Wednesday, January 17, 2018
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Market Morning Briefing: Dollar-Yen Has Also Moved Up On Back Of Perceived Dollar Strength
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STOCKS

Dow (24651.74, +0.58%) could spend a few sessions sideways before trying to move up towards 24800 or higher. Near term looks bullish.

Dax (13103.56, +0.27%) has risen from 13000 levels but while below 13150, chances of a fall again towards 12900 remain on the cards. A sustained break above 13150 is needed to initiate further upmove towards 13300 or higher.

The falls from levels near 23000 on Nikkei (22820.81, +1.19%) have not been able to take the index below 22000. While Nikkei is trying to re-attempt a test of 23000 on the upside, it could again come off towards 22600 in the next few sessions. But note that continuous testing of 23000 may give way on the upside for the longer term, strengthening the bulls towards 23200-23400 on the very long term.

Shanghai (3263.75, -0.07%) is headed towards 3250 and is likely to move to lower levels in the coming sessions. 3250-3230 is the target for the near term.

COMMODITIES

Gold (1255.30) is stable just now and is likely to trade within 1265-1250 region for a couple of sessions. Near to medium term looks bullish.

Brent (63.32) and WTI (57.35) are almost stable at previous levels. WTI could slightly rise towards 58.0-58.5 before trying to break higher. The movement has been in a contraction phase and a break above 59 on the upside looks more likely just now. Else an initial test of 56-55 is possible before a bounce is seen. Brent looks bullish in the near to medium term and has enough scope on the upside towards 65-66 levels.

Copper (3.1205) has moved up to test immediate resistance just above current levels. While that holds, price could come off towards 3.05-3.00 levels in the near term.

FOREX

Dollar-Index (93.887) rose to a high of 94.02 (resistance on 3 day candles & daily line chart) on Friday as news of the US corporate tax bill moving closer to ratification started to come in. This is an important resistance which should hold in the near term; however a breach of the same could take the index towards resistance on daily candles around 94.4-94.5, followed by a corrective dip thereafter.

Euro (1.176) has come down further after the ECB meet and the US tax cut developments and is currently testing support around 1.175 on 3 day and weekly candles). This is seen as a strong support (in correspondence with support for Dollar Index at 94). A break of this support could take Euro to 1.17 (support on daily candles), from where a bounce should be seen.

Dollar-Yen (112.64) has also moved up on back of perceived dollar strength. If the dollar index retains its strength (around 94) for another week, we could see Dollar Yen move in the range of 112.5-113.5. In case of a test of 94.5 by the Dollar Index, Dollar-Yen could test 114 (acting as resistance on 3 day and weekly candles); post which there should be a corrective dip.

Pound (1.3333) also fell on Friday and is currently trading around 1.33 levels, which could imply a possible test of support near 1.326-1.328 on the daily candles and then a rise back towards resistance near 1.341-1.342. We might be seeing the formation of an ascending triangle on the daily candles for the Pound, which could imply few more rounds of rangewise oscillation between 1.325-1.35, followed by a break on the upside next month.

INTEREST RATES

The US yields have moved down sharply and while the 30YR (2.70%) and the 10YR (2.37%) are testing supports at current levels, the 5YR (2.17%) seems to have moved up and may target higher levels of 2.20% in the near term. While the support holds on the 10Yr and the 30Yr, yields may move up in the coming sessions.

The UK-US 10Yr (-1.22%) and could be headed towards -1.33%. This could pull down Pound in the coming sessions.

The German-US 10YR (-2.06%) is down from channel resistance and could be headed towards -2.10% again in the near term.

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