STOCKS
Dow (23957.89, -2.93%) has fallen sharply as Trump’s plan for heavy import tariffs on China raises concerns for the US companies. This has been the sharpest fall since Feb, almost a d cline of 10% in a single session. This brings Dow to the correction region and while the index trades below 24000, it looks bearish for the medium term targeting 22000 on the downside.
Dax (12100.08, -1.70%) has also fallen testing 12100 mentioned yesterday. The index looks bearish for the next week as well targeting lower levels of 11900-11800 in the medium term.
Nikkei (20827.92, -3.54%) came down with a stronger Yen as mentioned yesterday. Dollar Yen slumped to 104.61 levels after the tensions over China and US trade resurfaced bringing down Nikkei sharply below 21000. This opens up a fall towards 20200 in the coming sessions.
Shanghai (3168.23, -2.92%) has fallen too along with the major indices and could test 3100 on the downside before trying to move up again in the medium term.
Nifty (10114.75, -0.40%) and Sensex (33006.27, -0.39%) may also fall a bit today keeping in line with the globally bearish sentiment. A break below 10020-10000 and 32750 on the Nifty and Sensex respectively would be an indication of further dip in the next week. Near to medium term looks bearish just now.
COMMODITIES
Brent (69.46) has medium term resistance near 71.50-70.00 which does not look very likely to break on the upside just now. A small dip from current levels is possible towards 68 by early next week. Nymex WTI (64.92) could also come off towards 63.60 in the coming sessions. 66-67 is important and is likely to produce some rejection pushing the price to lower levels in the near term.
Gold (1338.40) has risen and while that continues, it may attempt a test of 1345/50. If the ,momentum is strong, we may expect 1260 in the next week from where a corrective dip is possible.
Copper (3.0090) has come down as the Chinese stocks decline. A break below 3, if seen could open p chances of a fall towards 2.95-2.90 in the near term. Support is visible near current levels on the 3-day charts. Ned to see if price manages to bounce back from current levels or falls further in the next few sessions.
FOREX
The US President announced more than 50 billion dollars worth of import curbs on China last night, raising fears of a possible trade war. The implication of this move has already been seen on the Yen which has strengthened to a 17 months high. Whether this move leads to further weakening of the Dollar would have to be seen in the days ahead.
Dollar index (89.59) for now is trading near levels seen yesterday. There is immediate resistance near current levels on 3 day candles which could push it down further. The 1st downside target is support on weekly line chart near 89.3-89.5. As mentioned earlier, this is a crucial support level whose break could lead to medium term bearishness for the Dollar. The next target on the downside (in case a break of 89.3-89.5 happens) would be support on daily candles near 88.5.
Euro (1.2336) saw a high of 1.2390 yesterday thereby breaching immediate resistance near 1.236-1.237 on daily candles but has now again dipped below the resistance. Another breach of this resistance could take the Euro towards higher resistance level on 3 day candles near 1.255-1.260. This is a crucial level, whose breach could imply medium term bullishness for the Euro. On the downside, there is immediate support near 1.2275 on daily candles.
Dollar Yen (104.82), post Trump’s announcement, has dipped to a 17 months low and is testing support near 104.80 on daily candles. If this break of 105 sustains, the next downside target is seen on 3 day candles and weekly line chart near 103.75. This would be another crucial long term support level.
Euro Yen (129.30) as per expectation, has been pushed down by immediate resistance on daily candles near 131. However, contrary to expectation, it has broken the crucial support level of 130. If the Euro continues to respect resistance near 1.2375 and the Dollar Yen continues to be bearish towards 103.75, we could expect Euro Yen to turn very bearish in the medium term.
Pound (1.4117) has paused slightly after seeing a significant upmove (from 1.40 to 1.4220) yesterday. There could be some resistance near 1.43 on daily candles. If 1.43 is breached, it could attempt a test of 1.44 (seen as resistance on 3 day candles and 3 day line charts) in the coming 1-2 weeks.
Dollar Rupee (65.1050) -Watch intra-week Support at 65.00. We may see 64.90-80 if that breaks.
INTEREST RATES
After the US Fed didn’t put up a sufficiently hawkish stance for US yields to move up, Trump’s announcement of import curbs on China has made investors move away from stocks towards safer bonds, thereby pushing yields down even further.
As mentioned yesterday as well, our Treasury report for Mar’18 (available on demand) predicted a decline in yields after an initial upmove in the days post the rate hike. It looks like the decline has started happening without the initial upmove.
US 10 Yr Yield (2.7953%), 30 Yr (3.045%), 5 Yr (2.59%), 2 Yr (2.2621%) : As mentioned yesterday, on the short term chart, the 10 Yr yield has dipped towards channel support near 2.8% again, from where there should be a bounce if the support holds.
The 30 yr yield instead of moving up towards 3.2% has again dropped to support near 3.05%. It should see a rise now if the support holds.
The 5 year yield has also dipped to support near 2.6% and could see a bounce.
Japan 10 year yield (0.028) has broken crucial support near 0.0375-0.0400 on short term charts. Let’s see if it rises back up from these levels.
