STOCKS
Corrective dip seen in the equities overall. But on a longer term the trend remains bullish. All eyes focus on the FOMC and the Indian Union Budget due tomorrow.
Dow (19971.13, -0.61%) came down to test 19870 yesterday and closed at levels just below 20000. We could possibly see a test of 19720 again in the near term before bouncing back towards 20000-20200 levels. The FOMC meeting tomorrow could also bring in some momentum which could be the driver for the coming weeks. Above 20200, we are open to test 20500-20700 zone.
Dax (11681.89, -1.12%) also saw a sharp fall yesterday in line with the weekly candle resistance. But while the support at 11400 holds, we remain bullish for the medium term. We have already seen levels of 11680 as mentioned yesterday.
Nikkei (19116.84, -1.30%) could possibly be headed towards 18800-18700 support levels from where it could reverse the immediate trend.
Nifty (8632.75, -0.10%) was almost stable yesterday and could trade within the 8600-8700 region today also. Some volatility may come into the markets after the Budget tomorrow.
COMMODITIES
Gold (1200.65) and Silver (17.184) have moved up on fresh Dollar weakness. But we would have to consider resistances in the 1210-1215 region on Gold and 17.50-18.00 region on Silver which could hold in the near term bringing prices back to lower levels.
Brent (55.15) and WTI (52.35) are trading low, with the WTI falling faster than the Brent. They could test 54.25 and 51.65 over the next couple of sessions before bouncing back towards 56 and 54 respectively. Overall the crude prices may remain ranged in the near term.
Copper (2.6630) saw a slight dip but is trapped within the immediate support near 2.60-2.65 and weekly resistance near 2.70-2.72 regions respectively. The commodity price could remain range-bound in the 2.60-2.75 region for some more time.
FOREX
As discussed yesterday, the markets will be keen to know the Fed’s path for increase of interest rates after the FOMC meeting on Wednesday, especially in light of the weak Q4 GDP data in the USA. The weakness of Dollar continues.
Dollar Index (100.35) has been holding above the support of 100.05-99.75 despite the failure to rise above 101.20-25, the near term resistance we have been watching. The swing high of 101.02 becomes the new reference point as only a higher high may signal a reversal to the upside. The near to medium term direction may be set by the FOMC announcement coming tomorrow.
Just like Dollar Index, Euro (1.0705) has established the swing low of 1.0620 as the new reference point as the near term uptrend remains intact as long as it stays above this support. A gradual rise to 1.0725-50 can’t be ruled out but the next few sessions may see a consolidation in the region of 1.0650-1.0750.
Dollar-Yen (113.34) has broken below 113.85-65 as written yesterday after the BOJ kept the rates unchanged but if the decline is contained within the major support around 112.80-50, then another bounce to 114.00-50 can’t be ruled out.
Pound (1.2517) is in a shallow corrective mode with the major support coming at 1.2400. The upside possibilities remain open till iy stays above 1.2400 but the resistance around 1.28 may keep it rangebound in 1.2400-1.2800 for the next couple of weeks.
Aussie (0.7570) is rising in a very feeble manner but the weekly resistance near the current levels caps the immediate upside and keeps the chances of seeing 0.74 in the near term open.
Dollar-Rupee (67.75) is trading at 67.75 in the NDF market, which signals a potential breakdown of the 6-week range of 67.90-68.40 to the downside and opens up 67.70-60 as the near term target/support.
INTEREST RATES
Despite the Dollar (100.35) weakness in the near term, Euro (1.0705) has failed to capitalize on it as the German-US 10Yr yield differentials (-2.04%) still remains unable to break above the medium term resistance of -2.00%.
On the other hand, the US-Japan 10Yr (2.40%) remains almost unchanged and the BOJ keeping its rates unchanged as per the market expectations has not triggered any sharp moves, opening up the possibility of keeping Yen (113.34) stable in the near term.
Pound is technically still strong but the upside may be limited in the near term as the UK-US 10Yr (-0.95%) faces a major long term resistance at the current levels.
