STOCKS
Global stock indices have all moved up quite well in the last few weeks and are likely to test resistance levels above current levels which if holds could push the prices to lower levels soon.
Dow (26071.72, +0.21%) is almost stable near current levels and seems to have paused for a while. While below 26250, there could be some sideways movement in the 25750-26250 region before the index resumes its rally upwards. We would have to see if the news of government shutdown would have any impact on the indices.
Dax (13434.45, +1.15%) rose up sharply last week to close above immediate resistance near 13400. While the rise sustains, the index could continue to rise towards 13500 and higher in the coming sessions.
Nikkei (23772.02, -0.15%) is expected to trade below 24200-24000 levels and come off sharply in the medium term.
Shanghai (3490.78, +0.08%) has tested resistance of 3500. As mentioned in our earlier edition, 3500-3510 is an immediate resistance on the upside and is likely to hold in the medium term pushing off the index to lower levels. Failure to come off from 3510 could take it higher towards 3530-3550 in the longer run.
It would be crucial to see if Sensex (35511.58, +0.71%) come off from levels near 35750-35800 and Nifty (10894.70, +0.72%) from 10950-11000 levels. Although we have been expecting a rejection soon, the prices are yet to indicate any confirmation on that.
COMMODITIES
Brent (68.88) and WTI (63.54) have moved up a bit but are overall steady near previous levels. There could be some consolidation in the coming sessions before deciding on further direction.
Gold (1331.36) may trade within 1345-1320 region for the coming sessions. Thereafter a possible rise towards 1350 r higher could be expected.
Copper (3.1985) has been gradually coming down as expected towards 3.15 and could pause there for a few sessions. Downside scope is open towards 3.10-3.00 in the near term.
FOREX
Dollar Index (90.573) is continuing to stay below 91 as new political developments (the US government shutdown) prevent any strengthening of the dollar. US yields (see Interest Rates below), contrary to our expectations for some consolidation have only risen further from highs seen on Friday. While Friday’s rise might have been due to a shift from US debt to equity, the further rise in yields might just indicate lesser appetite for US debt in general, which might not be too positive for the Dollar. Currently, we maintain that the Index should respect support near 90.4-90.5 as seen on daily line charts and try moving up towards resistance near 91.5-92 on the 3 day line chart.
Euro (1.2230) has stayed above 1.22, seeing a high of 1.2295 on Friday. We can expect Euro to range between 1.21 to 1.2330 (seen as immediate resistance on daily candles) for few more sessions before attempting further upmove.
Against our expectations, Dollar-Yen (110.79) has come down below 111 instead of continuing its rise towards 112. We can however expect Dollar Yen to respect support near 110.5 on the 3 day candles and make another attempt at a rise towards 112 while it stays above this support, and, also while the Dollar Index stays above 90.4-90.5.
Euro-Yen (135.51) has come down from a high near 136.05 (seen on Friday) along with the drop in Dollar Yen, signifying some interim Yen strength. We still expect a week of slow upmove before it tests resistance near 137 on the daily candles.
Pound (1.3867) saw a low of 1.3839 on Friday which might suggest that it is struggling a bit to see a definitive breach past resistance near 1.385 on the daily candles. However, it is currently trading above 1.385 again and while it stays above this level, it will attempt to move towards resistance near 1.41 on the weekly candles in this week.
As mentioned on Friday, we might have to wait for couple of sessions before the breach of important resistance at 0.80 on the weekly line charts is confirmed for the Aussie (0.7993). It had gone past 0.80 on Friday but is again trading below it. A confirmation of breach of 0.80 would lead the Aussie to its next target of 0.82 (seen as higher resistance on the 3 day line chart).
Dollar-Rupee (63.895) could move up towards 63.90-64.00 this week with the downside limited to 63.60.
INTEREST RATES
US yields have continued their uprise in wake of the recent govt shutdown with US 10 Yr (2.6611%), 30 Yr (2.9323%), 5 Yr (2.4559%) & 2 Yr (2.0689%) all moving further up. Being a politically sensitive week, we could see some more volatility in yields on the upside till the shutdown ends.
The rise in yields is however providing some marginal pause to yield flattening as the US 10 Yr – 5 Yr (0.2052%) & US 30Yr – 10Yr (0.2712%) stay above supports near 0.19% and 0.24-0.25% respectively, indicating that we can expect them to hold for the time being.
Japanese 10 Yr yield (0.079%) as per our expectations has continued its ranging between 0.07% and 0.088% on short term charts, which might continue in this week.
 is continuing to stay below 91 as new political developments (the US government shutdown) prevent any strengthening of the dollar. US yields (see Interest Rates below), contrary to our expectations for some consolidation have only risen further from highs seen on Friday. While Friday’s rise might have been due to a shift from US debt to equity, the further rise in yields might just indicate lesser appetite for US debt in general, which might not be too positive for the Dollar. Currently, we maintain that the Index should respect support near 90.4-90.5 as seen on daily line charts and try moving up towards resistance near 91.5-92 on the 3 day line chart. ){kind=link}