Sample Category Title

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.

Moon Blots out the dollar

Another squally trading session overnight to celebrate the first total solar eclipse to hit the continental US in 99 years.

A definite downside dollar bias emerged overnight, although recent ranges were respected. But with few particular dollar triggers amid a sparsely populated economic calendar, the market could be doing little more than getting their last licks in before a more active global calendar later in the week,

There were few attention grabbers on a very sombre Monday trading session as the market was left recirculating headlines in thinly traded conditions.

The Dollar slide appears to be associated with a WSJ report stating that “Draghi is likely to layout the end of Europes QE”. This article has reignited top side interest in the Euro after those pesky anonymous ECB sources threw ice water on the notion just last week. Despite the questionable risk rewards, speculators can not resist the temptation to front run a possible central bank policy shift; the allure is just too strong.

Also, a Bloomberg report that stated Gary Cohn is emerging as the “clear front-runner” for the nomination to succeed Yellen as Fed Chair according to a National Association for Business Economics survey. Having Trump's top economic advisor manning the Holy Grail of central bankers would put the presidents stamp on the FED. While Cohn does not have a track record on monetary policy, In 2015, Cohn questioned Yellen for preparing to hike rates, saying she had “no legitimate argument to raise rates without inflation being close to – or having some inkling that it's approaching – 2%.” Regardless of his current monetary views the uncertainty over the next Fed Chairperson is cause enough for a short-term short dollar punt

EURO

1.2000 chatter is back in vogue this morning as the market is reading way too much into the WSJ article. Given the recent ECB minutes, it's unlikely Draghi is looking to ignite an aggressive EURO rally.

Japanese Yen

The market remains unpretentiously biased towards ‘risk-off'”. In the absence of a Jackson Hole hawkish surprise from Dr Yellen, we should expect the USDJPY rallies to remain capped near term.

USD/JPY has posted slight losses in the Monday session. In North American trade, the pair is trading at 108.91, down 0.28% on the day. On the release front, it's a quiet start to the trading week. Japanese All Industries Activity rebounded in June, posting a gain of 0.4%, just shy of the forecast of 0.5%. There are no US releases on the schedule.

The Japanese yen, a safe-haven asset, had a busy week in response to geopolitical events. The yen lost ground early in the week, as tensions between the US and North Korea eased after saber-rattling between the two countries raised fears of a military confrontation between the two foes. However, the yen was back in demand late in the week, following the deadly car-ramming attack in Barcelona, which killed 13 people and has set Europe on edge. The markets have settled down, but any escalation in tensions in the Korean peninsula or another terror attack in Western Europe could trigger heavy buying of the Japanese currency.

With the markets unsure about whether the Federal Reserve will raise rates once more this year, analysts will be carefully monitoring anything coming out of the Fed. They won't have to wait long, as central bankers gather in Jackson Hole, Wyoming on Wednesday. The odds of a December hike are at just 44%, according to the CME Group. Aside from interest rate policy, the markets will be looking for clues regarding the Fed's balance sheet of $4.2 trillion. Policymakers have said they plan to start reducing the balance sheet this year, and the trimming could begin as early as next month. A reduction in the balance sheet should benefit the dollar, as a trim of $60 billion is equivalent to a rate increase of 25 basis points.

4 positions were entered last week with total loss of 90 points and the positions are listed below.

14 Aug : GBP/JPY - Short at 142.50, exited at 142.80 (- 30 points)
17 Aug : EUR/JPY - Long at 129.45, exited at 128.85 (- 60 points)
18 Aug : AUD/USD - Long at 0.7895, 
18 Aug : USD/CAD - Short at 1.2690,

|                 AUD          EUR/JPY           EUR/GBP         CAD          GBP         GBPJPY
Jan             - 15             -275                - 35            -120
Feb           + 140            -17                  - 40             +11
Mar            - 20            +115                +132           - 19
Apr             + 30                                  - 40           +120                              + 45
May                             - 55                  +100          - 6                 -65             -60         
Jun            + 81           +150                - 10           +185             -120           +205
Jul                                                       - 40                                                   - 60
Aug           +150              0                 + 100                              +15            - 50
Sep              
Oct           
Nov         
Dec                                                                                                                                               
Y-T-D        + 366           - 82               +167            +463             -170            +80

6 positions were entered among all 4 currency pairs with total profit of 30 points and the positions are listed below:

11 Aug : EUR/USD - Long at 1.1790, exited at 1.1770 (- 20 points)
15 Aug : USD/JPY - Short at 110.10, exited at 110.30 (- 20 points)
16 Aug : EUR/USD - Short at 1.1755, exited at 1.1755 ( 0 point )
17 Aug : USD/JPY - Long at 110.00, exited at 110.05 (+ 5 points)
17 Aug : USD/CHF - Long at 0.9680, exited at 0.9645 (- 35 points)
18 Aug : EUR/USD - Long at 1.1715, exited at 1.1815 (+ 100 points)

|                 JPY             EUR             CHF            GBP

Jan          + 167             - 85              - 10            + 50
Feb          + 200            +150             +93            - 59
Mar              -23              -70               -23            - 35
Apr             + 65            + 93             + 50            - 40
May            - 65             - 35              + 100          -175
Jun            -100               -10                - 10          +175
Jul             + 85             - 35                 - 8
Aug           + 60            +145              + 60             -35        
Sep             
Oct         
Nov        
Dec                                                                                               
Y-T-D       + 388            +148               +252           -109     

Steve Bannon, known as the brain power behind Trump's nationalistic ideology, has mutually agreed to exit the position of the Chief Strategist at the White House on Friday, extending the list of people departing from the Trump's inner circle. With the board of directors being replaced frequently, as never happened before, uncertainty around Trump's administration has been escalating, dragging the dollar into further losses.

