STOCKS
Dow trades higher after the FOMC and looks bullish for the near term. A rise above 35000 is needed to prevent further fall towards 33000. Dax is also bullish and needs to sustain above 15500 to move up further. Nikkei looks bearish while below 30000. Shanghai has risen well from support and looks bullish. Nifty and Sensex can see a steady rise in the near term.
Dow (34258.32, +338.48, +1%) has risen back above 34000 and while it holds strong, we may expect a rise back towards 34500-34750. However, in the medium term it needs to rise above 35000 and sustain higher to prevent any vulnerability to fall back towards 33000.
DAX (15506.74, +158.21, +1.03%) has risen well too but needs to rise and sustain above 15500 to indicate bullishness towards 15700/800 in the medium term.
Nikkei (29639.40, -200.31, -0.67%) continues to fall over the last few sessions and the view is bearish while below 30000 to see a dip towards 29250-29000 followed by a rise towards 30500-3700 eventually in the longer run. Japan markets are closed today.
Shanghai (3648.57, +20.08, +0.55%) rose sharply from support near 3560 and while that holds, view is bullish on the shanghai.
Nifty (17546.65, -15.35, -0.087%) went up to test the level of 17623 and has come down from there yesterday. The view is bullish while above 17200-17400 to see a rise towards 17700-1800 levels eventually.
Sensex (58927.33, -77.94, -0.13%) has come down too. Sensex has support at the level of 58500 which can hold and we can see a bounce from here towards the level of 59500-60000 eventually.
COMMODITIES
Commodities have risen well. Crude prices have risen and are heading towards resistances. Brent needs to hold below 77-78 while WTI can test 73-74 before coming off from there. Any break above the mentioned resistances can take them higher towards 80 and 75 respectively which are crucial in the medium term. Gold has dipped and needs to sustain above 1740 to move up again soon. Else a fall to 1725/00 cannot be negated in the longer run. Silver can fall towards 22-21.50 but before that it can attempt to rise towards 23.50. Copper tested 4 and has bounced back well from there. It can now rise back towards 4.30/40.
Brent (76.44) has risen well breaking above 75 and could now head towards interim resistance at 77-78 above which there is crucial resistance at 80. The broad 77-80 zone is likely to be tested before a sharp fall towards 70 is seen in the medium term.
WTI (72.41) has risen well as expected and could test 73-74 in the near term.
Gold (1763.90) has fallen as expected from resistance zone of 1780/90 and while that holds, a dip to 1740 cannot be negated. We would have to watch price action near 1740 to see if the price bounces from there or falls further down in the medium term. While correlation with Euro remains strong, a possible bounce in Euro from 1.1665 can help Gold bounce back too.
Silver (22.55) has risen a bit and has scope to rise towards 23.50 before falling off from there. Any break below 22 if seen in the near term would prove contrary to our view and lead to a sharp fall towards 22-21.50. .
Copper (4.1960) fell to almost test 4.00 before rising sharply from there. While above 4.00/10, the price can rise back towards 4.30/40 in the near term.
FOREX
FED announced that it would start tapering by end of this year and stop purchases by mid-2022. It also signaled 3-rate hikes in 2023. Dollar Index rose sharply but needs to sustain above 93.40 to trade higher else a decline towards 93 is possible soon. Euro has broken below 1.17 and may test 1.1665 support which needs to hold to prevent further dip to 1.16. Aussie and Pound have bounce well from immediate supports. USDCNY is holding below resistance zone of 6.47/48. USDINR can test 74 on the upside but has 50% chance that it would come off from there back to 73.80/60. Watch price action near 74.00
Dollar Index (93.44) rose sharply to 93.4150 yesterday as FED announced starting of tapering by end of this year and signaled 3-rate hikes in 2023. Although the index has come off a bit it needs to break below 93.40 and sustain lower to avoid any further rise towards 93.60-93.80 in the near term. Watch price action near 93.40.
Euro (1.1697) fell to test 1.1684 yesterday before rising slightly from there. Note support near 1.1665 which needs to hold in order to keep some room on the upside intact. Else a fall towards 1.16 cannot be neagted.
EURJPY (128.50) has bounced well from support near 128 and while it holds, there is scope for a rise to 129 in the near term.
Dollar-Yen (109.88) rose sharply along with the rise in Dollar Index. But note that the pair still trades within 109-110.40 range which could hold for some more time.
Aussie (0.7226) has paused its fall near 0.7220-0.7200 and a bounce looks possible from current levels towards 0.7250-0.73 eventually.
Pound (1.3625) seems to be holding above 1.36 and while that holds, a bounce back to 1.3650-1.37 cannot be negated in the near term. Only a break below 1.36 if seen will force to look for lower levels.
USDCNY (6.4677) moved up but the resistance zone of 6.47/48 seems to be holding as of now. While below the mentioned resistance zone, the pair can come down towards 6.46/45 again in the near term.
USDINR (73.8750) needs to sustain the rise above 73.80 seen yesterday to test resistance at 74 on the upside. Else a fall from current levels is likely towards 73.80/60. We have 50% chance of resistance at 74 holding.
INTEREST RATES
The US Federal Reserve left the rates unchanged at 0%-0.25%. It had said that the stimulus taper will begin soon. The PCE and Core PCE inflation projections have been revised higher to 4.2% and 3.7% respectively from its earlier projection of 3.4% and 3% respectively. The US Treasury yields have risen at the near-end (2Yr and 5Yr) while the far-end (10Yr and 30Yr) yields have seen a dip. A break below the immediate supports can drag the far-end yields further lower from here. The German yields remain stable and are likely see a fresh fall from here and resume the broader downtrend. The 5Yr and 10Yr GoI have risen-back yesterday. However, they have key resistances ahead that can cap the upside and keep it pressured for a further fall going forward.
The US 2Yr (0.24%) and 5Yr (0.85%) Treasury yieldshave risen while the 10Yr (1.30%) and the 30Yr (1.81%) have dipped after the Fed meeting outcome. A fall below 1.28% on the 10Yr and 1.8% on the 30Yr can drag the yields to 1.2%-1.18% (10Yr) and 1.7% (30Yr) in the coming days. It will also negate the chances of seeing 1.4%-1.45% (10Yr) and 2% (30Yr) on the upside. We will have to wait and watch the follow-up movement in the coming sessions.
The German 2Yr (-0.72), 5Yr (-0.64%), 10Yr (-0.33%) and 30Yr (0.16%)yields continue to remain stable below their key resistances. Our view remains the same. We expect the yields to resume the broader downtrend and see a fresh fall from here. The 10Yr can fall to -0.5% while below -0.25% and the 30Yr can test 0% while it sustains below 0.2%.
The Indian 10Yr GoI (6.1390%) and 5Yr GoI (5.5938%) bounced-back yesterday. However, resistances are at 6.16% and 6.2% for the 10Yr and 5.6% and 5.64% on the 5Yr which can cap the upside from here. While these resistances hold, our broader bearish view of seeing 6.1%-6% (10Yr) and 5.55%-5.5% (5Yr) on the downside remains intact.
