Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
EQUITIES
The global markets are trading in the positive and trying to regain strength after the US consumer confidence data reached the highest point in the post-recession period. But technically, most of them are yet to confirm further rally.
The Dow (16367.88, +0.56%) is stuck in the 500 points band of 16000-16500 for more than 5 weeks now. This sideways medium term move may be taken as a bullish consolidation before breaking out to rise to 17000 later.
The Shanghai (2063.60, -0.18%) is not falling anymore nowadays on the bad Chinese data and all the hoopla about it entering a new bear market. This actually invites the suspicion if the already established 6 year long bear market is coming to a close. Right now we watch the 2080-85 levels for sustained rally or reversal back to lower levels.
The Dax (9338.40, +1.63%) recovered all of its loss incurred in the previous session but yet to break above our resistance zone of 9400-9460 to confirm a rally to 9700-9900. A failure to break above will keep the bearish options open.
Nikkei (14456, +0.23%) is consolidating in the range of 14200-14700 but the downtrend remains in force till 14700-800. We look for a break of 14200 to confirm the bearish momentum.
Nifty (6589.75, +0.09%) consolidated at the higher levels after a brief correction, which was limited to 6540 exactly in line with our expectation. At the end of this consolidation, it may rise to our initial target area of 6650-6700 where we would closely watch the price action for further clues.
COMMODITIES
Gold likely to weaken against Silver while the oil market looks bullish.
Gold (1312.00) seems to now retrace the recent rally from 1182 to 1388.5. It is trading low facing crucial resistance on the weekly charts which if holds may see 1300-1295 levels in the near term. Gold-Silver ratio (65.68) is stable for now and is likely to move down towards 63.7 indicating that Gold may weaken further against Silver (19.973) which is testing support near current levels. An eventual rise towards 20-20.5 could be seen in the coming sessions.
Copper (2.9975) has risen sharply forming a double bottom on the daily charts. Crucial resistance at 3, if it is able to break may rise higher to 3.15-3.25 else; may be pushed to 2.9 levels again. Confirmation of an upmove would come above 3.
Brent (107.15) is testing crucial supports near current levels and may rise to 108 in a few sessions. Overall the uptrend remains intact.
Nymex WTI (99.39) is stable for now and is trading near crucial support and resistance zone in the 97-99 regions. A sustained break above 100 could trigger a sharp up move towards 110-112. The ranged movements now may help the bulls steam up a little to take the prices higher. While below 100.5, movements may be restricted within 100.5-97 levels.
CURRENCIES
Dollar Index (79.99) remains on course to its way to 80.50-75 after the expected correction going on right now. Staying above 79.70-65, the strength remains intact.
The Euro (1.3814) has bounced sharply but yet to break above 1.3885-95 to negate the downtrend. The bearish momentum may intensify on a break below 1.3750.
Dollar-Yen (102.31) held above 101 to maintain the broader range of 101-104. The sideways action in this range may continue for some more time before a decisive move emerges.
The Euro-Yen Cross (141.34) remains stuck in a narrow range of 140.40-142 for the last few days and needs to break it for a trending move. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.
Pound (1.6534) is trying to bounce from our buying zone and the medium term trend decider level of 1.6470-50 now. Now if it manages to hold above 1.6450 and breaks above 1.6585, a resumption of the uptrend may be expected.
Aussie (0.9158) is showing initial signs of strength but only a break above 0.9210 would confirm a rally to 0.93-0.9350 initially. A failure to break above 0.92 may still drag the Aussie down.
Dollar-Rupee (60.48) has closed below the support zone of 60.60-50 with no sign of strength visible yet. We may see the support of 60.25-15 or even 60.00-59.90 getting tested now before any buying emerges.
INTEREST RATES
The resistance at 2.75% seems to be holding really well for the US 10Yr (2.75%) as it has been unable to move beyond it since Feb-14. Unless 2.75% is broken the downside risk of 2.50% remains open in the long run. But beyond 2.75% we can expect to see 3.00% and even higher. The US 5Yr (1.73%) remained unchanged trading near the resistance zone at1.73% - 1.75%. The US 30Yr (3.60%) has also been trading low, thus making the US yield curve flatter.
The German 10Yr (1.57%) is trading low after coming off from the resistance near 1.65-1.66%. A further fall to 1.50% seems possible while below 1.60%. The 2Yr spread (-0.26%) has dropped and has come to test the trend support at current levels. A bounce from here and we can expect it to go up to -0.20%.
The US-Japan 10Yr spread (2.13%) is stable can target 2.20-2.25%. The Japan 10Yr (0.61%) remains stable and is ranged between 0.55% - 0.65%. A break beyond this range will give further direction.
The Indian 10Yr GOI (8.79%) saw a slight rise but it is still range bound between 8.75% and 8.85%. A break beyond this range will give us further direction.
DATA TODAY
12:30 GMT or 18:00 IST US Durable Goods Orders
...Expected 1.10 % ...Previous -0.97 %
DATA YESTERDAY
GER IFO Business Climate
...Expected 110.90 ...Previous 111.30 ...Actual 110.70
GER IFO Business Situations
...Expected 114.60 ...Previous 114.40 ...Actual 115.20
GER IFO Business Expectations
...Expected 107.70 ...Previous 108.30 ...Actual 106.40
UK CPI Y/Y
...Expected 1.70 % ...Previous 1.90 % ...Actual 1.70 %
US Case Schiller
...Expected 13.30 % ...Previous 13.42 % ...Actual 13.2 %
US Cons Conf
...Expected 78.70 ...Previous 78.30 ...Actual 82.3
US New Home Sales
...Expected 447 K ...Previous 455 K ...Actual 440 K
The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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