Following numerous resignations last weekend, with the CEO of two business councils leaving their positions in protests against the president's reaction to the Charlottesville violence, the chaos inside the White House continued with Steve Bannon leaving his role as the President's Chief Strategist on Friday. That was three weeks after Antony Scaramucci was fired as a communications director and Reince Priebus resigned from his position of Chief of Staff.

Bannon was said to hold a strong influence on Trump's nationalistic and populist views, supporting some of the recent controversial policies including the travel ban on people from several Muslim-majority countries, the US withdrawal from the Paris climate accord and the pullout of the Trans-Pacific Partnership trade agreement. Besides that, Bannon was recently working on hardline restrictions on a Chinese bilateral trade deal, incentivizing investigations into Chinese intellectual property practices. Although Bannon seemed to be on Trump's side, his departure was mainly attributed to his far-right ideas which contradicted the democratic views of the other White House members, including the head of the National Economic Council, Gary Cohn, as well as to the hostile language he used against the Democrats following the violent incident in Virginia.

As the political turmoil in the US heightens, Trump appears to lose supporters from key states which helped him win the elections last November. According to an NBC/ Marist poll published on Sunday, Trump's approval rating dropped below 40% in Michigan, Pennsylvania, and Wisconsin. However, his administration is currently trying to restore confidence by bringing tax reforms back to the table. If this turns successful, the President would put his first check mark on his economic agenda.

Turning to the reaction in the forex markets, the recent unexpected reshufflings in the White House and the Fed's potential pause on rising interest rates weighed on the dollar on Monday, relative to the previous week's closing. The dollar index, which gauges the dollar's strength against a basket of currencies, fell by 0.27% to 93.05 in the late European trading hours. Dollar/yen sank by 0.40% to 108.70, while dollar/euro jumped by 0.43% to an intra-day high of 1.1809. Pound/dollar gained 0.22%, rising to 1.2908.

USD/CAD opened with a gap down in the morning and looks determined to take out another support level. Is trading in the green right now even if the USDX is going down aggressively after another failure to take out the 93.81 static resistance.

USDX is approaching the 93.00 psychological level and the 92.94 previous low, will drop towards the 92.55 swing low if will close below these levels. We may still have a sideways movement above the 92.49 static resistance before will start another significant move.

USD/CAD is pressuring a dynamic support, a breakdown will open the door for more declines on the short term.

The Loonie lost some ground versus the USD in the last two hours as the Canadian Wholesale Sales dropped by 0.5%, even if the economists have forecasted a 0.6% growth. It is pressuring the fourth warning line (wl4) of the former minor ascending pitchfork. We'll see what will happen because has retested the median line (ml), but a breakdown below the wl4 will send the rate towards the 1.2460 major static support.

Only a rejection from here will signal a bullish movement which could ignore the upper median line (uml) of the minor descending pitchfork and the median line (ML) of the major descending pitchfork.

You can see that I've drawn a major black ascending pitchfork, the rate could come even to retest the lower median line before will climb much above the1.2777 previous high.

The EUR/USD is trading in the green and resumes the Friday's bullish candle. The upside momentum is natural as the USDX is trading in the red and looks too heavy to be stopped at this moment. It is trading near the 1.1820 level and could hit fresh new high till the end of the day. The next upside target is at the 1.1846 previous high, could be attracted by the upper median line (uml) as well. Will resume the upward swing if will have enough energy to close above the 1.1909 previous high.

Price goes higher and is targeting new high as the EUR is very strong on the short term. The European currency increased versus all its rivals in the last hours despite the lack of high impact data. Price is attracted by the upper median line (UML) of the major ascending pitchfork and by the 0.9226 static support. A valid breakdown will signal a further increase on the medium term.

The Euro extended advance from daily low at 1.1731 (early European session low) broke above important barriers at 1.1765 (converged 10/20SMA) and 1.1785 (bear-trendline off 02 Aug peak at 1.1910) to dent psychological 1.1800 barrier (also 4-hr clod top).

Close above bear-trendline will be bullish signal with lift above 1.1815 (Fibo 61.8% of 1.1910/1.1662 pullback) seen as confirmation.

Broken 10/20SMA now initial support (1.1765), with 30SMA (1.1687) underpinning and guarding Friday's low at 1.1662.

EU PMI data on Wednesday and Jackson Hole Thu/Sat meeting are the key events this week.

Res: 1.1815; 1.1846; 1.1889; 1.1910
Sup: 1.1765; 1.1731; 1.1708; 1.1687