STOCKS
The FED has kept rates unchanged and the markets are willing to wait till March to analyze economic activity in the Trump-era. In India, although the Union Budget has brought about little disappointment to some people, many investors are still positive for the coming year.
Dow (19890.94, +0.14%) has bounced from support on the daily candles. The Dow looks potentially bullish over the medium term and could re-test 20000 levels in the near term. On the downside, we expect the crucial supports at 19500-19700 to hold in the medium to long term.
Dax (11659.50, +1.08%) has recovered after testing 11535 yesterday. While above 11400-11500 levels, we could see a rise towards 11800-12000 in the coming sessions.
Nikkei (19099.93, -0.25%) is almost stable in the 19257-18900 region and could possibly break on the downside in the near term. Immediate target of 18650 looks possible for now before any bounce is seen.
Nifty (8716.40, +1.81%) bounced back sharply towards the end of the session yesterday as the support near 8500 holds well. Note that the upside could be limited to 8750-8800 in the near term from where a corrective dip towards 8600 or lower can be expected.
COMMODITIES
Weakness in Dollar Index keeps the precious metals positive. Crude prices may rise in the near term. Copper may test crucial resistance.
Crude prices have risen slightly but may remain range-bound in the earlier mentioned 52-55 (for WTI) and 54-58 (for Brent) regions respectively for about a few more sessions in the near term. Brent (56.57) and WTI (56.56) may move towards 58 over today and tomorrow.
Gold (1214.24) is trading just below immediate resistance near 1215-1220 and while that holds, we could see a corrective dip in the near term back towards 1180. In case a break above 1220 is seen, we would have to shift our focus towards 1240-1250 levels. For confirmation we need to keep a close watch on whether the support near 99.00/50 holds on the Dollar Index.
Silver (17.57) has moved up and could test 18 in the near term. 17.50 now acts as a decent support. Although near term looks bullish, we need to see how the other assets play out to boost prices in the near term.
Copper (2.7205) looks positive and looking at the commodity-currencies like the Aussie (0.7638) there could be an upside potential in the near term. But we would like to wait and see price action near crucial resistance at 2.75. Only on a break above 2.75, would we shift our focus on higher levels. While 2.75 holds, we could see a fall back towards 2.60.
FOREX
While the Budget pleased the markets and strengthened Rupee, the global Dollar weakness remains the same as the Fed keeps rates unchanged.
Dollar Index (99.59) has not moved much as the Fed rates have been kept unchanged. Repeat – the Dollar bulls need 99.50-00 to hold to keep any bullish possibilities open. On the other hand, a break below 99.00 may damage the technical structure considerably and open up much lower levels till 97.00 in the medium term. Inflection point.
Euro (1.0781) is in a pause mode for the last 2 sessions but it may test the target/resistance 1.0820-50 soon. The price action near 1.0820-50 may be decisive in the near to medium term and needs to be closely watched.
Dollar-Yen (113.05) is in sleep mode too, just like Euro. The upside chances are still open but the pair requires a break above the resistance of 113.40 to negate the immediate downtrend and open up 114.00-50.
Pound (1.2666) is trading at a 7-week high after the strong bounce from the major support of 1.2400 and is well on its way to our targets of 1.2800.
Aussie (0.7637), contrary to expectations, has rallied above the resistance of 0.7600 with a lot of strength which may propel it higher to the resistance near 0.7750 in the coming sessions.
Dollar-Rupee (67.47) is coming closer to our immediate target/support zone of 67.40-25. It is trading at 67.38 in the NDF now, not too far away from the 2-month low near 67.30.
INTEREST RATES
Interestingly, the equities rallied and Rupee (67.47) strengthened considerably following the Budget but the 10Yr GOI yields (6.5512%) actually closed marginally higher compared to the previous close. It raises questions about the internal steam of the dominant downtrend. It needs to be seen if the downtrend reasserts itself or an attempt to rise above the major resistance near 6.60-65% is seen in the next few sessions.
The US 10-5Yr yield spread (0.55%) is shooting up sharply and if the momentum remains unchanged, then it may test the resistance near 0.575% soon.
UK yields are facing immediate resistances at their respective current levels. Pound (1.2666) needs both the 10Yr (1.55%) and the 20Yr (1.98%) to break above the downtrend resistances near 1.57% and 2.02%. While the 20-10Yr (0.43%) is in a gradual decline, the 20-5Yr (1.39%) is trading at a 3-year high.
