STOCKS
Stocks are almost stable. We could expect some ranged movement in the near term before they resume their up-trend.
Dow (21173.69,+0.18%) has been almost stable. Some movement is expected within 21000-22000 but while resistance near 21200 holds, there is some scope of coming off towards 21000.
Dax (12672.49, -0.14%) could get some support from 12600 and if that holds, could move up towards 13000 in the medium term. A break below 12600 if seen, could take it lower towards 12500 before resuming the uptrend.
Shanghai (3134.32, -0.19%) looks bullish and could be headed towards 3150-3170 in the coming sessions.
Nikkei (19990.55, +0.03%) could be headed towards 20500 in the next few sessions while above 19700. If not an immediate rise, some sideways movement is possible in the coming sessions.
Nifty (9663.90, +0.28%) tested 9630 on the downside yesterday and could remain stable just now. Some consolidation in the 9600-9700 region is possible before it resumes its rally towards 9800. Overall near to medium term looks bullish.
COMMODITIES
Gold (1284) is trading at lower levels and may test the support zone of 1275. The bullish momentum is still intact, though the chances of downside can’t be fully negated. In case a break below 1275 takes place in the coming sessions, we may have to consider lower levels of 1247 . But till the sub 1270-75 fall really materializes, we prefer to stay as buyer.
On the other hand, Silver (17.59) is sustaining the higher levels comfortably irrespective of the overbought condition. Thus we recommend caution at the higher levels for Silver longs. A failure to sustain above 17.50-60 levels may trigger a sharp fall towards 16.91 regions.
Copper (2.54) is hovering around its pivot at 2.55 of the trading range of 2.44-2.66. Only above 2.66, higher resistances of 2.72-80 can come into consideration. In the medium term 2.44 are going to be a strong support now but a close below that could open up 2.40-35 levels.
We had clearly mentioned in our yesterday’s morning briefing that “The short term oversold condition has been rectified with this upward movement” and “ At the same time it could be prudent to be prepared for a sudden turnaround to the downside if there is a mismatch between forecast figure and the actual outcome”.
Yesterday Brent (48.18) and WTI (45.83) fell almost 4.8% as U.S weekly crude oil inventory rose by +3.3M barrels against the expectation of -3.1M Barrels. At present Brent and WTI are trading within the range of 47.40-50.20 and 44.20-47.50 respectively. We think 47.40 (Brent) and 44.20 (WTI) are going to be a strong support as both Brent and WTI are within short term oversold zone.
FOREX
All three of UK election, ECB policy decision and ex-FBI chief Comey’s testimony will take place today and can be a short term decider for the markets.
Dollar Index (96.72) bounced back to 97.00 from our support of 96.50-25 but an upside reversal would be confirmed only a break above 97.10. So at this point, Dollar stands in the middle of the bullish breakout levels of 97.10 and bearish breakdown level of 96.25. The near term direction may be clear by tomorrow.
Euro (1.1260) saw some volatility yesterday as it tested 1.1200 before recovering most of the intraday loss. Both the ECB statement and Comey testimony may affect it today and make it clear how far it can rise inside the resistance cluster of 1.1300-1.1450. Repeat, if Euro really weakens from the higher levels, Dollar may bounce back from its support of 96.50-25. Please note, the Euro trend remains up and Dollar trend remains down till now but we stay prepared for the possibility of a sudden trend reversal, which at the moment has 45-50% probability.
Dollar Yen (109.85) has been supported by the Dollar Index resilience and any further global Dollar strength may push it up to 111.20 but to negate the downside risk, it requires a break above 111.70. Till then, the trend remains down.
Pound (1.2956) has risen a bit towards the upper end of the range of 1.2750-1.3050 but till the election result comes, no moves can be trusted. We prefer to wait and watch in which direction the range breaks post result. An upside break may push it to 1.3300 and a downside break may drag it down towards 1.2600.
Aussie (0.7543) is sustaining the higher levels but the advance may be limited to 0.7600-10 this week as Crude and Iron Ore weakened considerably (Check Commodities section).
Dollar Rupee (64.33) remained almost indifferent to the RBI policy announcement as it didn’t register any fresh high or low for the week and closed above the support of 64.30, just like the earlier sessions of the week. It remains to be seen if the multiple global events today can bring it out of the range of 64.30-70.
INTEREST RATES
The US yields are rising again and may move up a little more in the next few sessions. The 10Yr (2.18%) could move towards 2.25% while the 30Yr (2.84%) could try to test 2.92% in the near term. The 10-5 Yr (0.44%) may bounce from support at current levels and move back to 0.45%.
The UK yields have started to move down and could re-test supports below current levels. The 20Yr (1.56%) could bounce back from 1.50% while the 5Yr (0.45%) has some more room on the downside towards 0.35%.
The Japan yields have risen sharply and suddenly. The 5Yr, 10Yr and 30Yr are trading at -0.07%, 0.06% and 0.82% from previous levels of -0.09%, 0.046% and 0.80% respectively. There could be some more rise over today and tomorrow followed by some corrective dip in the near term.
The German yields are trading low and looks bearish for the medium term. the 5YR , 10Yr and 30YR are trading at -0.45%, 0.26% and 1.12% respectively.
