STOCKS
Expectations that the republicans would come out with their tax plans this week and some news stating lower tax rates for bankers and retailers is giving a boost to the equities. Dow (24792.20, +0.57%) is headed to make a high of 25000 and it could happen faster than our expectations. As mentioned yesterday near term looks bullish.
Optimism and heightened expectations of US tax cut has aided the Dax (13312.30, +1.59%) too to move higher. A break above 13150 has been seen finally and while that sustains, it would trigger a sharper rise towards 13400 or even higher in the near term. After breaking on the upside from the medium term sideways phase, the index could possibly gather some momentum now. Bullishness likely to prevail for the coming sessions.
Resistance near 23000 seems to be holding well on the Nikkei (22910.79, +0.04%) just now and while below 23000, the index could come off towards 22700-22500 levels in the coming sessions. Sideways trade within 23000/200-22500 levels is possible in the near term.
Shanghai (3286.65, +0.57%) has managed to bounce back yesterday from 3250 but while below 3325, the index may have some chances of testing lower levels of 3225. Some sideways movement is possible for now.
Nifty (10388.75, +0.54%) saw high fluctuation in the 10050-10450 region yesterday but after the BJP win in the Gujarat elections, the index could try to move up towards 10500-10550 in the next few sessions. There could also be a slight possibility of a re-test of 10100 before the index starts to rise towards 10500 or higher.
Sensex (33601.68, +0.41%) could trade within 33000-34000 for a couple of sessions before trying to attempt higher levels.
COMMODITIES
Gold and Copper looks bullish just now while the crude prices could remain stuck in some narrow and small movements in the next few sessions.
Gold (1261.60) has moved up a bit and looks bullish towards 1270-1280 in the near to medium term. Immediate resistance is visible near 1280.
Brent (63.52) and WTI (57.39) are almost stable. Earlier mentioned targets of 58.0-58.5 (for WTI) and 65-66 (for Brent) remain on the upside and while that holds, a small corrective dip could be seen followed by a sharp rise later on.
Copper (3.1275) is likely to come off from 3.15 to test lower levels of 3.05-3.00 again. Failure to come off from there just now would take it higher towards 3.20, but that looks less likely just now.
FOREX
Most currencies may go quiet over the next couple of days, headed into the holidays. While the Euro and Pound look potentially weak, the Yen and Aussie look potentially strong.
Although the Euro (1.1786) continues to trade above the mentioned Support at 1.1750, its failure to build on its rise to 1.1834 last night is a sign of potential weakness. Alternatively, the market is just hunkering down for the X’mas/ New Year week and may trade sideways between 1.1750-1825 for the next couple of days. The trend-deciders to be watched for the medium term are 1.1700 and 1.1900.
Dollar-Yen (112.60) too is likely to be quietly ranged between 112-113.50 for a few days now. In the bigger picture we shall see whether it is able to break below 112 or not.
The Euro-Yen (132.73) is absolutely ranged between 132-134 for now, but has long-term Resistance in the 134.05-45 region and could be vulnerable to the downside on a break below 132.00-131.75. This will be an interesting pair to watch in early 2018.
Look for near-term range trade between 1.33-35 in the Pound as well. Longer term could be bearish while below the Resistance at 1.35.
Unlike the Euro and Pound, which seem to have long-term Resistances overhead, the Aussie (0.7658) has bounced well from 0.75 last week and appears potentially bullish in the long-term.
Dollar-Rupee (64.24) may range between 64.15-30 today. A break below 64.05 or above 64.40 is needed to start a trend for the coming weeks.
INTEREST RATES
The German-US 10Yr Spread (-2.09%) continues to move down as German 10Yr has Resistances overhead at 0.40% while the US 10Yr has Support at 2.35%.
The German-Japan 10Yr Spread (0.27%) is also moving down and has broken below earlier support in the 0.30-28% region recently. Further decline below 0.25% could pull the Euro-Yen lower.
The 10Yr GOI (7.18%) remains in an uptrend as of now, but may face Resistance near 7.25% in the coming days which could produce a corrective fall towards 7.00% in the medium term.
