STOCKS
Markets react positively to the Trump speech yesterday. Almost all indices are trading higher and looks potentially bullish for the near term except Nifty which is trading at crucial levels and is yet to decide on near term direction.
Dow (21115.55, +1.46%) has risen sharply breaking above the immediate resistance on the 3-day candles. Now there is high potential on the upside towards 21300-21600 in the near term. Upward rally may continue in the coming sessions.
Dax (12067.19, +1.97%) has finally moved up sharply to test our early target of 12000. It could continue to move up towards 12200 before seeing a pause.
Nikkei (19643.62, +1.29%) has broken from the contracting phase to move on the upside and while that sustains, it could rally towards 20000 in the near term. This has negated our expectation of an initial fall and could take up Dollar-Yen to higher levels in the near term.
Shanghai (3240.00, -0.21%) is trading slightly lower today but overall is contained within the near term uptrend. While above 3225, there is scope of an up move towards 3275-3300 in the medium term.
Nifty (8945.80, +0.75%) is trading just below the crucial resistance levels and seems to be consolidating for a few sessions now. We would still expect a corrective dip in the near term unless a confirmation above 8960-9000 levels is seen. A break above 9000, if seen could turn very bullish for the coming weeks.
COMMODITIES
Gold (1247) was almost unchanged and hovering around the pivot (1246) of its trading range of 1217-1274. Recent strength in dollar index (101.89)could drag the yellow metal towards 1217. A close below 1230 could also hamper its recent upward momentum.
Silver (18.32) is holding its crucial support of 18, and we will remain bullish until it is holding the same. Defiantly the bullish momentum become weak and a possibility of a decline towards 18 levels can’t be ruled out. A close below 17.80 could be trend reversal.
Copper (2.74) is trading around its pivot of 2.75 of its recent trading range of 2.60-83. It is holding its upward trend line support at 2.65-68 since October 16. We have US Unemployment data at 7.00 p.m IST, which could influence the price of copper and silver.
Brent (55.560) and WTI (53.74) both are trading within their narrow ranges of 55-56.10 and 53-5461 with no directional bias. Surplus of 0.6M barrel in US weekly crude oil inventory (1.5M) has impacted negatively on the prices.
FOREX
Major currencies (except Aussie) weaken on fresh Dollar strength post the Trump speech. This may continue for some sessions before a small pause is seen.
Dollar Index (101.90) could face immediate resistance near 102 which if breaks on the higher side could turn bullish towards 103. We need to watch price action near 102 which would decide immediate movement in the other currencies. A recovery from 102 would bring back strength in the major currencies in the next few sessions.
Euro (1.0535) may test 1.05 in the near term. In case that holds, we could see a bounce back towards 1.055-1.06; else downside potential is open towards 1.040-1.035 for the long term.
Dollar-Yen (114.035) has broken the immediate resistance near 113.75 and is headed higher for the coming sessions. The upside break on Nikkei and the strength in Dollar has lead to Yen weakness and while the Nikkei looks bullish for the near term, Dollar-Yen could head towards 114.50-114.80 soon.
Pound (1.2278) has fallen in line with our expectation breaking below our immediate target of 1.23. While the US-UK 10Yr differential continues to fall, the Pound could be headed towards 1.2100-1.2085 levels in the near term. (Refer to Interest Rates section below)
Aussie (0.7656) is stuck within the 0.7600-0.7750 region and could continue to remain so in the near term. While support at 0.7625 holds, we may expect a rise in Aussie towards 0.7700-0.7720 levels.
Dollar-Rupee (66.8250) could face immediate resistance near 66.95/90 which if holds could keep the currency pair ranged within 66.65-66.85 region. Overall broad range of 66.50-66.95 may hold for the next few sessions.
INTEREST RATES
The German-US 2Yr (-2.14%) has bounced back a bit from levels near -2.21% seen yesterday. If the bounce manages to take the differential towards -2.10% or higher, it could indicate that the Euro is likely to bounce back from 1.05 levels. Note that the German-US 10YR (-2.18%)is headed lower and may take some time to bounce back. Medium term trend for the yield-differential looks bearish.
The US-UK 10Yr (-1.28%) has been clearly indicating a fall in the Pound since the last few days which has reflected in the currency yesterday. Unless the differential starts moving up, it would be difficult for the Pound to rebound from current levels.
The US yields continue to rise sharply. The 10YR (2.46%) and the 30YR (3.06%) are trading just near immediate resistance and while those holds, we may expect a dip in the near term. A break above 3.10% (on the 30Yr yield) and 2.5% (on the 10yr yield) could turn very bullish for the medium term.
The German yields have bounced from immediate support levels and could move higher for some time before seeing a pause.
