STOCKS
Global stocks are all mixed. We will have to wait for more directional clarity as most of the indices are trading near indecisive levels. Shanghai looks very bullish just now but Nifty, Dow and Dax are not very clear for the near term.
Dow (21987.56, +0.18%) is trying to move up in every session but is unable to sustain the day’s highs. A break above 22080 is needed to resume the medium term uprtrend. But we do not negate a fall towards 21800 just now.
Dax (12102.21, -0.33%) need to break above 12200 to show a medium term bullish signal; else a fall back towards 12000-11900could be seen in the next few sessions.
Nikkei (19417.31, -0.47%) has been falling for the last 2-sessions as expected. 19250 is an immediate downside target from where a slight bounce could be expected.
Shanghai (3380.13, +0.02%) is trading along the support and could slowly inch up in the near term. A rise towards 3400-3425 looks possible in the coming sessions.
Nifty (9912.85, -0.62%) came off sharply to test 9850 on the downside. Trade within 10050-9800 levels looks possible for the coming sessions. While below 10050, we may expect a narrow range trade for this week.
COMMODITIES
Gold (1341) is inching towards 1350 as the support at 1335 is still intact. But we are doubtful about the sustainability beyond 1350-55 levels due to short term overbought condition. Muted price action had been seen in Silver (17.96) as the scrip is highly overbought thus a price correction towards 17.50 could be seen soon.
Copper (3.16) moved higher as 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.
No directional move had been seen in Brent (52.16) as it 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, otherwise it might come down towards 51. WTI (47.41) is also trading at yesterday’s level, within its range of 46.50-49. We will remain neutral on Brent and WTI while they are trading below 52.80 and 48 regions respectively.
FOREX
Some more dip in the Dollar Index (92.51) compared to yesterday’s 92.65, with further strength being seen in the Yen (USDJPY = 109.32, EURJPY = 130.18) and some recovery in the Euro (1.1906). A further dip towards 92.00 is possible this week. The Chinese Yuan continues to be the strongest performing currency.
We had hinted at chances of Yen strength to 109.20-10 against the Dollar on a possible break below 109.50. Some more downside to 108.85 may also be budgeted for within an a broad sideways range of 108.50-110.50 now.
Our target of 129.45 for the week is a decent possibility in Euro-Yen (130.18), but not very much lower than that. Decent medium-term Support is seen near 129.
This suggests that the Euro (1.1906) will be able to stay above 1.1830 over the next few days and may even make a stab at a rise towards 1.20 by the end of the week. Note the ECB meeting is due this Thursday, 7th September. Whether or not the Euro is able to rise past 1.20 is going to be crucial.
A bit of weakness in the Pound (1.2925) yesterday within the indecisive sideways range of 1.28-30. More immediate range for the day is 1.2900-2975.
The Aussie (0.7963) continues to build strength for a possible rise to 0.81. Good Support at 0.7935 now.
The Chinese Yuan (USDCNY = 6.5375) has strengthened further still and could test 6.50. Dollar-Rupee (64.0550) had risen to 64.1750 yesterday. Watch crucial Resistance at 64.10-15 today.
INTEREST RATES
Euro has rebound as The German-US 2 Yr Spread (-2.11%) and German-US 10Yr Spread (-1.76%) are hovering around at yesterdays levels with no further losses.An immediate bounce from the current levels could boost the Eur as well.Besides we have ECB press conference on 7th Sep 17 at 6.00 pm IST, which may add some more clarity towards the future price action in Euro.
Muted price action had been seen in the benchmark US 10Yr yield (2.166%)for last few days. The immediate support at 2.15% is still intact, thus the US 10Yr could rebound towards 2.20 regions by this weekend.
Sign of a possible bounce has been seen though there were no changes in the Japanese 5Yr JGB (-0.14%), 10Yr JGB (0.00%) and the 30Yr JGB (+0.82%) at this writing.
The UK 5Yr and 30Yr Gilt Yields (5Yr 0.45% and 30Yr 1.61%) are continuing their bullish momentum in line with our expectation.The UK 10Yr (1.05%) is also hovering around its crucial resistance of 1.07-08% levels and a close above that could open up 1.25 levels in medium term time frame.
