STOCKS
Dow (23557.99, +0.14%) has inched up a bit to move towards 23600. Our medium term target of 23750-23800 remains on the cards for the coming sessions. The rise could be slow and small and could take some time to reach 23800. Note 23800 could act as a decent resistance and could keep the index range bound before letting another sharp up move in the longer term. Overall trend looks bullish.
Dax (13059.84, +0.39%) may trade sideways in the 12800-13200 region. Unless a break on either side is seen, Dax may continue to remain range-bound in the near term.
22760 is an important resistance on Nikkei (22482.16, -0.30%) and while that holds, a test of 22200-22000 is possible in the near term. For at least the next 2-3 sessions, 22000-22760 region is likely to hold.
Shanghai (3325.74, -0.84%) is trading near support levels and is on the verge of breaking on the downside in the next couple of sessions. A sustained break below 3320 could initiate fresh weakness coming in and could take down the index towards 3250 or lower.
Nifty (10389.70, +0.40%) could test immediate resistance near 10450-10500 region and see a sharp rejection from there back towards 10350-10300 in the near term. Immediate view is bullish with a possible correction coming up soon.
COMMODITIES
Gold (1289.55) and Silver (17.04) are almost stable. Silver may trade in the 16.90-17.25 region in the coming sessions while Gold could attempt a test of 1295-1297.
Brent (63.75) could be stable for a couple of sessions before trying to move up towards 65 while WTI (58.65) has already tested its immediate resistance near 59 and is trading slightly lower just now. 59 is a crucial weekly resistance on the WTI and while that holds, the price could possibly come off towards 57 in the near term.
Copper (3.1635) has been moving up slowly and could test 3.25 as we have been mentioning for quite some time now. A ejection from 3.25 is possible bringing the price back towards 3.15 in the medium term.
FOREX
Dollar Index (92.829), as per our expectations, has fallen to support near 92.70 on the daily charts and seems poised for a bounce from current levels to move towards 93.25 in this week. Recovery in US 10 yr yields (see Interest Rates below) and continued bullishness in crude prices are likely to enable this bounce.
Euro (1.1923) as predicted is also on course to test resistance on monthly charts (not featured here) at 1.1950 (earlier mentioned as 1.1900 in Friday’s briefing). With a likelihood of dollar strength resurfacing, the resistance should hold; however, a breach could prove to be bullish with levels beyond 1.22 opening up in the medium term.
Dollar-Yen (111.40) is trading around similar levels as on Friday and still shows possibility of going down to test 110 on the weekly charts, as long as Dollar weakness persists. However, we might just be looking at an immediate reversal in trend here, which would yield a new support level around 111.00-111.50. We’ll have to wait and watch to be certain about this.
Pound (1.3320) is trading near resistance at 1.335 on the daily charts. A dip from here could see resumption of another round of range wise oscillation between 1.3 and 1.335; however, a breach of this resistance to test 1.35 on the weekly charts is also on the cards.
Dollar Rupee (64.7075) may move up towards 64.80 while support at 64.60 holds. Only on a break below 64.60, (if seen) could open up chances of testing 64.40 on the downside.
INTEREST RATES
US Yields have managed to remain above the Supports mentioned on Thursday. The 5Yr (2.07%) has Support at 2.06% while the 30Yr (2.76%) has Support at 2.75%. But, it is to be seen if they are able to rise above 2.10% and 2.80-85% respectively.
Again, as mentioned on Thursday, there should be some scope for Curve Steepening in the USA, as the 30-5Yr Spread (0.69%) has channel Support near current levels.
Recent moves in the currency market are diverging from the bond market. Dollar-Yen (111.38) has been falling from 114.00 in the beginning of November even as the US-Japan 10Yr Spread (2.31%) has remained steady. Similarly, the Euro (1.1927) has moved up sharply last week even though the German-US 10Yr Spread (-1.98%) has been stalling between -2.05% and -1.95%. Perhaps the market wants to be sure of a fresh increase in US yields as a reason to buy the US Dollar.
In the meanwhile, the German 2Yr (-0.69%) could be threatening to break its downtrend from 0.2% (March 2014). Need to keep a watch on this. Similarly, the Japanese 10Yr (0.03%) is fighting with Resistance near current level. This too needs to be watched.
The Indian 10Yr GOI (7.0015%) managed to close above 7.0% on Friday after a week. It will be interesting to see how the market moves today after the news that the S&P rating has been kept stable.
