STOCKS
Rally in Dow (25527.07, +0.44%) continues while above 25250. Upside target for the near term is 26000. Note that there is a decent resistance in the 25800-26000 zone.
Dax (12809.23, +1.83%) has also moved up following the rise in Dow and could test upside resistance near 12900-13000 in the next few sessions. A fall from 13000 can be seen in the longer run. For now we do not expect a break beyond 13000.
Nikkei (22635.59, +0.22%) was almost stable yesterday with no major movement and could be found in the 22600-23000 region for a few more days. Whether it breaks above 23000 or faces a sharp rejection from 23000 would be important to watch to get some directional clarity for the longer run.
Shanghai (2889.03, +0.24%) is coming off from just above 2900. The 2900-2950 zone is an important resistance zone and while that holds, the index looks bearish towards 2850. Overall near tern trade could be seen in the 2850-2950 region for a few sessions.
Nifty (11167.30, +0.32%) closed below 11200 yesterday also and is likely to see some range-trade today. A short corrective fall is possible followed by resumption in the uptrend.
COMMODITIES
Nymex WTI (69.55) trades stable but has some scope of testing 71-72 on the upside before it could come off from there in the medium term. Overall the 3-day and weekly candles show that a bounce from current levels is possible in the longer term leading to overall bullishness; but we would have to wait and watch how far the current slow upmove take the price.
Brent (74.40) has been steadily rising from support at 71 and while that holds, near term upside is in place. The price can target 76 just now. Thereafter a dip is expected before it further moves higher towards 78-79 in the longer run.
Gold (1223.50) came off from levels just below 1240 and while the price remains below 1240, chances of a test of 1200 or lower is high. A break above 1240 is necessary to negate downside in the longer run. For now 1200-1240 region is likely continue for some more time.
Copper (2.8240) is testing immediate support on the daily charts and if that holds, the price could move up above 2.85. Failure to breach 2.85 would bring another downleg towards 2.75 or lower in the next week.
FOREX
Euro (1.1650): ECB’s policy statement was perceived to be dovish, which thereby has resulted in Euro weakness. After testing resistance near 1.174 yesterday, Euro fell to a low near 1.164. It could test support on daily line chart near 1.16 in today’s session. If US GDP comes out stronger than expected, Euro might break below 1.16 also. The next downside target in that case would be support near 1.145 on daily line chart.
Dollar Index (94.694): Dollar Index tested support on daily and 3 day candles yesterday near 94.08 and then bounced as the ECB continued being dovish. The US GDP release today is expected to show sharp acceleration in GDP in the 2nd quarter. If that happens, we might see Dollar Index test levels near 95.3-95.5 in today’s session itself. A test of 96 next week seems possible.
Dollar Yen (110.98): Dollar Yen saw a low near 110.6 yesterday and has risen slightly from there. We again note important interim supports at 110.5 and 110.0 which might restrict the Dollar Yen’s current downmove. However, next week’s Bank of Japan meeting could change it all. If the BoJ decides to bring in even slight tightening to its loose monetary policy (of which, there are some rumours), then it might lead to strength in the Yen and hence, a break below 110.
Euro Yen (129.31): Euro Yen has broken support on daily candles near 129.4 but is still testing support on weekly line chart near 129.2. If it closes below 129.30-20 today, it might become bearish towards 128-127 in the next week. This could correspond with expected Euro weakness in the week ahead.
Pound (1.3106): Pound has again dipped from resistance near 1.32 on daily candles. If it closes below 1.3127 today (89 weeks MA), we might see the Pound drop towards support on 3 day candles near 1.29 next week. The broad bearish trend is expected to continue in the next week.
Dollar Rupee (68.665): Euro’s weakening could prevent a break below 68.60 for USDINR and instead, it might continue the 69.10-68.60 range trade for another week. Immediate 1-2 sessions could be bullish for USDINR.
INTEREST RATES
Japanese 10 year yield (0.11%) has breached resistance on short-term chart near 0.09%. The bond markets now await the 30th-31st July Bank of Japan meet in which the BoJ might decide if it wants to modify its ultra-loose monetary policy. There is a chance that the BoJ might not try to bring down JGB yields by much; which thereby could lead to investment flows from US bonds to Japanese bonds. That, in turn, would raise US bond yields further.
The ECB yesterday maintained status quo and reiterated that key interest rates in the Eurozone would remain at present levels atleast through the summer of 2019. This dovish stance was more or less expected and hasn’t lead to any significant movement in German yields. The German 10 year yield (0.4%) still looks like it could target 0.45%-0.50% on short term chart.
US 10 year yield (2.98%), 30 Year (3.10%), 5 Year (2.86%), 2 Year (2.69%):
The US 10 year yield continues moving higher in the 2.95%-3.00% resistance zone. Next week’s BoJ meeting might just push the 10 year yield above 3%. Let’s wait and watch.
