STOCKS
Equity indices are almost mixed. Dax could face some rejection near current levels while Dow and Nikkei could remain stable. Shanghai and Nifty are trading strong and looks bullish amongst others.
Dow (20934.55, -0.07%) is stuck within important resistance and support levels of 21200 and 20800 respectively and needs a clear break on either side just now to decide on further direction. However, we prefer a break on the upside in the early next week.
Dax (12083.18, +0.61%) has come up to test resistance near 12200 and while that holds, a small dip is possible. A break above 12200 could be bullish towards 12400.
Nikkei (19523.17, -0.34%) is stuck within the narrow 19600-19400 region and could spend a couple of sessions in this range. Medium term looks bullish towards 19900-20000 levels on a break above 19600.
Shanghai (3270.35, +0.05%) could be headed higher while above 3250. Looking at the weekly line chart, the index looks bullish for the medium term. We could expect a rise towards 3300 just now with a higher target of testing 3400 in the medium term.
Nifty (9153.70, +0.76%) has risen sharply this week maintaining above the 8930 support level on the Weekly candles. Our initial target of 9130 has been broken yesterday and we now look towards 9280 in the coming sessions.
COMMODITIES
Gold (1227) is trading below 1240, which is the pivot of its recent trading range of 1213-1266.This could open up lower supports at 1213 and 1200 respectively. While 1200 may hold for a few sessions, considering the short term oversold state, but the chances of seeing 1180 and lower levels are much greater now.
Silver (17.31) is also trading within the range of 16.81-17.45.In case of any short covering, the upside in the near term may be limited for bullion. The trend is bearish in the near to medium term time frame and any corrective bounce may face selling pressure at the higher levels.
Copper (2.67) was unable to close above its pivot at 2.72 of its recent trading range of 2.55-83. We will remain bearish while it is trading below 2.70-72.Only a close above 2.72 could negate our short term bearish view.
Brent (51.77) and WTI (48.83) both are still within their narrow trading channel of 50-52.50 and 47.5-50. It may consolidate within these levels for few more sessions though the possibility of a decline towards channel supports can’t be ruled out. We will remain bearish while Brent and WTI are trading below 53 and 50 levels respectively.
FOREX
Further weakness overnight for the Dollar against the Euro (1.0775), but some recovery against the Yen (113.45). The Dollar Index (100.26) trades lower while the Euro-Yen (122.23) trades higher. As mentioned yesterday, break below 100.40 on Dollar Index sets up a near term target of 99.00. Further weakness below 99, although possible, may take time to materialise.
The Euro-Yen looks like it wants to test 123, a move that may be driven more by Dollar-Yen (113.45) if it manages to remain above 21-week Moving Average Support near 113.00
Near term Resistance is coming up near 1.08 on the Euro, so be careful about chasing the market and buying late. While below 1.08, we could see a corrective dip towards 1.07-1.06 again. That said, in case there is a strong break above 1.08, the focus will shift upwards to 1.10. For that to happen, the Dollar Index may need to break below 99, which may take time.
The Pound (1.2350) has broken above the resistance at 1.23 mentioned yesterday and is close to testing near term Resistance at 1.2410-20, which might hold on first testing. An eventual break, if seen, will pull the Pound up towards 1.26. The Euro-Pound (0.8721) is relatively bullish while the Pound-Yen (140.15) is trading sideways.
Important Resistance is seen near 0.7725 on the Aussie (0.7685) which is holding for now. In case it is broken some more upside towards 0.7810-20 may be possible, but that too may hold.
In sum, although the current Dollar weakness can persist for a day or two, be aware of Support at 99 on the Dollar Index and Resistances at 1.08 on the Euro, at 1.24 on the Pound and 0.7725 on the Aussie.
Dollar-Rupee trades near 65.35 on the NDF. Possibly the RBI will try to limit its downside for the while.
INTEREST RATES
The US yields recovered a bit yesterday but continues to trade below the immediate resistance levels. The yields could come off a little more in the near term before again heading towards respective resistance levels.
The Japanese yields have paused after the recent fall in the last few sessions and could possibly move up a little in the near term. The 5Yr (-0.13%), 10Yr (0.08%) and the 30Yr (0.84%) are almost stable compared to yesterday’s levels.
The UK 10-5Yr (0.65%) has recovered as expected and could move up towards 0.70-0.75% in the coming sessions. That could possibly help the yields also to recover a bit on the higher side.
