STOCKS
Global stocks look mixed. Nifty and Sensex seem to be trading just below crucial resistances and may come off soon while Dax and Nikkei have come off from immediate resistances and could come down in the next few sessions.
Dow (25369.13, -0.07%) looks bullish towards 25400-25600 as mentioned earlier. Dax (13281.34, -0.78%) on the other hand is finding it difficult to sustain a break above 13400 and while below that, the index could also come off towards 13200-13000 soon. Near term looks bearish.
Nikkei (23707.31, -0.34%) tested resistance below 24000 and while that holds, the index could come off slightly towards 23600-23400 in the near term. Looking at the weekly candles this could act as a long term resistance with a possibility of initiating a fresh downward correction in the coming sessions.
Shanghai (3408.80, -0.38%) almost came up to test 3440 yesterday but came off to close at lower levels. On the upside there is scope for testing 3450-3500 in the medium term.
Nifty (10632.20, -0.05%) saw an intra-day low of 10592 yesterday, near the support zone of 10600-10550 and while that holds, we may expect a test of 10750 on the upside. Failure to move up just now would take the index below 10550, initiating fresh correction towards 10400 in the medium term. Similar support on the Sensex (34433.07, -0.03%) would be at 34250 above which the index may remain sideways or try to move up again.
COMMODITIES
Brent (69.15) and WTI (63.53) are almost quiet after the sharp rise seen yesterday. Brent has crucial resistance at 70 which is likely to hold and push back prices towards 68-67 in the medium term. A break above 70 is not factored in just now and if that happens would be surprising. Weekly resistance on the WTI near 65-66 and on the Brent near 70 is expected to produce rejection in the near term.
Gold (1320.10) is paused near 1320 levels and is likely in a sideways consolidation mode unable to decide further movement just now. We may either see a bounce towards 1350 or a fall to 1300 in the near to medium term.
Copper (3.2525) has risen back from 3.23 instead of coming off towards 3.20 or lower. It could re-attempt a test of 3.30-3.35 before coming off to current levels.
FOREX
Keep an eye on the Euro-Yen (133.30). It saw a low just below 133 yesterday. Although it can bounce a bit towards 133.70-90 in the near term, there are increasing chances that it might eventually break below the crucial Support at 133. It would then target 130 in the medium term.
Such a dip in the Euro-Yen would be triggered/ accompanied by a fall in Dollar-Yen (111.44) over the coming days. These two together could try and pull the Euro (1.1960) below 1.19.
To prevent that from happening, the Euro needs to convincingly rise past 1.20 over today-tomorrow. While the potential is still there and it did, in fact, bounce from 1.19 to above 1.20 yesterday, it’s failure to sustain that bounce is a little puzzling. We need to watch this carefully over today-tomorrow.
The Chinese Yuan (USDCNY = 6.5054) strengthened a goodish bit yesterday on news that Chinese officials are recommending a halt/ reduction in the purchase of US Bonds. Let us see whether the USDCNY breaks below 6.49 today or moves back up today. A bounce/ rise is a little more probable.
As expected, the Pound (1.3507) is relatively calm amidst the volatility in other currencies and is likely to remain so for some more days.
Contrary to our expectation of a dip to 0.7750, the Aussie (0.7875) did not even fall below 0.7800 and has, in fact, risen strongly today morning. This seems to be fresh strength that could pull the Aussie up towards 0.7950-8000 this time.
As expected, Dollar-Rupee (63.60) found Resistance just above 63.80 and can dip to 63.50-45 today. Direction after that is unclear.
INTEREST RATES
Global bond markets could well be entering a bearish phase with higher crude prices raising inflation and consequently, investors’ expectations for higher yields.
The US 10Yr (2.5495%) reached highs near 2.588% with news of China’s reluctance to buy US bonds coming in. We could now expect the 10 Yr yields to consolidate near 2.55% for sometime before targeting 2.62% on the upside, seen as resistance on short term charts. US 30 Yr (2.8928%) could move up to resistance near 2.94% on the short term chart and stay below that level for few days before attempting another rise. Expectations of higher inflation being reflected in the CPI data release (due tomorrow) seems to have been already factored into the rise in yields recently. However, we still need to see if some surprises could push the yields further up.
Japanese 10 Yr Yield (0.075%) dipped from yesterday’s levels around 0.088%, where we see resistance on the short term charts. This resistance could hold for the time being.
The German 10 Yr Bund Yield (0.543%) is testing resistance on the medium term chart and could dip from here. The German-US 10 Yr Yield Spread (-2.0095%) has gone up appreciably from yesterday and might attempt a test of resistance near -1.9% on the long term chart in the coming sessions.
