Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
All the major markets are trading absolutely flat this morning waiting for cues from the US markets after an extended weekend.
Dow (17068.26, +0.54%) closed at a 5 week high and above 17050 on the back of a good NFP data and may rise to 17250-300 now. The Dax (10009.08, -0.20%) is consolidating near the life high of 10050 but 10200-250 can be expected soon and even higher levels can’t be ruled out anymore.
Nikkei (15446.88, +0.06%) has been trading not far from our target of 15600 and though grudgingly, may try to reach higher levels as long as it stays above 15300. The Shanghai (2055.93, -0.17%) keeps trading in a contracting range for the last few months where the range has narrowed with the breakout levels coming at 2000 & 2075.A break below 2050 now can drag it to 2020-2000 once again.
Nifty (7751.60, +0.48%) looks all set for our higher targets of 7900-8000 now after the Friday correction got support in 7680-50 exactly in line with our expectation. Keep any eye on BankNifty if it manages to break above 15800, bringing more momentum.
COMMODITIES
Gold (1316.70) has fallen and is trading near crucial 1320 from where we may see the price move in either direction. A break below 1300 could take it towards 1295-1290; else it could bounce from 1310-1300 levels to target 1340. Need to wait and watch.
Silver (21.042) has paused near 20.8-21.3 levels and may remain ranged for a few sessions before deciding its further direction. Gold-Silver ratio (62.54) is trading near support at 62.37 and may remain ranged for a couple of sessions before bouncing back towards 63-63.50.
Copper (3.2565) has fallen a bit but may target resistance near 3.32-3.33 and further 3.75-3.8 in the near term. Overall near term trend is up.
Brent (110.80) is trading near 110.83 and may see a rise from here towards 112-112.58. The recent correction seems to have ended for now and while above 110.5 it may rise higher. Note that a crucial support is coming up on the daily charts.
Nymex WTI (104.020) is trading below the crucial 104.27 and has been ranged for the last 3 sessions. It may fall a little more towards support near 102.5-103.6 from where it may bounce back towards 105.
FOREX
Today is a day without any kind of global cues and it may be better to keep away from the markets today. The Dollar (80.33) is yet to break above the resistance of 80.45-50 to negate any immediate weakness.
Euro (1.3584) is testing our support of 1.3580-50 and a break above 1.3600 may produce a bounce to 1.3640-50 where the sellers may return again. The continued weakness in EURGBP (0.7921) suggests more downside, even up to 1.35, especially if EURGBP fails to bounce from the channel support of 0.7905-0.7900.
With the unchanged policy of BOJ & no additional QE in sight, the upward potential of Dollar-Yen (102.15) is limited and the range of 101.20-102.75 may continue for some more time. The Euro-Yen (138.76) dropped sharply on account of a weak Euro and stagnant Yen but the broader range of 138-140 must break for a decisive run.
Pound (1.7146) is unaffected by all those happenings in ECB or US and keeps trading with a lot of bullish momentum. Now it may reach 1.72 as expected or even higher very soon after the current consolidation ends.
After the false breakout above 0.9460, Aussie (0.9355) has tested the entire support band of 0.9350-20 and now it must bounce higher without making any new low to keep the already threatened uptrend alive.
Dollar-Rupee (59.73) runs the risk of testing the supports at 59.45 and 59.15 while below 60.00. Any attempt to bounce may face selling pressure in the supply zone of 59.90-60.10.
INTEREST RATES
The Indian 10Yr GOI yield (8.67%) has been coming off from 8.75% through last week and may dip a little more, but a break below 8.50% does not seem likely in the near term. Positive fiscal triggers from the Budget could help push the yield down later in the month. Reduction in yields can help bring Dollar-Rupee Forward Premia down.
The German-US yield Spreads (2Yr -0.51%, 10Yr -1.40%) are accelerating downwards and can drag the Euro (1.3585) lower.
The US 30Yr (3.48%) looks set to rise the most compared to the 5Yr (1.76%) and the 10Yr (2.66%). We could be looking at 3.75% over the next 3 months. The 5Yr and 10Yr can also rise 15-20bp over the next 3 months. The 5Yr is testing a long-term Resistance at current levels and a rise past that could pull yields higher.
All in all, the Dollar is likely to have an yield advantage against most countries, including the UK, where the UK-US 10Yr Spread (+0.09%) also has chances of pushing lower while below Resistance near 0.17%. Take a look at
http://www.kshitij.com/graphgallery/gbpusddiff.shtml#gbpusd
DATA TODAY
No major data release today.
FRIDAY'sDATA
No major data release on friday.
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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