STOCKS
Stock indices are in a correction period and could remain weak to sideways in the near term except Shanghai which looks potentially bullish.
Dow (21750.73, -1.24%) fell sharply in line with our expectation but closed at levels below our expectation of 21800. While the index trades below 21800, it can come down to test 21670-21600 levels in the near term. Immediate trend looks bearish.
Dax (12203.46, -0.49%) is holding well above the support of 11940 and could trade sideways in the 12500-12000 region for some sessions. We prefer a rise towards 12500 in the next few sessions.
The Nikkei (19497.52, -1.04%) came down sharply to test 19450 again yesterday and in case it fails to bounce back from current levels, we could see a fresh fall towards 19250-19000 or even lower in the near to medium term.
Support near 3200 is holding good for Shanghai (3258.23, -0.31%) and while that holds, the upside potential remains open towards 3300. Overall near term looks bullish.
Nifty (9904.15, +0.07%) could come off towards 9800 again today while immediate resistance near 9960 holds. A dip towards 9800-9700 is on the cards for the medium term.
COMMODITIES
Gold (1292) is hovering around its key physiological resistance of 1300 and if this resistance breaks, a quick bounce towards 1317-25 can’t be ruled out. Otherwise it remains in a sideways move which may take it to the support of 1275 and 1259. Silver (16.95) is also moved higher and trading within the range of 16.50-17 regions. A daily close above 17.05 could open up 17.50 levels as well.
Copper (2.92) moved higher but trading within the narrow range of 2.85-98. Only above 2.98, higher resistances of 3.05 and 3.12 can come into consideration. We will remain bullish on copper while it is trading above 2.85 regions.
8th consecutive week of fall (-8.9M B) in U.S oil inventory which could be supportive for the entire energy pack. Brent (50.92) is out of its midterm bearish channel. Immediate resistance comes at 51.50 and 53 and a close above those levels could open up 56 as well. WTI (47.01) is still trading within the midterm bearish channel but there could be a decent chance of a upswing towards 50 and 52 within a few days of time. We will remain bullish on Brent and WTI, while they are trading above 49.50 and 45.50 levels on a weekly closing basis.
FOREX
The US Dollar Index (93.64) is holding well above the support of 92.54 but has come up to test immediate resistance near 94.00-94.50 which if holds could push the index again towards 92.50 in the coming sessions. In case the index breaks above 94.00 just now, we may expect a further rise towards 95.00 and higher going forward.
The Euro (1.1729) could come down to test support near 1.1650 but in case the Dollar Index comes off from immediate resistance levels, Euro could strengthen towards 1.1800-1.1850 levels again. Near term trend likely to be seen within 1.1650-1.1850 region.
Dollar-Yen (109.438) is trading above important support near 108.13 and could possibly bounce back from there. Only on a break below 108, if seen, can we look at lower levels of 106. Till then we prefer a bounce from 108 in the near term.
The Euro-Yen (128.40) is also trading above important support at 128 and while that holds, has some chance of moving up towards 129 again. On a break below 128, we may revise our targets towards 125.
Pound (1.2886) is also trading just at crucial support levels and if that holds could take the currency pair towards 1.2930 or higher in the near term. We also do not negate some chances of testing 1.2790 before a sharp bounce is seen. Overall some sideways movement is possible in the coming sessions.
The Aussie (0.7892) bounced back sharply this week from just above important support near 0.78. There is enough room on the upside towards 0.80/81 while above 0.78.
Dollar-Rupee may open slightly higher today but it remains important to see if it is able to break above 64.27. Above 64.27, the next important resistance is near 64.50 which may not be very easy to break on the upside just now. We expect a dip from levels near 64.50 or 64.27, bringing the currency pair back to levels below 64.00. Note important support near 64.10 which could hold for a few sessions keeping the currency pair ranged within 64.50-64.10 zone.
INTEREST RATES
The US yields are all trading lower and could come off in the near term. The 5Yr (1.76%), 10Yr (2.20%) and the 30Yr (2.79%) can come off towards 1.70%, 2.10% and 2.70% respectively and looks bearish just now.
The US-Japan 10Yr (2.16%) is testing medium term support near current levels and while that holds, it could possibly bounce back in the near term. A failure to bounce back just now could be another possibility which could pull down Dollar Yen and Nikkei in the near term. We need to keep a close watch as this might be an important cue.
The German-US 10Yr (-1.77%) has bounced back sharply and has got enough room on the upside towards -1.70%. While the spread rises, Euro strength could be on the cards for the medium term.
