STOCKS
Major stock indices are in a corrective mode which is likely to continue for a couple of more sessions before we see a recovery.
Dow (22085.34, -0.15%) moved up straight to 22180 yesterday before coming off sharply to close below 22100. Some corrective dip is possible in the next few sessions before the price index again starts to move up. The current fall could extend towards 22000 in the near term.
Dax (12292.05, +0.28%) is almost stable and is possibly in a sideways consolidation mode. There is scope of a rise towards 12400-12500 while above 12200. Near term looks bullish.
Shanghai (3269.08, -0.40%) has dipped slightly but while above 3240, near term looks bullish towards 3300.
Nikkei (19739.88, -1.28%) fell off sharply from levels near 20000 to re-test earlier support of 19700. In case the price index breaks below 19700, we could see the fall extend towards 19450; else a bounce back from current levels looks more likley.
Nifty (9978.55, -0.78%) made an intra-day low of 9947 (also an immediate support) yesterday in line with our expectation. While the support near 9950/30 holds, we could see a bounce back towards 10100-10200 in the near term. A break below 9930-9900 if seen could bring in lower levels but we need to wait for some price confirmation. For now near term is likely to be bullish.
COMMODITIES
Minor appreciation is seen in Gold (1264.87) as it holds above the support of 1245. Only on a break below 1245, lower levels of 123-10 may come into consideration.
Silver (16.51), contrary to expectations rose above the resistance of 16.50, making the trend neutral. It may oscillate in the range of 16.00-17.00 for a few session now.
Copper (2.94) is rising towards our immediate target of 3.00 in line with expectations, above which comes the target of 3.12. Support comes up at 2.86.
Absence of any fresh trigger has kept Brent (51.90) and WTI (49.00) very quiet for the last two sessions. Repeat – the bullish stance remains unchanged as long as Brent is trading above 48.70 and WTI above 45.50 levels on a weekly closing basis.
FOREX
Geopolitical tensions between US and North Korea has tempered the risk appetite a bit, driving Dollar-Yen (109.90)to the lower end of the near term range of 109.30-111.10. If the support of 109.50-30 holds, then a recovery to 111.00 levels can be expected in the coming sessions.
The strength in Yen and weakness in Euro (1.1735) has pushed EURJPY (128.95) below the trendline support and towards the 5-week low around 128.55, which must hold to keep the upside possibilities intact. On the other hand, a break below 128.50 for EURJPY may imply extended weakness for Euro, which in that case may decline to 1.16 levels.
Dollar Index (93.66) may test the resistance of 94.10-40 if Euro keeps going down towards 1.16 before the Dollar bears return.
Pound (1.2983) has met our immediate downside target of 1.2950 but the decline may not be over yet. A corrective bounce from 1.2950-30 can’t be ruled out but the larger downtrend may drive it down to 1.2850 levels in the coming days.
Contrary to expectations, Aussie (0.7873) extended its correction beyond 0.7875 despite a rise in Copper (See Commodities section).While the correction remains shallow considering the sharp rally from the May low of 0.7325 to the July high of 0.8065 and the broader trend remains firmly up, a break above 0.7950 is required to resume the larger uptrend.
Major downtrend may have resumed for Dollar Rupee (63.80) and fresh lows below 63.55 can be expected as long as 63.80-85 holds. The major support of 63.25 may be tested by the end of the week.
INTEREST RATES
The US yields have risen slightly. The 10YR (2.28%) is up from 2.26% seen yesterday and could test immediate resistance near 2.30% from where another dip towards 2.25% is possible.
The UK yields are falling sharply and could continue to fall in the coming sessions. The 10YR (1.15%) could be headed towards 1.10% in the near term.
The UK 10-5 YR yield differential (0.6150%) may come off in the near term as it has faced rejection from important resistance levels.
The Japan yields could fall in the next few sessions. The 10Yr (0.07%) and the 30YR (0.86%) could come down towards 0.05% and 0.84% in the near term.
