STOCKS
Dow (21948.10, +0.25%) closed near 21950, the immediate resistance we were looking at since the past few days. As mentioned yesterday, a break above 22000 could take it higher towards 22100-22200 in the medium term; else a fall could mean test of lower levels near 21700 again.
Dax (12055.84, +0.44%) has been trying to move up and has been opening the last 3-sessions with a gap-up, unable to sustain the highs in a single session. No bull strength is visible just now. 12200 on the upside is possible in the near term followed by a corrective dip back towards 12000.
19800-19850 is the immediate upside limit for Nikkei (19678.67, +0.17%) just now. Looking at the US-Japan 10Yr yield differential (2.12%), while the yield differential is headed lower towards 2% Dollar Yen (110.04) and Nikkei could be vulnerable to a sharp fall in the coming sessions.
Shanghai (3372.98, +0.36%) recovered sharply giving a false break below 3360 yesterday. If the index manages to sustain above 3360-3375 region, it could indicate the current rally that started from 3200 in August to continue this month as well. In that case, we may negate a fall towards 3275 mentioned yesterday.
Nifty (9917.90, +0.34%) is trapped in the 9950-9750 region just now. We have to remain cautious while below 9950; in case the index fails to break above 9950 in the current rise, it could come off towards 9750 and fall lower in the near term. Else a sustained break above 9950 could give some relief taking the index back towards 10000 or higher. For now preference is for a sharp rejection from 9950.
COMMODITIES
Gold (1324) moved higher as Dollar index failed to hold its ground above 93 regions. Immediate trading range for Gold is 1280-1350 with an interim resistance at 1335. Gold is not overbought yet thus a quick rally could be seen upon a beach of 1335. Similarly Silver (17.54) has also broken its resistance of 17.50 and heading towards 17.80 and 18.00 regions respectively. Both Gold and Silver are out of their short term bearish channel but the supports of 1280 and 16.90 should hold to keep the present bullish momentum intact.
Copper (3.10) is trading within the narrow range of 3.00-3.12. Only above 3.12 (which is still working as strong resistance), higher levels of 3.26 can come into consideration. The only concern in the short term overbought condition which may drag the prices towards 3.00 levels. But we will remain bullish on copper while it is trading above 2.88 levels in the medium term time frame.
Delayed reaction of a weekly shortage in US oil inventory had been seen in both Brent (52.76) and WTI (46.98). Overnight rally pulled the prices up towards their crucial resistance of 52.80 and 49 levels. But we will remain neutral on Brent and WTI, while they are trading below 52.80 and 49 levels on a weekly closing basis.
FOREX
The mentioned Support at 1.1800 held well on the Euro (1.1907), producing a decent bounce. It may now consolidate between 1.1850-2000 for a few days trying to figure out where to go for the nest couple of weeks. Perhaps the upcoming ECB meeting on 7th September will set the direction.
Dollar-Yen (110.04) too turned down well from the mentioned Resistance at 110.65 yesterday. Support at 109.80-50 today. If it breaks, we may see 109.00 next week. On the other hand, should there be a break above 110.65, much higher levels will come into play. Two way possibility in Yen, keep options open. Some greater preference may be given to the upside.
The Euro-Yen (131.04) saw the anticipated dip to 130.80-60 yesterday and is bouncing from there. A rise to 132.45 is possible, which could support the upside preference in Dollar-Yen as well.
Although we were expecting an indecisive range of 1.2825-2925 on the Pound (1.2944) it got bought strongly on an intra-day dip to 1.2850 yesterday. This might suggest increasing strength for the Pound, contrary to our expectation. Continue to watch.
Decent bounce in the Aussie (0.7950) from an intra-day dip to the lower Support at 0.7865 mentioned yesterday. This increases the chances of an eventual rise towards 0.81, but the barrier at 0.80 needs to be broken first.
The Yuan (USDCNY = 6.5785) is trading stronger again. We will be keen to see if the pair bounces from here or not, as we perceive the current levels to be a crucial Support. Let us see.
Dollar-Rupee had closed at 63.90/91 yesterday. It trades at 63.93/94 on NDF just now. It is expected to continue to trade in a range, with the range possibly expanding to 63.80 on the downside.
INTEREST RATES
Euro has managed to rebound from its intraday low asThe German-US 2 Yr Spread (-2.09%) and the German-US 10Yr Spread (-1.76%) both are trying to find support at current levels. If the German-US 2Yr Spread could manage to move up towards -2.00% then it could possible pull up the Euro too.
Sideways move had been seen in the benchmark US 10Yr yield, between 2.09-2.15 regions. But there are rooms for further downside towards 1.97 if the US 10Yr will close below 2.09% on a daily closing basis.
The Japanese 5Yr JGB (-0.14%), 10Yr JGB (0.01%) and the 30Yr JGB (+0.82%) are continuing their consolidation at current levels, suggesting a possible bounce in near term time frame.
The UK 5Yr and 30Yr Gilt Yields moved up (5Yr 0.44% and 30Yr 1.60%) in line with our expectation.The UK 10Yr (1.04%) has also rebound from its low of 1.00.
