STOCKS
Almost all stocks are trading low and the corrective phase may extend for a few more sessions.
Resistance near 23600 on the Dow (23409.47, -0.13%) is holding well for now and could push the index down towards 23200-23000 or lower in the near term. Near term likely to remain sideways to bearish.
Dax (13033.48, -0.31%) has bounced back from levels near 12960-12900 as expected and while that holds, a bounce towards 13200 is possible. Only if the index breaks below 12900, we would focus on lower levels for the coming sessions.
Nikkei (22246.07, -0.60%) resumed its fall unable to sustain a break above 22500. Lower levels of 21800-21750 are possible in the coming sessions. Dollar Yen (113.17) is also trading lower and a fall below 113.0-112.9 would push Nikkei to further lows in the near term.
Shanghai (3416.21, -0.39%) could test levels near 3380-3370 soon while resistance near 3450 holds. Near term looks bearish.
Nifty (10186.60, -0.38%) is likely to test important support of 10125-10100 today. A bounce from these levels could see another rally towards 10300; else a fall below 10100 could extend weakness for the medium term.
COMMODITIES
Gold (1282.10, -0.06%) could start moving up towards 1300 by next week and move up further by end of this month. Enough room is visible on the upside while support near 1260 holds.
Silver (17.05, -0.16%) could test 17.25 before coming off towards 16.60 again. Overall the price is likely to remain sideways within 17.00-16.60 in the coming sessions.
Brent (61.47) has decent support at 60.85 but the falling momentum looks strong just now and could take the index towards 60. Thereafter a bounce back towards 63 is likely.
WTI (55.11) tested immediate support of 54.75 before closing at higher levels. While 54.75 holds, there is a chance of trading within the 54.75-57.00 region. A sustained break below 54.75, if seen could turn bearish for the price in near term opening up lower levels of 53
Copper (3.0515) may come off towards 3.00 or lower while the Chinese stocks trade lower. An extension towards 2.95 is also likely.
FOREX
Contrary to expectation, the Euro (1.1792) has risen strongly past 1.1745 and the Dollar Index (93.82) has broken below the cited support level of 94.25-20. In retrospect, we missed seeing the Resistance at 95.15 a week ago.
The rise in the Euro/ fall in the Dollar Index has been despite the US PPI rising 0.4% (m/m), higher than the market expectation of 0.1%. It was perhaps triggered by Q3 German GDP coming in at a strong 3.3%, higher than the market expectation of 2.4%. European Q3 GDP clocked 2.5% (y/y), compared to the last us gdp reading of 2.95%.
In the bigger picture, perhaps the fall from 1.2092 to 1.1555 in the Euro was only corrective and we now have to think of possibilities of sideways trade between 1.1850-1500 over the next few weeks.
Dollar-Yen (113.20) has also come down, hurt by the weakness in the Dollar Index. With this, the Resistance at 114.50 has proved to be insurmountable till now. If the expected Support at 113.00 fails to produce a bounce, we may have to consider chances of a fall to 112.00 as well.
Also contrary to expectation, the Euro-Yen (133.85) has risen sharply, pulled up by the rise in the Euro instead of the anticipated rise in Dollar-Yen. Need to see if the cited Resistance at 134 holds or not.
The Pound (1.3136) has moved up a little in line with the expectation of range trade between 1.30-32. The Aussie (0.7588) continues to remain above the Support at 0.7600 and as such the chances of a rise to 0.77 remain valid.
Dollar-Yuan (6.6331) is trading sideways as expected, hesitating to rise past 6.65. Dollar-Rupee (65.42) rose to 65.5350 yesterday, but did not see follow-through buying. Look for a range of 65.30-60 over the rest of the week.
INTEREST RATES
The German-US 10Yr Spread (-1.96%) has dipped from -1.97% as the German 10Yr (0.39%) has come off a bit from the Resistance near 0.42% mentioned yesterday. The German 30Yr (1.28%) has also come off a bit from the Resistance at 1.31%.
Contrary to expectation, the US yields have also dipped a bit. The 10Yr has dipped from 2.40% to 2.38% and the 30Yr has dipped from 2.87% to 2.83%, despite the more than expected rise in the US PPI. Perhaps yields have come down along with the expected dip in Brent (61.56).
With chances of some more downside to 60 on Brent in the near term, US yields could dip some more, but the US 10Yr (2.38%) may has Support in the 2.35-30% region now. Watch the US CPI data release. A number higher than 2.65% (y/y) could pull Yields back higher.
The 10Yr GOI (7.0502%) has continued to rise and may test 7.06-07% before a corrective dip to 7.00%.
