STOCKS
Dow (24508.66, -0.31%) has weekly resistance near 24700 and if that holds, the index could enter into a sideways consolidation mode within 24700-24000 before again moving up towards 25000 in the longer term.
Dax (13068.08, -0.44%) came off sharply and could try to re-test lower levels of 12900 again before moving back towards 13100 or higher. For now, near term trade is likely to be stuck in the 13150-12900 region.
Nikkei (22494.76, -0.88%) has been pulled down by the US-Japan 10YR yield spread and Dollar Yen. While these look bearish for the near term, Nikkei could be headed towards 22250.
Shanghai (3275.53, -0.51%) is unable to move up$ sharply above 3270. Shanghai could either remain range-bound just now or try to move down towards 3250 again before it is pushed upwards. Near term likely to be sideways.
Nifty (10252.10, +0.58%) is fluctuating in the 10150-10300 region. It could well be ranged within the said region for some more time before it decides on further direction.
Sensex (33246.70, +0.59%) may bounce from levels near 32750. Overall sideways range-trade possible within 33500-32750 region.
COMMODITIES
Gold (1254.90) has paused a bit after making an intra-day high of 1260 as expected. While 1260 holds, the price may fall back towards 1240; else a break above 1260 if sustains could trigger a rally towards 1280 and higher.
Brent (63.33) and WTI (57.19) are both trading higher today. While support on Brent holds at 62, the price could eventually test 68 in the medium term while WTI is likely to re-test crucial levels of 59-60 resistance zone.
Copper (3.0755) has moved up a bit and could test important resistance near 3.10 which may push prices back towards 3.00-2.95 levels in the near to medium term.
FOREX
Dollar-Index (93.56) reached a low of 93.28 yesterday post the Fed rate hike but has been trading higher around 93.5-93.6 post the ECB announcement that they will be continuing their asset purchase programme till Sept next year, thereby indicating possible weakness in the Euro relative to the Dollar. However, the impact of this might be temporary in nature and we still expect to see the Index move towards support at 93 in a week or two.
Euro (1.1786) after seeing a high of 1.1863 yesterday has now dropped and is currently trading in the 1.177-1.179 range. The ECB’s plans to continue injecting liquidity in the medium term and its concerns about global factors (which could possibly affect European exports) point towards a possible interest in not letting Euro rise and harm exports. Although Euro is trading lower currently, we expect it to resume its upmove towards 1.19 by the end of this month and thereby test resistance on the weekly line charts.
Dollar-Yen (112.25) has dropped further as expected and might touch 112 by next week. A further decline towards 110 near support on weekly candles could happen by Jan if the US-Japan yield spread (2.313) finally drops towards 2.28 after having hovered near resistance (2.35-2.36) for couple of months.
Pound (1.3433) has been trading at similar levels as yesterday (near 1.342-1.345) and as mentioned yesterday, we might have to wait for a couple of sessions for more directional clarity (ie whether it will move back down on its downtrend towards support at 1.32-1.3225 on the daily, 3 day and weekly charts, or whether it will test resistance near 1.355-1.3575 on the weekly candles before dipping again.)
We were expecting Rupee (64.345) to drop to 64.15-64.20 in case Euro gained strength after the ECB meet. Inspite of Euro weakness after the meet, Rupee opened lower at 64.165. However, we could see markets factor in the Euro behavior and Dollar Rupee to rise back towards 64.30-64.40 today.
INTEREST RATES
The US yields have come down to test support levels and is likely to bounce back in the next few sessions. View is bullish for the early trades next week.
The US-Japan 10Yr (2.31%) is falling as expected. A further fall towards 2.28% or lower could bring down Dollar Yen also to lower levels.
The German-US 10YR (-2.04%) is stable at levels seen yesterday. The yield spread could test immediate resistance and could come off towards -2.08% or lower in the near term, indicating a fall in Euro too.
