STOCKS
News of US missile strike on Syria Airbase has possibly kept the Japanese stocks down today. Nikkei (18588.87, -0.04%) is trading low today, making a fresh 4-mnth low of 18517. As mentioned yesterday, in case the index breaks and sustains below 18600, we could possible see a gradual fall towards 18300-18200 levels in the medium term.
Dow (20662.95, +0.07%) was almost stable yesterday. A break above 20780 is needed to take it further towards 20980; else we could possible see a trade in the 20780-20410 zone in the near term.
Dax (12230.89, +0.11%) has moved up from levels near 12120 and is trading just above immediate support near 12200. Some more movement below 12400 is possible before moving up further in the medium term.
Shanghai (3282.50, +0.05%) continues to move up. Immediate resistance is visible just above current levels on the daily charts but in case that breaks on the upside, the potential rise towards 3400 would come into focus as indicated in the 3-day and weekly charts.
Nifty (9261.95, -0.03%) was almost stable yesterday and may remain stable today also. No major movement expected today. A test of 9280-9300 is possible in the near term.
COMMODITIES
The Resistance at 1237 mentioned in the morning has held well and Gold (1265) has indeed rose above 1260 and has chances of rising further towards 1289.
Silver (18.42) also continues to move up and close to our 18.75 target. We have to see if that Resistance breaks or holds. In case the Silver rises past 18.75, it can move up to 19.05 levels also.
Copper (2.66) is trading within a range of 2.57-2.70. 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 but a close below that could open up 2.55 and 2.49 levels respectively.
WTI (52.65) has broken the resistance of 52.50 sooner than expected and has opened the higher target/resistance of 54. Immediate support comes at 52.50 and 51. Brent (55.80) has also bounced from its monthly trend line support and trading within the range of 55-57 levels, though a strong resistance is poised at 56.20 levels.The bias will remain bullish in near term while WTI and Brent are trading above 51 and 53.5 levels respectively.
FOREX
The risk appetite is a bit lower after the first military strike of the Trump-era took place in Syria but till now, the markets haven’t moved much and the risk appetite may recover by the early part of the next week.
Dollar Index (100.64) has risen a bit but the 5-day long consolidation phase is yet to be over, which is expected to resolve to the higher side for 101.00-35 in the coming days. Bullish momentum may intensify on a break above 101.00.
The major downtrend in Euro (1.0643) remains intact but lacking downside momentum as the currency gradually declines towards our target of 1.0600-1.0580. The only relief for Euro can come from EURJPY (117.55) which is trading just above a major support of 117.30 which may hold in the near term.
On the other hand, a bounce in EURJPY will imply underperformance of Yen, which is already evident in Dollar Yen (110.44), as the pair has managed to hold our support of 110.10-109.90 despite the increased risk appetite after the US strike in Syria. As discussed yesterday, the signals are conflicting and the true picture may take a couple of sessions more to emerge. Till then, we prefer to wait and watch.
Pound (1.2469) keeps forming a Triangle pattern as discussed in this space yesterday. Repeat – it implies a major expansion of volatility coming by the end of the next week. But for a significant trending move, a breakout from the range of 1.2350-1.2600 is required.
Aussie (0.7527) has been testing our support zone 0.7530-00 repeatedly but the expected bounce is yet to materialize but till 0.7500 holds, the chances of a bounce to 0.7650-80 can’t be ruled out.
With a sharp crash in Dollar-Rupee (64.51) after the RBI meet yesterday, all our targets till 64.50 are achieved and 64.40, even 64.20 may be seen in a day or two. It remains to be seen if the very important support of 64.30-20 holds or not as a huge bout of capitulation goes on.
INTEREST RATES
The US yields are testing immediate support levels and could see a short bounce in the coming sessions. The 5yr 91.83%), 10Yr (2.31%) and the 30yr (2.96%) are down from 1.86%, 2.35% and 3.01% respectively.
The German yields are falling sharply. Some more fall may be expected in the near term. The 5yr (-0.45%), 10Yr (0.262%) and the 30yr (1.04%) have risen slightly yesterday by 1bps but could see some more downside before bouncing back sharply.
The Japan yields have come off from resistance as expected. The 5yr (-0.14%) may test levels near -0.15% while the 10YR (0.06%) and the 30Yr (0.84%) may come down towards 0.04% and 0.78% respectively.
Keep a close watch on the US-Japan 10YR (2.25%). If this breaks below current support levels, it could indicate fresh strength in Yen and a fall in Nikkei in the near term.
The 10YR GOI (7.0362 %) rose in line with our expectation yesterday. A rise to 7.10-7.15% is possible before a short dip from there.
