STOCKS
Dow (24895.21, +0.38%) inched up slightly yesterday and is heading upwards towards our near term Target of 25500. While above support near 24500, near term is likely to be bullish.
Dax (12355.57, +0.90%) closed above our mentioned resistance at 12300 and while the index sustains above 12300, the upside momentum could stay intact and the index may head towards 12400-12500 levels.
Nikkei (21553.31, +0.87%) moved up to that resistance near 21800 on the daily candles. If that holds, a rejection towards 21400-21200 is again possible; else a sustained rise could take it higher to levels near 22600 in the medium term. Look at 3 day candles which indicates medium term bullishness for Nikkei. While the channel support holds, the index is likely to move up gradually.
Shanghai (3291.47, +0.09%) is trading at important levels just now as seen on the 3-day candle chart. If the index moves above 3300 and sustains to move up, it could target 3350 or higher in the coming sessions; else a rejection from 3300 could again take it lower towards 3200.
Nifty (10242.65, +0.87%) bounced back from 10140 itself without coming down to test our expected 10080-10020 levels. The current rise is expected to be short lived before another down-leg is seen. Sensex (33351.57, +0.96%) looks as if it may try to test 33750 on the upside before again trying to come off from there. Near term looks bullish.
COMMODITIES
Brent (63.80) is holding below resistance near 66 and is likely to come off towards 62 while WTI (60.26) has support in the 60-59 region from where a bounce is expected.
Gold (1318.80) fell back towards 1315 instead of moving higher towards 1340/50. Note that 1300-1360 is an important region of trade for Gold in the near to medium term and it would be difficult for the price to break on either side just now. A bounce back from 1315-1310 is again possible in the coming sessions taking it higher to another attempt towards 1340/50.
Gold-WTI (21.82) is trading near immediate resistance and if this holds, the ratio may come down again towards 21 and lower.
Copper (3.0740) is down to test 3.07 in line with our expectation and is likely to bounce back from here back to levels near 3.15-3.20 in the medium term. Note that 3.07 is an immediate support on the daily candles and is likely to hold just now.
FOREX
Euro (1.2310) : The impact of the ECB policy decision yesterday was seen in 2 parts. Immediately post the release of the press statement, the dropping of the ‘easing bias’ (a commitment to increase monetary stimulus if absolutely necessary) was perceived as a step forward in the direction of tighter monetary policy in future. This prompted the Euro to shoot up towards 1.2446. However, later, the visibly dovish stance by Draghi in the press conference and the downward revision of forecasted inflation in 2019, caused the Euro to weaken immediately below 1.24. It is now trading near 1.231. There is support near 1.23 on the weekly candles for Euro which could hold. A break of 1.23 (if it happens) would see Euro testing support on daily candles near 1.22-1.225.
The Dollar Index (90.218) has seen an upmove due to the weakening in the Euro. It has immediate resistance visible on the daily candles near 90.5. If breached, there is higher resistance near 91 on 3 day and weekly line charts. The Bank of Japan policy decision might also impact the Dollar.
Dollar-Yen (106.69) has risen beyond immediate resistance near 106.5 on daily candles and might now confront two important resistances near 107 on the daily line charts provided by 13 days and 21 days moving average lines. The Bank of Japan meeting today might impact the course of Dollar Yen significantly in the days ahead.
The Euro-Yen (131.28) seems to be respecting the channel resistance on daily candles near 131-131.5 and might hence come down towards 129-130 in the coming sessions.
Pound (1.3799) against our expectation has unexpectedly dropped towards 1.38 again but there is strong support near current levels on daily candles which should hold for the time being.
Dollar-Rupee (65.145): Overall uptrend has possibly reasserted itself. A break above 65.20, if seen, takes the market up to 65.40+
INTEREST RATES
The ECB press statement’s apparent hawkishness (due to dropping of the easing bias – explained above in Forex) did send German 10 Yr yields (0.628% ) towards 0.69% yesterday but Draghi’s dovishness in the press conference that followed pulled yields back down. The ECB as expected kept key interest rates unchanged. The German – US yield spread is again near support on long term charts near -2.24% and might see a rise in the coming sessions (possibly via a downmove in US yields).
US 10 Year Yield (2.87), US 30 year Yield (3.133), US 5 year yield (2.64), US 2 year yield (2.262) : US yields continue their sideways movement in a very narrow range. We had mentioned yesterday that global politics indicates that a rise in US yields beyond long term resistance levels is imminent. However, there might just be some drop in US yields in the coming week, after which the week of the US Fed meeting might then see volatility return, taking yields higher in anticipation of a rate hike.
(Long term resistance levels for the 4 yields have been as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively – a decisive breach of these levels could happen in March 2nd half.)
The Bank of Japan meeting is underway and the policy decision would be important for global bond markets in the coming weeks.
