STOCKS
Dow (23516.26, +0.35%) continues to move up and the 3-day line charts show a possibility of a rise towards 24000 maybe in this month. Near to medium term looks strongly bullish.
Dax (13440.93, -0.18%) is testing resistance on the 3-day candles but at the same time has more room on the upside towards 13600-13700 on the line charts. Either a rejection from current levels is possible with resumption of the upward rally later on or the index may continue to rise in the next week. While other global indices are rising the Dax would prefer to move up too with the other major indices.
Nikkei (22539.12, +0.53%) is all set to test 22666 on Monday but would it rise higher to make fresh highs would be a big cue for Dollar Yen in the medium term. A break above 22666 would be a trigger to more upside in the coming sessions. Need to be careful above current levels.
Shanghai (3372.59, +0.32%) has support at 3360 and could bounce back from there towards 3400 in the next week. Near term looks bullish.
Nifty (10423.80, -0.16%) dipped slightly yesterday but while it trades above 10400, a rise towards 10500-10600 is a possibility.
COMMODITIES
Gold (1276.80) is almost stable at current levels. While above 1265-1270, view remains bullish.
The resistance seen on the 3-day line chartsseem to be holding well for now and could push Brent (60.78) towards 58-55 levels in the near to medium term. Only on a break above 62, we would focus on higher levels of 65. Preferred view is a downward correction towards 58 and lower. Some sideways movement is possible just now.
Brent-WTI (6.03) is coming off sharply from levels near 6.75 and could head to lower levels of 5.5 in the near term. WTI (54.77) could face some rejection near 55.00-55.08.
Copper (3.1520) is likely to trade in the 3.05-3.25 region for now.
FOREX
Most currencies are trading at crucial juncures just now with perhaps greater chances of further weakness ahead.
There’s been a sharp fall in the Pound (1.3071) despite the 25bp increase in interest rates by the BOE yesterday, with chances of more hikes to come. This is in keeping with our suggested view of range trade between 1.31-33. Careful now as a further decline from here could herald 1.2750 in the medium/ long term. Watch today.
Overall Dollar strength prevails and the Dollar Index (94.70) has chances of rising further towards 95.50. If so, the Euro (1.1659) could weaken next week, as it was unable to sustain a rise to 1.1687 yesterday.
Dollar-Yen (114.02) trades higher, but just below important Resistance at 114.50. A break of Resistance, if seen, could propel the market much higher, but we would not like to pre-empt such a move. The Euro-Yen (132.89) may have potential for a near-term dip towards 130.
The Support at 0.7630 has held well on the Aussie (0.7685) giving it a bit of a bounce, but it also has a relatively strong Resistance at 0.7750 overhead. A strong rise can be seen if that Resistance breaks.
Dollar-Yuan (6.6157) has recovered a bit after a dip below 6.60 yesterday and might try to rise towards 6.64 while above 6.58. Dollar-Rupee (64.61) also bounced from 64.50 yesterday and can try to test 64.70 in the near term.
INTEREST RATES
Yields have been coming down across the developed world over the last two days.
Strangely, UK yields (5Yr 0.71%. 10Yr 1.26%, 20Yr 1.76%) have dipped despite a 25bp rate hike by the BOE yesterday. The 5yr and 20Yr have Supports near current levels. We need to see if they will hold/ break today.
In USA, the 30Yr (2.83%) may have Support near 2.75% while the 10Yr (2.35%) may have Support near 2.25%. The market expects to see a post-hurricane rebound in US NFP today. Any disappointment could lead to these Supports being tested. Longer term, however, the market is looking for a rate hike by the Fed in December.
The German 10Yr (0.38%) is holding above Support near current levels while the 30Yr (1.25%) has some room to dip to 1.125% in the near-term. The German-US 10Yr Spread (-1.97%) has bounced from -2.05% over the last few days (resulting in the ongoing consolidation in the Euro). We now have to see if it can break above the now crucial Resistance at -1.95%.
In India, the 10Yr GOI (6.8611%) dipped a bit from 6.893% earlier, but remains in an overall uptrend for now. Resistance may be available near 7.00%.
