STOCKS
Worries of monetary tightening continue to impact the stocks negatively. Shanghai (3216.73, -0.79%) came down, breaking below the immediate support on the daily candles. Important support below current levels would come near 3200 which is expected to hold in the medium term. The dip could be short lived and we could possibly see a bounce back in the coming sessions.
Dow (20659.32, -0.20%) was almost trading flat with no major movement seen yesterday. If we do not see a n immediate rise back above 20800, there could be chances that the corrective dip may not be over yet. The index may remain stable this week above 20400.
Dax (12203, +0.44%) tried to move up slightly making an intra-day high of 12233, achieving our initial target of 12220 but closed at lower levels. A rise towards 12300 and higher looks possible.
Nikkei (19169.92, -0.25%) is almost stable near current levels. 19400 could act as an immediate resistance which could keep the index sideways for another 2-3 sessions.
Nifty (9143.80, +0.47%) closed above 9100 yesterday and could continue to move towards 9200-9280 levels in the medium term.
COMMODITIES
Gold (1248) found resistance at 1264 and trading within a narrow range of 1240-1260. A break on either side could be decisive.
Silver (18.18) is still trading above its support at 17.80 of its trading range of 16.82-18.35. We have U.S. weekly unemployment claims data at 6 p.m IST, which may influence the price of silver as well as copper.
Copper (2.62) has found resistance at 2.70 levels. Only above 2.70, higher resistances of 2.80 can come into consideration. In the medium term 2.55-57 are going to be a strong support now and the chances of a close above 2.70 have increased.
Less than expected increase in U.S. weekly crude oil inventory (expected +1.2M, actual +0.9M) has helped Brent (52.35) and WTI (49.65) to close higher. This bounce was expected and it may continue for a few sessions more. Brent could touch 53.36 as it is trading above 52.20 but WTI is trading below 50.30. We will remain bearish on the energy pack in medium term due to continuous increase in U.S. crude inventory.
FOREX
Dollar remains strong against all the majors and may gradually appreciate a bit more but most of the majors are approaching near term support.
Dollar Index (100.12) has opened up higher targets of 100.70-101.00 after breaking above the interim resistance of 99.90 in line with expectations.
Euro (1.0746) has cracked below 1.08 and already trading much closer to the immediate target/support around 1.07 levels. It may consolidate in the range of 1.07-1.08 for the next few sessions.
Dollar-Yen (111.33) hasn’t moved much in the last 24 hours as it still struggles around the near term resistance of 111.50-60 but the chances of a breakout towards 113.00 may be slightly higher at this point. However, a failure near 111.50-60 can resume the major downtrend and trigger the lower targets of 109.40 and 108.50 again.
Pound (1.2439) has bounced back exactly from our support of 1.2370-60 even after the UK PM triggering the Article 50 for Brexit. A range in 1.2350-1.2600 can be built in the next few sessions and a sideways consolidation may be likely.
Aussie (0.7658) is going nowhere as expected and the sideways consolidation in the range of 0.7600-0.7750 continues, which may go on for a few more days.
Dollar Rupee (64.90) is trading at 64.84 in the NDF market, very close to our immediate target of 64.80. The price action in our target/support zone will be crucial. Resistance unchanged at 65.20.
INTEREST RATES
The German-Us 2YR (-2.04%) and the German-US 10YR (-2.06%) have both fallen and may continue to fall in the near term. This could indicate fresh Dollar strength in the near term. Euro could come down in the next 2-weeks, in that case.
The US-UK 10yr (-1.25%) is again coming off from -1.18% and looks bearish in the near term. Pound could resume the long term down trend in the coming sessions,
The Japanese yields are rising. The 5Yr (-0.13%) has risen sharply and could test resistance near -0.09% in the near term. The 10YR (0.06%) and the 30Yr (0.84%) have some more room on the upside.
Looking at the sharp falling momentum of the UK 10-5 yield spread, it looks as if it may possibly test lower levels of 0.4%, retracing the whole rise seen from Oct’16 to Feb’17.
