STOCKS
Dow (24946.51, +0.29%) is stuck near important levels. While there is a medium term resistance just above current levels, there is also a near term support along which the price has been trading for the last 3-sessions. In case the support breaks on the daily candles, the index could be bearish for this week targeting levels near 24500-24000.
Dax (12389.58, +0.36%) is trading below immediate resistance near 12500 and while that holds, the index could be pushed back towards 12000 or lower in the near term. A sustained break above 12500 is needed to indicate an upmove in the medium term.
Nikkei (21465.91, -0.97%) is trading above the 3-day candle support near 21400 and while that holds, medium term looks bullish for Nikkei towards 22600.
Shanghai (3272.80, +0.09%) looks bearish while below 3350. Narrow trade region of 3250-3350 could keep the index stable for the next couple of sessions.
Nifty (10195.15, -1.59%) and Sensex (33176, -1.51%) are trading just near immediate suport levels near 10130 and 32750 respectively and may bounce back in the near term. Note that overall the medium term view is bearish and the indices may resume downtrend after a few sessions.
COMMODITIES
Commodities are trading near import ant levels and could try to move up in the next few sessions.
Brent (65.87) is likely to move up towards 68 gradually while above the 64 support. Whereas the Nymex WTI (62.11) could try an attempt towards 63-64 levels.
Gold (1311.60) broke below the support on the daily candles and while the price continues to trade lower, there could be chances of testing 1300 on the downside.
Copper (3.0790) is trading just near the support of 3.0750 and if that breaks on the downside, the price may move towards 3.05-3.00 in the near term. Thereafter a bounce from there could take it higher towards 3.15-3.17 again.
FOREX
Dollar index (90.282) is close to immediate resistance on daily candles near 90.25-90.30. There is resistance near 90.5 on weekly candles as well which we expect should hold and produce a dip. A lot could depend on the US Fed meeting this week, where a rate hike is expected. Whether a rate hike and a possible rise in US yields subsequently are positive for Dollar strength or not would have to be seen –the usually positive correlation between bond yields and currency strength has not worked for the Dollar in the past 3-4 months and whether this particular rate hike can reinstate the previous correlation would be something to watch out for in the coming weeks. Our preference is for the negative correlation to continue ie for the Dollar to see a dip.
Euro (1.2270) – has immediate support on daily, 3 day and weekly candles in the 1.225-1.230 region from where a bounce should take place. The Euro has been seeing sideways movement in the broad 1.215-1.255 zone for the last 8 weeks. A decisive breakout on the upside beyond 1.255 could be on the cards within the next couple of weeks. For now, we see Euro dipping till 1.225 and then bouncing back up.
Dollar Yen (105.85) seems to be continuing its down move with possible downside target being crucial support near 105.00-104.75 on daily candles. However a testing of the same would imply a break of 105.5, which is a crucial level since the Dollar Yen hasn’t been able to move below it. On the daily line charts, the 13 day and 21 day moving average lines are pushing down the Dollar Yen further.
Euro Yen (129.87) is testing crucial support near 129.75 on 3 day and weekly candles and also on the daily line chart. This support should hold if the Euro continues its sideways movement of the last 8 weeks in this week by bouncing from immediate support levels as mentioned above.
As mentioned on Friday as well, Pound (1.3934) had dipped from resistance near 1.4 on the daily candles and is now moving towards support near 1.39 on 3 day candles. This support is also seen on daily line chart and is likely to hold, thereby producing a bounce.
Dollar Rupee (64.935) was stable on Friday. Support near 64.75/80 is likely to continue holding and the currency pair may head towards 65 or higher this week.
INTEREST RATES
US 10 Yr Yield (2.85), 30 Yr (3.08), 5 Yr (2.65), 2 Yr (2.295) : The US 2 Year Yield had risen to a 9 year high on Friday on the back of positive data on unemployment claims and import prices (which had indicated higher employment and rising prices respectively). Moreover, the Friday data releases showed industrial production rising as well as Capacity Utilization (while Housing Starts saw a decline). However, from the Fed minutes of the last meeting, it would be obvious that capacity utilization is considered as an important variable in one of the inflation models which the Fed considers before arriving at its decision on rates. A growth in Capacity Utilization only provides impetus to the possibility of a rate hike combined with hawkishness from the new Fed chairman in the press conference that follows. Lets wait and watch. US 2 year yield has continued to rise to record highs while longer term yields have seen a 3 basis points increase on average.
Japan 10 Yr Yield (0.038) has fallen slightly below important support on the short term chart around 0.035%. It seems to be moving up again which implies that the support might hold and the yields might again rise.
