STOCKS
Dow (20954.34, -0.24%) and Dax (11958.40, -0.57%) closed a little lower yesterday. Markets seem to be quiet just now allowing some correction in the indices after the recent rally. As mentioned yesterday, Dow may move towards 20750 while Dax could test 11800 on the downside before seeing an immediate bounce back.
Nikkei (19345.49, -0.17%) has not been able to sustain levels above 19600 and while below 19600, we may expect a test of 19200-19000 levels in the near term.
Shanghai (3233.72) is almost stable near current levels. It could try to inch up towards 3250 and higher in the coming sessions. We do not expect a break below 3200 in the near term.
Nifty (8963.45, +0.74%) is in a consolidation mode within the 8800-9000 region and unless we see a break on either side, it would be difficult to get any directional clarity just now. We prefer a corrective fall from current levels before it continues to rally further but lack of immediate rejection may indicate that we need to wait for confirmation from the prices.
COMMODITIES
Gold (1226) is trading within its sideways range of 1212-1275. The bias will remain bearish as long it is trading below 1247-50.
Silver (17.72)also moved lower but somehow managed to hold its upward trend line support of 17.62. A close below 17.45 could be trend reversal from bullish to sideways.
Copper (2.64) looks weak due to its failure to close above 2.73. It is still holding its upward trend line support at 2.63 since October 16, but the bullish momentum is becoming weak. A close below 2.63-60 could open up lower levels of 2.53 and 2.44 respectively.
Brent (55.60) and WTI (53.14) both are trading within their narrow ranges of 54-58 and 52-55 with no directional bias.
FOREX
The RBA decision will be released today though no change is expected, same as the ECB meet on Thursday, 9th March’17. Almost all the currencies are mute with the volatility collapsing.
Dollar Index (101.66) is trading quietly in the range of 100.70-102.25 in line with our expectations and may continue that for the rest of the week.
Euro (1.0607), taking cue from the Dollar, is trading sideways too and the range of 1.0500-1.0630 may remain intact even after the ECB meet on 9th Mar’17.
Dollar-Yen (113.97) hasn’t moved much in the last session and the probability of horizontal trade in the range of 113-115 for the week looks much stronger now. The stability in EURJPY (120.63) in the near term may be beneficial for both Euro and Yen but a break above 121.25-35 may take Euro to 1.0630-50 levels once again.
Pound (1.2241) has been consolidating in the narrow range of 1.22-23 for the last 3 sessions as expected but the downside targets of 1.2100-1.2085 remain unchanged.
Aussie (0.7592) remains almost unchanged as it waits for the RBA rate review conclusion. The status quo is expected to be maintained but technically, the currency may test the near term support zone 0.7520-00 before declining further to lower levels of 0.7450.
Dollar-Rupee (66.72) ended the session with a loss in a very grinding manner. The major support 66.50 may be tested in the next couple of sessions but no major movement is expected with 66.90-67.00 capping the upside for the week.
INTEREST RATES
The US 10-5Yr yield spread (0.48%) has bounced from channel support and could move higher in the near term towards 0.50%.
The US yields have moved up. The 5Yr (2.02%), 10YR (2.50%) and the 30Yr (3.10%) are trading higher as compared to previous levels of 2%, 2.47% and 3.06% respectively. The 30YR is exactly at resistance levels and if it breaks on the upside, would indicate further bullishness which could pull up the shorter term yields too.
The US-Japan (2.43%) yield differential has been moving up in the past 2-sessions and if it continues to move higher, it could indicate some more weakness in the Japanese Yen.
The UK 10-5Yr spread (0.61%) has collapsed from levels near 0.93% due to increase in the 5Yr (0.60%) yields must faster and sharper than the 10YR and 20YR yields. The 10-5YR spread may bounce back from current levels to move up towards 0.705 in the next few sessions.
