STOCKS
Stock indices are all mixed. Dow and Dax are in a downward corrective phase and may continue so just now while the Shanghai looks sideways. Nikkei looks bullish and Nifty could test lower levels this week.
Dow (21349.63, +0.29%) tried to recover slightly from the sharp fall seen on 29th June from levels near 21487 to 21197 in a single session. Momentum could be slow and movements narrow in the near term. The sideways phase may continue for some more sessions. We could possibly see a fall towards 21000 before it starts to move up again.
Dax (12325.12, 0.73%) is trading below our expected 12400 on the downside and while the index moves lower we may expect a test of 12000 in the near term. the downward correction may continue for the next 2-3 sessions at least.
Shanghai (3182.82, -0.30%) seems to be ranged just now within 3170-3195 region and could spend a couple of more sessions in the same region. Thereafter, there is some scope of testing 3160 on the downside before again trying to rise towards 3200 or higher.
Nikkei (20060.21, +0.13%) looks bullish while above immediate support near 19950 and has a potential to rise towards 20500 in the near term.
While Nifty (9520.90, +0.18%) is trying to come up towards 9600 but while the resistance zone of 9580-9600 holds, it could be difficult for the index to rise sharply just now. In that case, the index could possible test lower levels of 9400-9380 in the coming sessions before bouncing back towards 9580-9600.
COMMODITIES
In the smaller time frame, Gold (1237) is oversold and needs a pause before attempting lower levels. We have been talking about 1230 for the last few days as a strong support. Now a break below 1230 is required before the lower levels of 1193 can be seen.A pause in the range of 1230-1260 can provide the necessary bearish momentum in Gold.
In Silver (16.58), the daily close took place close to the immediate support of 16.45. A failure to rise above 16.70 levels may trigger a sharp fall towards 16.20 regions.
Copper (2.68) moved higher in line with our expectation and trading within a range of 2.66-80. The scrip is overbought thus upside could be limited but in the medium term 2.55-57 are going to be a strong support and we will remain bullish while it is trading above those levels.
There is 40% probability that Brent (47.92) and WTI (46.25) could rise a bit more towards 50 and 48 regions respectively but this recent bounce hasn’t affected their midterm bearishness much. We think the immediate resistances of 50 (Brent) and 48 (WTI) are expected to hold as the they are in overbought territory and may see range trade between 46-50 in Brent and 44-48 in WTI. But a failure to hold above 46 and 44 may push them towards 43 and 40 levels respectively.
FOREX
Dollar Index (95.73) has managed to stay above the support of 95.50-40 in the last 2 sessions but it has to rise above 96.00-50 to trigger even a little bit of short covering,. The trend remains firmly down but keep an eye on Euro (1.1415). If Euro fails to rise above 1.1450-70 this week, Dollar may see a corrective bounce to 96.40-80.
Dollar Yen (112.41) is searching for direction after the defeat of the ruling party in the Tokyo election. 113.00 may be retested as long as the support of 111.70 holds but failure to extend the rise above 113.00 can drag it down once again.
Pound (1.3004) is trading very close to the 10-month high of 1.3047 and a successful break above it may push it towards 1.3200. Immediate support comes around 1.2930-00.
Aussie (0.7673) is struggling after meeting our initial target/resistance of 0.7700. The probability of the resistance band of 0.7700-0.7800 holding for the next few sessions are considerably higher and while the resistance holds, the currency may test the support near 0.7630.
Dollar-Rupee (64.58) is expected to trade in the modified range of 64.40-80 for the next few sessions.
INTEREST RATES
The German-Us 2YR (-1.98%) has already come off sharply from near term resistance near -1.91% while the German-Us 10Yr (-1.84%) is trading just below resistance at -1.80% and could come off from there in the coming sessions. If the resistance holds, we could see a fall in the yield spreads which could pull down the Euro a bit towards 1.14-1.1350 possibly.
German-Japan 10YR (0.38%) has also come up to test the sideways horizontal resistance which could push it back towards 0.15% in the near term. This could possible indicate an upcoming correction in Euro.
The US yields continue to rise and could possibly pause in the next couple of sessions to see a slight dip before continuing to rise further. The 10Yr (2.30%) may test 2.40% in the near term.
