STOCKS
Dow (21987.56, +0.18%) rose up to test 22040 on the upside before coming off from there to close at lower levels. Note that 22040-22060 is an immediate resistance which could keep the index trapped for a few sessions. An eventual rise towards 22100-22200 looks possible in the near to medium term.
Dax (12142.64, +0.72%) could test levels near 12300 on a break above 12200; else a fall back towards 12000 is possible. Overall broad range of 12300-11900 may hold for some more sessions before we gain some clarity on further course of direction.
Nikkei (19521.44, -0.86%) came off sharply from levels below our expected upside limit of 19800-19850. Although the index has been trying to move up, some inherent weakness seems to be still hovering around for the coming sessions. A fall back towards 19400-19300, is seen would not be surprising. Restating that while the US-Japan 10Yr yield differential (2.16%) has chances of falling towards 2% Dollar Yen (109.78) and Nikkei could be vulnerable to a sharp fall in the coming sessions.
Shanghai (3368.85, +0.05%) has been very quiet and stable above 3350 levels and could possibly continue to remain sideways for some sessions.
Nifty (9974.40, +0.57%) could possibly target 10200 levels again while above 9950 before seeing another down-leg towards 9800. Near term looks bullish.
COMMODITIES
Gold (1337) moved higher as expected and trading above its interim resistance of 1335. As it is not overbought yet, a quick rally could be seen towards 1350. Similarly Silver (17.94) has also broken its resistance of 17.80 and reached almost 18.00 mark. We had mentioned earlier that Gold and Silver both are out of their short term bearish channel with a strong bullish momentum as the supports of 1280 and 16.90 are intact.
Finally Copper (3.14) has penetrated its recent trading range of 3.00-3.12 on the higher side. we had told that above 3.12, higher levels of 3.26 can come into consideration. The only concern in the short term overbought condition which could be resulted short term profit taking anywhere between 3.12-3.26 levels. But we will remain bullish on copper while it is trading above 2.88 levels in the medium term time frame.
Brent (52.48) is hovering around the resistance of its near term trading range of 49.70-52.80.Only a close above 52.80 could open up 55 regions. WTI (47.41) is also trading within the range of 46.50-49 as well. We will remain neutral on Brent and WTI while they are trading below 52.80 and 48 regions respectively.
FOREX
Overall Dollar weakness still prevails for now with the Dollar Index (92.65) trading below crucial Resistances near 92.80-95 and 93.37. But, we have to be careful about chances of a break of this trend.
Some two-way volatility was seen in the Euro (1.1882) after the lower than expected US NFP data on Friday (+156K against the expectation of +180K), but there has not been much movement in Asia today in response to the North Korean provocations over the weekend. 1.1830 is a decent Support for the day, and we may see a range of 1.1830-1930 for a few days within the still prevailing overall uptrend.
There’s been a bit of strengthening of the Yen (USDJPY 109.78) today in response to the North Korean tension. The two-way possibility talked about on Friday seems to be resolving into a sideways range of 108.50-109.50 for the next few days. Within this, a break below 109.50 can yield a dip to 109.20-10, even 109.00.
Contrary to expectation of a rise towards 132.45, the Euro-Yen (130.48) has broken below the earlier support of 130.80, being pulled down by Dollar-Yen. This opens up chances of a dip to 129.45 this week.
The Pound (1.2955) has managed to move up a bit more, perhaps drawing advantage from the slight weakness in the Euro. But, the trend is still not very clear. In the bigger picture, we might say it is trading sideways within a broad range of 1.2750-3150, with decent Resistance at the upper end of the range.
The Aussie (0.7960) has been unable to break above 0.80 yet, but is maintaining its overall strength and chances of an eventual break above 0.80 which could target 0.81.
The Chinese Yuan (USDCNY = 6.5482) continues to strengthen relentlessly for now, breaking below the 6.5785 support mentioned on Friday. Maybe the next target might be 6.50. We will not stand in front of the trend now.
Dollar-Rupee is likely to continue to trade sideways between 63.90-64.10 for some more days, waiting for global triggers to move the market.
INTEREST RATES
Euro moved lower asThe German-US 2 Yr Spread (-2.13%) has dipped from previous levels. There is no change in German-US 10Yr Spread (-1.76%) but Eur seems to be responding more to the German-US 2Yr Spread in short term time frame.
Sideways move had been seen in the benchmark US 10Yr yield, between 2.09-2.16 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.
Muted price action in the Japanese 5Yr JGB (-0.14%), 10Yr JGB (0.00%) and the 30Yr JGB (+0.82%) as they are continuing their consolidation at current levels, suggesting a possible bounce in near term time frame.
The UK 5Yr and 30Yr Gilt Yields (5Yr 0.46% and 30Yr 1.61%) are continuing their bullish momentum in line with our expectation.The UK 10Yr (1.06%) has also rebound from its low of 1.00 as expected and moved higher .
