STOCKS
Almost all major equity indices seems to have initiated a corrective dip except Shanghai and could continue to fall next week, bringing a pause to the recent rally.
Dow (23461.94, -0.43%) has immediate support near 23400 and lower upport on the weekly charts at 23000. While that holds, there could be a decent dip in the index today before again trying to rise higher in the medium term.
Dax (13182.56, -1.49%) has come off from resistance visible on the 3-day candle chart. While the resistance holds, the index could come off towards 13000-12800 in the near term. Immediate view is bearish for the next week.
Nikkei (22547.42, -1.40%) finally seems to have formed a top below 23500 and while that holds, the index could see either a sharp correction possibly heading towards 22000 or consolidate sideways near current levels. The fall in Dollar Yen if continues can pull down Nikkei in the coming sessions.
Shanghai (3419.76, -0.23%) has some room on the upside towards 3460-3500 for the near term. Note that 3500 is an important resistance on the upside and the index could be ranged in the 3500-3380 region for at least the remaining sessions for this month.
Nifty (10308.95, +0.06%) is likely to come off towards 10100 in the coming sessions before again trying to attempt arise towards 10500 again in the longer term. Immediate view is bearish.
COMMODITIES
Gold (1285.34) is slowly trying to rise towards 1300. But an interim rejection from 1290 is possible just now which could push the price to levels near 1280-1270 again. An eventual rise towards 1300 is possible in the coming week.
Brent (63.78) could possible trade in the 65-63 range for a few sessions before trying to attempt higher levels. While 65 holds, we may also look at a possibility of a fall towards 62-61 in the medium term.
WTI (57.03) could find an interim support near 56.50 which if holds could keep the price range bound within 56-58 region. A break above 58 could open up chances of testing 59 in the longer term.
Copper (3.0820) is trading near immediate support on the daily candle chart. If that holds, the price could bounce back towards 3.20-3.25 again in the coming week. Near term looks bullish.
FOREX
The Euro (1.1640) as the ECB has upped it’s European growth forecast from 1.7% to 2.2% (for 2017) and from 1.8% to 2.1% in 2018, leading to a hardening of German yields (see Interest Rates below). The change in direction now targets 1.17 in the near term. 7nclear whether we will get to see a rise past that.
Dollar-Yen (113.30) has come off substantially from the 114.50, the Resistance that was holding it down for the last several days. Crucial Support seen near 113 now. A confirmed break below that could be very bearish.
Basically, the market has to decide whether it has had enough of Dollar strength or it still believes in the rise of the Dollar Index (94.53) from the September low of 91.The uptrend looks intact while Support at 94.25 holds.
The Pound (1.3145) trades near a crucial Support, with deeper Support near 1.3025. It could be a candidate for a bounce if these Supports hold over the next few days.
The Aussie (0.7683) has been ranged roughly between 0.7625-7725 over the last two weeks. Still, it seems a final dip to 0.7600 would be appropriate. Note that Copper could stage a bounce from near current levels. To that extent the downside might be limited for the Aussie as well.
Dollar-Yuan (6.6390) could be on the threshold of a strong rise, but needs a break above 6.65-66 for confirmation. This will be interesting to watch. Similarly, Dollar-Rupee (63.95) needs a break above 65.10-15 to confirm a strong rise.
INTEREST RATES
The German 10Yr (0.37%) and the 30Yr (1.26%) have both moved up from 0.33% and 1.21% respectively, on the back of the increase in European GDP forecasts by the ECB. But we need to see the 10Yr move up past 0.40% in order to be able to think of a sustained rise.
Meanwhile, the US Yields have also risen, albeit a little less. The 10yr (2.34%) is up from 2.33% while the 30Yr (2.82%) is up a goodish bit from 2.78%. The 30Yr has potential to test 3.00% in the coming weeks while the 10Yr can rise to 2.50% while above 2.25%.
It is possible that the German-US 10Yr Spread (-1.97%) may find Resistance near current levels.
Significantly, in India, leading bankers (Uday Kotak of Kotak Mahindra Bank and Rajnish Kumar of SBI) have started talking about limited room for a rate cut. The 10Yr GOI (6.9314) has been trading above 6.85% this week and has moved up steadily in the last few sessions. 7% is an important resistance just now, which if breaks could initiate sharp rise for the medium term.
