STOCKS
Dow (23526.18, -0.27%) came off respecting out earlier mentioned levels near 23600. But overall still has some chances of testing 23750-23800 in the near term. Trade within 23400-23800 looks likely for the coming sessions.
Dax (13015.04, -1.16%) is likely to move up in the coming sessions targeting 13400 and higher with some interim dips. Currently near 13000, the index looks bullish while above 12900.
Nikkei (22590.27, +0.78%) is stuck within the 22750-22000 region unable to decide further direction just now. A fall towards 22250 looks probable in the coming sessions.
Shanghai (3423.63, -0.20%) has also seen a dip in trade similar to Dax. But overall the trend remains up with medium term target of 3440-3460 levels.
Nifty (10342.30, +0.15%) could possibly see a dip today to 10130 before again moving up in the near term. Levels near 10400-10500 is likely to hold for the medium term pushing the index back towards 10100 and lower. But a test of 10500 before that is likely.
COMMODITIES
Gold (1290) moved up yesterday but could again come off to 1280. As mentioned earlier, trade within 1280-1300 is possible in the near term with gradual upmove in the next couple of weeks.
Silver (17.09) is trading in the 17.30-16.90 region. The movement is expected to narrow down in the next few sessions before breaking on either side.
Brent (63.19) could see some interim dip to 62.20 before again moving up towards 64.00-64.60 again. Overall view is bullish with possible corrective dips. WTI (57.88) could also see a pause today before again moving towards important resistance of 59.
Copper (3.1385) is likely to test 3.15-3.20 in the coming sessions with possible dip to 3.10-3.05 again.
FOREX
The Dollar took a beating yesterday after the FOMC Minutes revealed that members are still not convinced about Inflation rising fast or enough. Contrary to expectation, this has led to a dip in US yields (see Interest Rates below) and sent the Dollar Index (93.25) lower, breaking the uptrend since 91.00 (Sep ’17).
The Euro (1.1820) has moved up in line with our expectation of a bounce to 1.1800-50, but the cited support at 112 on Dollar-Yen has broken, pushing it down towards the alternative target of 111. The Euro can see further strength towards 1.19 while the Yen could gain further towards 110.
Our expectation of continued range-trade in the Pound (1.3323) seems to have been wrong with the Pound now trading above the range-resistance at 1.33.. Maybe we have to examine chances of further rise towards 1.35 now?
Also, the Chinese Yuan (6.5911) has surprised us by its large gains while we were looking for weakness towards 6.65.
Dollar weakness could reflect in Dollar-Rupee which closed near 64.91/92 yesterday. It trades near 64.83 on the NDF market today.
Note, Japan and US markets being closed today, trading could be a little quiet.
INTEREST RATES
Although the FOMC Minutes sent US yields lower, the market’s expectations of a December rate hike remained the same.
Even though the September and October CPI (2.23% and 2.05% y/y) have come in above 2.0%, perhaps the FOMC is looking at the Core CPI which remains well below 1.8%. We continue to look for Brent (63.16) to move up towards 65+ over the coming months, although a rise past 70 could take time.
To the extent a sharp rise in Brent above 70 is delayed, the US 10Yr (2.32%) might range sideways between 2.25-2.50% over the next few weeks. In the near term, yesterday’s dip below 2.35% brings up chances of a test of 2.25% on the downside.
In India, there is a Bloomberg report that the Treasury Head as SBI is taking a contrarion call, looking for 10Yr GOI (6.9585%) to move down towarsd 6.75% and 6.50% in the medium and long-term. On our side, we see Support at 6.80%. So, it will be interesting to see where the market actually goes.
