STOCKS
No major movement visible in the stock market ahead of the FED policy meeting due tomorrow. Most of the indices are trading low and are in a corrective mode. There could be some more falls in the near term.
Dow (21513.17, -0.31%) has come off well from the long term resistance of 21600 and could now test an interim support near 21460 which if holds could keep the Dow ranged sideways for a few sessions else the index could head lower towards 21400 over this week.
Dax (12208.95, -0.25%) is looking bearish for the near term and could test 12000-11870 levels in the coming sessions.
Shanghai (3243.10, -0.23%) is down from levels near 3260 which is an immediate resistance as mentioned yesterday. The fall could extend towards 3220 or lower before again resuming the rise towards 3260-3270.
Nikkei (19950.11, -0.13%) is almost stable and could possibly stay above 19750 levels in the near term. Some indication from Dollar Yen and the US-Japan 10Yr yield spread could be crucial to have more clarity on further direction in Nikkei.
Nifty (9966.40, +0.52%) has been moving up in line with our expectations and could test the 10000-10050 levels today. Thereafter a corrective dip is possible towards 9900 in the coming sessions.
COMMODITIES
Bullion has strengthened as no sign of recovery had been seen from Dollar Index (93.80). Gold (1254) and Silver (16.46) are hovering around their crucial resistance of 1260 and 16.50 respectively. Gold looks overbought and immediate trading range could be 1246-1260. A fall below 1246 could take it lower towards 1230 as well. Silver is trading within the range of 16.20-16.50 and well supported by the recent strength in copper. A close above 16.50 could open up 16.85 and 17 levels as well.
Copper (2.75) is moving higher during last few trading sessions, though it is still trading within the range of 2.66-78. Only above 2.78, higher resistances of 2.85 and 2.89 can come into consideration. In the medium term 2.55-60 are going to be a strong support and we will remain bullish while it is trading above those levels.
Oil Prices rose higher in line with our expectation as Saudi Arabia pledge to cut export during August to reduce the Global (mainly U.S) crude glut. Both Brent (48.96) and WTI (46.80) are trading within the ranges of 48-50.20 and 45.80-48.30 respectively. We are bullish on oil since 10th of July onwards and there is no reason to change our bullish stance in near term while Brent and WTI are trading above 48 and 46 on a weekly closing basis. Only a close below those levels could bring the near term bearish possibilities into consideration.
FOREX
The majors may not move much today as it waits for the FOMC policy statement tomorrow.
Euro (1.1652) is trading in a very narrow range of 1.16-1.17 for the last 3 sessions and we wait to watch if it manages a break above the final horizontal resistance of 1.1712 while Dollar Index (93.93) remains very weak as usual with the downside target of 93.00 unchanged. The next phase of the price action may be decided by the FOMC policy statement due tomorrow.
Dollar Yen (111.06) has registered a low of 110.58, very close to our target/support of 110.50, before attempting a recovery in line with our expectations but it needs a break above 111.50 to confirm an upside reversal. Till then, the chances of a retest of the support of 110.50-35 remain open.
Aussie (0.7928) is consolidating its recent gains as it trades sideways in 0.7850-0.80 but the rise for 0.80+ levels may resume in the next 2-4 sessions.
Dollar-Rupee (64.34) closed almost flat yesterday after a brief rally above 64.40 but persistent Euro strength keeps Rupee strong. Repeat – The charts themselves suggest greater chances of further downside towards 64.10 in case the immediate Support at 64.28 breaks.
INTEREST RATES
FED policy meeting is due tomorrow. No change is rate is expected.
The US yields have bounced a bit contrary to our expectation of a further fall from current levels. The 10Yr (2.25%) is trading higher from 2.23% seen yesterday and could possibly head towards 2.28% before again coming off from there.
The US-Japan 10YR (2.18%) has moved up as expected and if it continues to rise, Nikkei and dollar Yen could also move up in the coming sessions.
The German-US 10Yr (-1.74%) is testing a decent support near current levels and if that holds, it could bounce back towards -1.70% indicating a rise in Euro in the near term; else the spread could move down towards -1.80% which could bring in some dip in Euro in the near term. Ned to wait and watch for more clarity.
