STOCKS
Dow, Dax and Nifty are facing some corrective dips while Shanghai looks bullish while Nikkei remains indecisive just now. The next 2-3 sessions could give some clarity on further movements in the price indices.
Dow (21574.73, -0.25%) is trading slightly lower today. 21500-21600 has been a crucial long term resistance and it would be necessary for the index to sustain above 21600 in order to continue the upward rally. While below 21600, there could be chances of a sharp correction towards 21400 or even lower in the near term.
Dax (12430.39, -1.25%) fell sharply but is trading above immediate support near 12380. While 12380 holds, a bounce back towards 12800 is possible in the medium term. Only in case it breaks below 12380, we would have to shift our focus to lower levels of 12200 for the coming sessions.
Shanghai (3215.02, +0.86%) has been rising sharply in the past 2-sessions moving up to our target of 3220. There is scope of further rise towards 3240-3260 in the coming sessions.
Nikkei (20025.22, +0.13%) is stuck within the 19900-20300 region since the last one month and continues to consolidate sideways. A rise back towards 20200 is possible in the near term. We wait for a break on either side of the range for more directional clarity.
Nifty (9827.15, -0.90%) came down from levels near 9900 yesterday but could possibly recover in the next few sessions. While above 9750, trend remains firmly up which could be accompanied by some corrective dips.
COMMODITIES
While Dollar Index (94.52) failed to rebound, Bullion has strengthened again against Dollar yesterday. Gold (1240) and Silver (16.24) are trading well above their crucial support at 1231 and 16.20 respectively. A break above 1245 is necessary for gold to remain bullish towards 1260 for the near term else a fall below 1230 could take it lower towards 1220. Silver is trading within the range of 16.20-16.50 and only a close above 16.50 could negate our midterm bearish view. As dollar index is highly oversold, it will be difficult for Bullion to maintain this short term bullish momentum.
Muted price action had been seen in Copper (2.72) for last couple of trading sessions. It is trading within a range of 2.66-78. Only above 2.78, higher resistances of 2.80 can come into consideration. 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.
Both Brent (48.84) and WTI (46.38) moved nowhere as market is waiting for today’s U.S weekly crude inventory data (8:00 pm IST) with an expectation of a shortage (-3.6 MB) in inventory and prices could move according to the outcome. If the anticipation of -3.6 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 bearish possibilities into consideration. Thus 48.80 (Brent) and 46.70 (WTI) could be the levels where the price action has to be checked on a Daily and weekly closing basis to assess the future price direction.
FOREX
The markets may wait quietly for the ECFB and BOJ meet tomorrow before taking the next major step.
The net movement of Euro (1.1539) in the last 24 hours is almost zero as it waits for the ECB policy meet tomorrow. The trend remains firmly up but it must be noted that the net position in Euro is the largest since 2011 and any surprise from the central bank or any other corner may trigger a very sharp correction. Similarly, the Dollar Index (94.76) may have attracted too many shorts. These two crowded trades may invite nasty surprises eventually as the previous historical instances show. Therefore high caution warranted at the current levels this week.
Euro has strong resistance in the band of 1.16-1.17 and Dollar Index has major support near 94.15-00.
Dollar-Yen (112.09) has registered a low of 111.65, not too far from our downside target of 111.35. With no clear reversal signs visible yet, the lower support of 111.00 may be tested before any major short covering emerges.
Aussie (0.7925) is rising very sharply towards our target of 0.8150-75 and the bullish momentum remains intact above the support near 0.7835-00. The target may be achieved by the next week.
Pound (1.3028) is in a minor corrective mode after hitting a high of 1.3125. A pause here can be good for the currency for its technical strength which may help it later to rise above 1.3125 and rally towards 1.32-1.34.
Dollar-Rupee (64.33) has been quiet between 64.2850-3650 due to RBI buying Dollars on dips and the fall in the Nifty yesterday. Although Dollar-Rupee remains in a downtrend, some amount of buying should be expected just above 64.20.
INTEREST RATES
The German yields are trading lower and could fall some more in the near term. The 10Yr (0.56%) could move towards 0.50% while the 30Yr (1.30%) could come off towards 1.18% in the near term.
The UK yields continue to move down and look bearish just now. The 10Yr (1.21%) and the 20Yr (1.75%) are down from 1.24% and 1.78% and could fall some more in the near term. This could possibly bring down Pound in the next few sessions.
The German-US 10Yr (-1.71%) is just below channel resistance which could push it back towards -1.75% in the near term. This could also indicate a small dip in Euro from levels near 1.16.
The US-Japan 10Yr (2.19%) is falling and could test levels near 2.09% pulling down Dollar Yen towards 111.50 or lower in the near term
