STOCKS
Overall stocks are stable and are trading near important support and resistance levels.
Chinese markets opened today after a week long holiday. Shanghai (3141.24, -0.56%) is trading lower and could come off towards 3125 before bouncing back from there.
Dow (19884.91,-0.03%) is trading near levels seen yesterday. We could possibly see some sideways consolidation in the 19750-20000 region for some sessions before a break on either side is seen.
Dax (11627.95, -0.27%) has recovered after testing 11535 yesterday. While above 11400-11500 levels, we could see a rise towards 11800-12000 in the coming sessions.
Nikkei (18843.67, -0.37%) is all set to re-test support at 18651 but price action at those levels would determine further direction for the medium term. We prefer a bounce from 18651 which could pull up Dollar-Yen with itself (In case Dollar Index rises from 99.00).
Nifty (8734.25, +0.20%) closed lower after testing immediate resistance near 8750/60 levels. There could be some chances of a corrective dip from current levels which could further enable the index to see another leg of sharp rally towards 800 and higher. But in case the index breaks above 8760 today, it could test important resistance near 8850-8875 in the near term.
COMMODITIES
Slight bounce in Dollar Index from 99.25 has helped to keep a check on further rise in Gold and Silver. Gold (1213.29) tested 1225 yesterday before coming off to lower levels. For the near term we could expect 1230-1240 levels to hold which could keep prices ranged in the 1200-1230 region today.
Silver (17.30) is also trading lower after testing 17.73 yesterday. As mentioned earlier, the 17.50-17.30 is a important support region just now and if that holds, we could see a rally towards 18 an higher. A break below 17.30 could take it back towards 17.00-16.50 region in the near term.
Crude prices inched up to slightly higher levels but came off from there. Brent (56.7) looks potentially bullish towards 60, looking at the 3-day candle chart while WTI (53.79) could face important resistance near 58.
Copper (2.65) has fallen sharply. The wedge like formation seen on the daily chart is breaking on the downside and if it continues to move lower, we could see a sharp dip to 2.60-2.55 levels in the near term. Crucial resistance at 2.75 holds well for the near term.
FOREX
With all the political risk haunting the currencies and the central banks not adding to the visibility, all eyes are on the US NFP data to be released tonight.
Dollar Index (99.84) has made low at 99.23, just above the long term support of 99.00, before bouncing back close to 100. It still needs to go much higher above the resistance of 100.75-101.00 before the downside risk gets negated. The US Jobs report to be released tonight may determine the near term path.
Euro (1.0757) is in a corrective mode now after a strong rejection from our resistance of 1.0820. While the trend remains up above 1.0690, the labored rise in the last few sessions increases the risk at the higher levels in the band of 1.0820-50.
Dollar-Yen (112.66) is stuck in the range of 112-114 for the last 4 sessions and the next directional move depends on the breakout direction from this range. Bidirectional possibilities exist at this point despite the downtrend. Wait and watch.
Pound (1.2520) crashed from 1.27 levels despite the BOE raising the growth forecast dramatically as the governor warned about the Brexit impact on the economy. We have to see if it recovers above 1.26 soon as a failure may damage the near term uptrend.
Aussie (0.7644) is taking a breather after its sharp rally to 0.77 and may test the target/resistance of 0.7750 in the next 2-3 sessions.
Dollar-Rupee (67.37) has closed below the support of 67.40 and the chances of testing 67.25 and the major support of 67.00-66.90 are much higher now. Some short covering may be expected near 67.00-66.90.
INTEREST RATES
Less than expected bond purchase by the BOJ has driven the Japanese yields sharply higher. The Japan 10Yr (0.137%) has gained almost 0.03% in a single session, shaking up the market confidence in the central bank commitment to hold down bond yields. Now the 10Yr is testing a major 7-year resistance line at 0.15% which may hold if BOJ is willing to control the yields.
While the German-US 2yr yield differentials (-1.96%) remained the same, the German-US 10Yr (-2.06%) saw a sharp decline, pulling down Euro (1.0757) along with.
Similar sharp rejection was seen for the UK-US 10Yr (-1.00%) as it came down from the medium term resistance around -0.92%. The chances of further decline to -1.08% can’t be ruled out which would weaken Pound (1.2520) too.
