STOCKS
Equity indices may test immediate support levels which could attempt to produce some bounce in the near term.
Dow (20661.30, -0.03%) has taken support on the daily candles near 20578 and in case this holds, we could see an attempt to move higher towards 21000 in the next few sessions but in case the support breaks on the downside, we would have to get ready to see levels near 20400 or even lower in the medium term.
Dax (11904.12, -0.48%) is headed towards support near 11700 and if that holds, we could see a rise to levels near 12000 again.
Nikkei (19068.22, +0.14%) is trading within the 19600-18600 region. No major movement expected just now and we could possibly see another 1-2 sessions with small or stable movements. Note important 21-week MA that could possibly act as an immediate support.
The channel support on the daily candle is holding well on Shanghai (3257.14, +0.37%). If it continues to holds in the near term, we could see a bounce towards 3275 and higher in the coming sessions.
Nifty (9030.45, -1.0%) could possibly get some support near 8990-9000 from where a bounce could be expected (a max low of 8970/60 is possible on a break of 8990, if seen) towards 9100.
COMMODITIES
Gold (1245) found resistance at 1250 and trading within a narrow range of 1240-1250. A break on either side could be decisive.
Silver (17.54) still shows no sign of direction as it is hovering around its pivot at 17.45 of its trading range of 16.82-18.00.
Copper (2.62) found support at 2.57 levels. While 2.57 hold, a bounce to the interim resistance 2.68-70 can be seen. Only above 2.70, higher resistances of 2.80 can come into consideration. In the medium term 2.55-57 are going to be a strong support now and the chances of a close above 2.70 have increased.
With a 5.0M barrel surplus in U.S. weekly crude inventory, both Brent (50.93) and WTI (47.34) has fallen in line with our expectation. We are bearish on Brent and WTI since 8th March, 17 . Considering the short term oversold sate, we may see some profit taking rally towards their respective resistances of 52-53 for Brent and 48.50-49.80 for WTI respectively. But the trend is still bearish in the near to medium term time frame. Any corrective bounce may face selling pressure at the higher levels.
FOREX
The markets are very quiet, waiting for the Fed Chair Yellen’s speech and the Republican attempt to pass a health-care bill tonight.
It is just another session for Dollar Index (99.82) below 100 with little activity seen in the markets. Upside remains limited to 100.50 in the near term. Repeat – the narrow band of 99.00-98.50 is a very significant support zone which may be tested in the coming days
Euro (1.0785) is consolidating at the higher levels not too far away from the major resistance of 1.0830-50.As discussed yesterday, though the upside possibilities must be considered more now, we prefer to wait and watch till a clean break above 1.0850 is seen.
Dollar-Yen (111.44) may face selling pressure near 111.70-112.00 and 113.00, if it manages to rise that high, in any bounce with greater chances of seeing 110 in the near term.
Pound (1.2482) has tested the support of 1.2440-20 and bounced back strongly, indicating its intention to rise higher towards 1.2650-1.2700.
Aussie (0.7654) is stable inside the band of 0.7600-0.7750 as expected and this range may continue for a few sessions more with a downward bias in the medium term.
Dollar Rupee (65.44) moved little in the last session as it closed exactly at the midpoint of our expected range of 65.20-70. As stated before, the sideways consolidation is expected to continue.
INTEREST RATES
The US yields have paused. The 5yr (1.95%), 10YR (2.42%) and the 30Yr (3.03%) are stable and could see a slight bounce in the next couple of sessions.
The US 10-5yr (0.46%) is down 1bps and could head towards 0.45% in the near term.
The US-Japan 10YR (2.35%) could bounce from support at current levels indicating that the strength I Yen could be limited in the near term. While the support holds, the near term looks potentially bullish for the yield spread and Dollar-Yen. 9refer FOREX section above for specific view on Yen)
The German-US 10Yr (-2.01%) is testing resistance near current levels which if holds could bring it down towards -2.05% or lower in the near term. This could coincide with the 1.0830 resistance on euro indicating that a corrective dip is on its way for the coming sessions.
