
The US yields are trading higher. The 30yr (3.08%) has almost reached to test crucial resistance at 3.10% which if holds could bring in some correction. The 10Yr (2.49%) and the 5Yr(2.03%) are headed higher and could rise some more in the near term.
The German yields continue to rise. The 5Yr (-0.47%), 10Yr (0.31%) and the 30Yr (1.12%) are trading higher today.
