STOCKS
Corrective phase for majority of the stock indices likely to begin soon within the overall long term uptrend. Need to be cautious just now.
Dow (21703.75, +0.13%) could get some support near 21600-21500 levels which could possibly hold for sometime in the near term. Thereafter a break below 21500 looks more likely taking the index further down towards 21250-21200 levels in the longer term. For now we prefer 21500 to hold just now giving a slight bounce to the equity index.
Interim support could be tested near 11940 on the Dax (12065.99, -0.82%) which if holds could keep the price within 12200-11940 region for a few more days. On a break below 11940, we would have to consider lower levels of 11700 for the coming sessions.
Nikkei (19406.61, +0.07%) has been forming a rounding top on the charts since May’17 and the current break below 19800 has given impetus to the formation and while the pattern seems to hold, we could see a fall towards 19000-18800 levels in the coming sessions. Near term looks bearish.
Shanghai (3285.58, -0.04%) is trading well within the channel uptrend and could test resistance at 3300/05, from where a short corrective dip is possible. Only on a break above 3305, we may look for further upside and a fresh rise towards 3350. For now we need to watch price action near 3300.
Nifty (9754.35, -0.84%) came down to test 9750 yesterday itself. Resistance near 9950 seems to be holding well for now. Immediate support is visible near 9700 on the daily charts but in case that breaks on the downside, Nifty could be vulnerable to a faster and deeper fall in the medium term towards 9500. Watch price action near 9700.
COMMODITIES
Gold (1294) had moved up in line with our expectation and while it remains above 1275-80 regions, there is a scope of re-testing 1300-07 in the near term. Else a fall towards 1260 levels is possible in the coming sessions. As the US Dollar Index (92.92) is heading towards 92.50 levels, gold might remain within 1275-1310 regions in the next few sessions. Muted price action had been seen in Silver (16.98). Immediate resistances are poised at 17.00-17.50 which if holds could push the price towards 16.50 .
Copper (2.97) is highly overbought in near term time frame. Chances of a dip towards 2.85 are possible before it tries to move up towards 3.12. We will remain bullish on copper while it is trading above 2.85 regions. Only a close below 2.85 could open up 2.66 levels as well.
Brent (51.75) is hovering around the pivot of its near term trading range of 49.70-52.80.Only a close above 52.80 could open up 55 regions. WTI (47.50) is also trading within the range of 46.50-49 as well. We will remain bullish on Brent and WTI while they are trading above 49.70 and 46.50 regions respectively.
FOREX
It seems ‘Risk-ON’ is slightly more favoured in the currency market for now. The Dollar Index (93.16) continues to be vulnerable towards 92.00 while it trades below 94.00.
Decent gains in the Euro (1.1807) yesterday in line with expectation of a rise to 1.1830. Trend remains bullish with medium term Supports at 1.1700 and 1.1675-45.
Dollar-Yen (109.22) has again found Buyers near 108.60, the third week in a row. Resistance seen at 110.00 on Dollar-Yen. While the Support at 108.60 continues to hold on Dollar-Yen, the Euro may continue to be bought against the Yen. The Euro-Yen Cross (128.99) continues to hold above 127.50 and 128.00, pulled up by strength in the Euro. Now we need to see whether it can rise past 129.36, the 50% retracement of the decline from 149.51 (Dec ’14) to 109.42 (Jun ’16). If successful, the Cross may target 132.50 in the medium term.
The Pound (1.2885) is stable near yesterday’s level but has near-term, intra-day Resistance at 1.2915-30 and intra-week Resistance at 1.2950. The trend leans towards bearishness, with chances of further fall towards 1.26 on a clear break below 1.2850. The Euro-Pound (0.9160) continues to trend upwards and could move up past 0.9200.
Fresh strength possible in the Aussie (0.7937) which can move up towards 0.81 in the coming weeks while above 0.7850-35. Of course, as mentioned yesterday, the chart looks similar to that in the Euro and therefore the 200-week Moving Average at 0.7970 will have to be broken to confirm the upmove. Dips likely to be bought.
The Chinese Yuan (USDCNY = 6.6587) continues to trade lower, targeting 6.65 and lower.
Dollar-Rupee trades near 64.13/14 on the NDF just now, near yesterday’s closing and is likely to continue to be ranged between 64.00-25 in the near term. The Euro-Rupee (75.71) faces a crucial Resistance at 76.15. Should that break, it would be because of Euro strength, and could pull Dollar-Rupee higher as well. Let us see.
INTEREST RATES
The US yields had moved lower in line with our expectation. The 10Yr (2.18%) and the 30Yr (2.77%) could test 2.10% and 2.70% respectively as mentioned in our previous edition.
Euro had moved up as we had mentioned yesterday that it could be beneficial for Euro ifThe German-US 2Yr (-2.03%) and the 10Yr (-1.77%) move up in the near term towards -1.97% and -1.75% respectively.
The Japan 30Yr (0.84%) had moved lower towards 0.80%. The 5Yr (-0.10%) and the 10Yr (0.04%) are stable just now and could move down too in the near term.
The UK yields are also moving downwards as mentioned yesterday. The 10YR (1.07%) and the 20YR (1.62%), both have scope of testing 1% and1.50% on the downside.
