STOCKS
Dow, Dax and Nikkei looks bullish while Shanghai may trade sideways attempting to move up eventually. /nifty trades below the all time high of 10140. Need to watch price action at those levels.
Dow (22158.18, +0.18%) continued to rise as expected and could re-test the previous high of 22200 seen in August. As mentioned yesterday, the upward momentum looks strong just now and the index may possibly break above 22200 to make fresh highs in the near term.
Dax (12553.57, +0.23%) is also headed up just like the Dow and could target higher levels of 12750-13000 in the medium term. Also note there could be a slight pause near 12675 levels before resuming the rise towards 12750 and higher.
Nikkei (19876.42, +0.05%) could head towards 20500 in the next couple of weeks; looking at the weekly candle chart. Immediate target is 20200 where the index may take a pause. Long term target is seen at 20500.
Shanghai (3386.15, +0.06%) continues to trade below 3400. An eventual break above 3400 is possible after a couple of sessions. For now sideways consolidation within 3400-3360 looks more likely. A break above 3400, if seen could take it higher towards 3420-3440 in the long term.
Nifty (10079.30, -0.14%) is all ready to test the high of 10140 from where a corrective dip is possible towards 10000. If not a sharp fall, the index could trade sideways within 10140-10050 region to gather more force for a sharp upmove later on. For now the index looks bullish towards 10140.
COMMODITIES
Commodity metals are in a corrective mode after the recent rally in the last few weeks. Only Crude prices look bullish for the enar term as they are on the verge of breaking immediate resistances to surge higher in the coming sessions.
Gold (1321.38) might have possibly made a near term top just below 1360 and the current dip could possibly take it back towards 1300 levels.
Silver (17.70) could get some support at 17.50 from where a bounce looks possible.
Copper (2.9815) has been coming off sharply since the last 2-sessions and could possibly test 2.90 over today and tomorrow before taking a pause. This is the first sharp correction after the price started rising from levels near 2.50 in June.
Brent (55.03) has broken above immediate resistance near 54 and is now indicative of a sharp rise in the coming sessions. While above 54, Brent could target 58.00-58.40 levels in the coming sessions. Also note that 55.60 is an important level and that needs to break to move higher towards 58. Near term looks bullish.
WTI (49.20) is on the verge of breaking above an important near term resistance and if that breaks, WTI could target towards 50.20-52.00 in the longer run.
FOREX
Dollar Index (92.42) has risen past our target of 92.25 to test 92.50. A rise past this level, if seen, could be very bullish for the Dollar.
This is reflected in the Euro (1.1878), which, contrary to the expectation of a slow rise to 1.2050, has broken below important support at 1.19. This threatens the uptrend since 1.1119 (June 2017) and suggests chances of a further dip to 1.1810.
Dollar-Yen (110.52) has also broken above stated resistance at 110.50 to see a high near 110.73 and may now test 111.00 (21-week Moving Average) on the upside. However, the Resistance at 132 on Euro-Yen (131.27) has held well due to the fall in the Euro. A further decline towards 130.35 may be seen in the Euro-Yen, which might limit the upside in Dollar-Yen to 111 for now.
Also contrary to expectation of a rise to 1.3400-20, there has been decent profit-taking in the Pound (1.3202) from levels just above 1.33. While the Pound does not look as weak as the Euro, the 1.33-34 region can now be seen as a strong medium-term Resistance.
Like the Euro, the Aussie (0.8007) has also dipped instead of moving up further towards 0.8070. But, it has done better than the Euro by bouncing from 0.7966 today, just above Support at 0.7950. It might be able to regain bullishness if it is able to sustain the rise today. Need to watch.
It is possible that Dollar-Yuan (USDCNY = 6.5571) has made a significant bottom on the dip below 6.45. A rise past 6.55 (if seen) can lead to much higher levels. Dollar-Rupee (63.9950) traded up to almost 64.20 in the NDF market overnight, but is quoting near 64.00/05 on the NDF now. It can move up a bit towards 64.10-15 today within an overall range of 63.80-64.20.
INTEREST RATES
US Yields have been rising since Friday. The US 10Yr (2.20%) is coming close to testing 2.22-25%. The 5Yr (1.77%) has moved up from 1.75% yesterday while the 30Yr (2.79%) is up from 2.76% yesterday. That said, the 30Yr also has an important Resistance at 2.80%. However, the 2Yr (1.34%) has remained stable over the last three days. There is a chance that the ongoing trend of Curve flattening could ease up for a while.
The August US CPI data is due tonight. See the chart at http://kshitij.com/graph-gallery/fundamentals/uscpi . If it moves up towards 2.00% compared to the last reading of 1.73%, it could trigger a further rise in US yields. We need to watch that tonight. Brent (55.04) has been moving up from levels near 44.50 in June and might suggest an uptick in the CPI.
Watch Resistance near current level on the US-Japan 10Yr Spread (2.16%). If this holds, it could help restrict the rise in Dollar-Yen to 111.00.
The German-US 10Yr Spread (-1.79%) has been unable to rise past -1.72%. A further decline from here, if seen, could break the uptrend since -2.16% and could even pull the Euro lower. Need to watch this closely.
