STOCKS
Recovery is seen in Dow (24984.55, +1.63%) and Dax (11307.12, +1.03%) yesterday but note that we cannot negate a test of lower levels again in the near term. Nikkei continues to trade in the red.
Dow (24984.55, +1.63%) has immediate resistance near 25000-25250 and unless a sustained break on the upside is seen, near term bearishness remains intact. Another dip below 25000, if seen could gradually take the index towards 24000 in the medium term.
Dax (11307.12, +1.03%) seems to have held above the weekly support at 11000. While the support on Dax holds, we may not expect a break below 11000 in the near term but an eventual rise towards 12000 is possible in the next 2-weeks.
Nikkei (21245.35, -0.11%) continues to trade in the red today also and looks bearish for the near term. While below 21800, Nikkei could come off further towards 21000-20800 in the near term.
Shanghai (2605.14, +0.052%) has resistance on the upside at 2650 and 2750 respectively. If 2650 holds, we could see a dip towards 2450-2400 in the near term; else a rise towards 2750 could be seen before another corrective decline.
Nifty (10124.90, -0.98%) dipped slightly yesterday. We continue to look at immediate support near 10000. Upside could be capped at 10400 in the near term.
COMMODITIES
The OPEC governor said yesterday that the market could be heading into oversupply as growth concerns come back into the picture with decline in the global equities this week. Further, the Saudi Arabia Energy Minister Khalid Al-Falih said there could be a need for intervention to reduce oil stockpiles after increases in recent months.
News states that BSE said yesterday that it will introduce futures contracts on Oman Crude Oil in its newly launched commodity derivatives segment today approved by SEBI. The BSE Oman Crude Oil Futures Contract will be settled on Dubai Mercantile Exchange (DMX).
Brent (76.51) and WTI (66.79) have risen slightly. WTI has support near 66 which may hold in the near term producing a bounce towards 68. A break above 68-69 levels is needed to target higher levels in the medium term.
Brent has risen from immediate support near 74 and could head towards 77-78 in the near term. Some stability in crude prices could be seen in the next few sessions.
Gold (1234.30) is trading below 1240 just now. While immediate resistance at 1240 is likely to hold and keep prices stable for some more sessions, Gold is likely to break on the upside eventually targeting 1250/70 on the upside soon. Medium term looks bullish.
Copper (2.7380) could continue to remain ranged for now within the 2.70-2.83 region. While Aussie is ranged within 0.705-0.7150 and shanghai trades in the 2750-2450 region, Copper is also in its sideways consolidation phase. We expect Aussie, Copper and Shanghai to move together and see a break out soon to sustain in a particular direction in the longer run. For now, while consolidation continues, we will have to wait and watch unless a break on either side is seen.
FOREX
Euro has broken below 1.14 and Dollar-Yuan is almost testing its Dec ’16 high of 6.9633. Watch out for further weakness in both Euro and Yuan – it could be negative for Rupee strength.
Euro (1.1370) – The ECB maintained status quo yesterday and Draghi maintained a dovish tone in the press conference later. In response, Euro has broken below the support near 1.141 on 3 day candles and could now target its previous low of 1.1301 in the next week. It has almost broken below horizontal support on weekly line chart as well – a clear break of this support would be very bearish for the next few weeks.
Dollar Index (96.63) has broken above resistance near 96.3 on 3 day candles and could now move higher towards its previous high near 96.98 in the next week. Looking at the weekly line chart, Dollar Index looks quite bullish in the weeks ahead.
Dollar Yen (112.26) has continued to trade above support at 112. While it stays above this support, there will be chances of an up move to 113 in the near term. Also watch the 21 weeks MA at 111.48 – a week close below this level in the next 1-2 weeks could be bearish.
Euro-Yen (127.64) : On 3 day and weekly line charts, there could be some support for Euro Yen near current levels. However, a test of lower support near 127 on 3 day and weekly candles and a bounce back from there could happen in the next week.
Pound (1.2820) is trading just above support near 1.2800-1.2775 on weekly candles. If this support also breaks, there is lower support at 1.27 on daily line chart. Pound could possibly range between 1.27 and 1.30 in the next 2-3 weeks before deciding further direction.
Aussie (0.7062) has resistance on daily candles near 0.71. While below this level, it could continue to move down towards 0.705. 0.705-0.704 is a super crucial long term support level, which if broken, could turn out to be very bearish for the Aussie.
Dollar-Yuan (6.9628) has moved up very close to its Dec ’16 high of 6.9633. If it rises above that level –it could be a very bullish indicator – and could bring about further weakness in EM currencies.
Dollar Rupee (73.28) – Weakness in Euro and Yuan could lead to Rupee weakness in the near term. A rise to 73.40-50 (or even above that) in today’s session is likely.
INTEREST RATES
The ECB maintained status quo in yesterday’s meet as expected. Draghi maintained a mostly dovish tone in the press conference later on – he did however highlight concerns about Brexit, trade wars and Italy and also remarked that recent economic data had been “somewhat weaker” than anticipated. Bond yields have remained largely unmoved in response to the ECB meet.
The US 10 Year (3.10%) is testing important support near 3.10%. It will be important to see whether 3.10% holds or breaks – in case of a break, the yield could even move down towards 3% in the next couple of weeks.
German 10 year yield (0.40%) has been falling after testing 0.577% in early Oct and could test support near 0.35%-0.30% in the near term. A break of 0.30% (if it happens) would be very bearish.
Japan 10 year bond yield (0.12%) has broken below trendline support near 0.14% on near term chart and could drop more towards 0.10% in the next week.
