Overall stock indices are mixed with the Nifty, Sensex and Dow looking bullish while Nikkei and Dax have come off slightly.
Dow (26439.48, -0.67%) is in a strong upward rally and we do not find any immediate resistance to limit further upside. The index looks bullish for the coming sessions.
Dax (13324.48, -0.12%) came off a bit towards 13300. While below 13400, it may test 13200 or lower on the downside for the coming sessions.
Nikkei (23477.26, -0.64%) is down from levels near 23700. Downside is open towards 23250-23000 for the near to medium term from where a bounce back towards current levels is possible.
Shanghai (3517.71, -0.15%) has come down to test interim support near 3500 and while that holds, another upleg is possible in the coming sessions. Else, the index if dips below 3500 could extend its fall further towards 3475-3450 levels.
Nifty (11130.40, +0.55%) and Sensex (36283.25, +0.65%) rose up yesterday also and could possibly be in the last leg of the rally that started In Dec’17 from levels near 10020. A few more sessions of upside is possible before the index pauses.
Strength in the US Dollar brings a pause to the rising commodity prices. While the Dollar strengthens, a short dip in commodities, especially Cruse and Gold is possible in the near term.
Brent (69.19) and WTI (65.17) have both come off a bit as expected and the fall may extend towards 68 and 65 respectively in the coming sessions. Need to see if support at 65 holds on WTI or if the price manages to break below 65 in the near term.
Gold (1335.88) has broken below 1340 and while the price trades below 1340, there is scope of further dip towards 1320 in the next few sessions. Near term looks bearish.
Copper (3.2045) is likely to trade within 3.12-3.25 region in the near term. A break on either side of these levels would indicate further course of movement.
Dollar Index (89.283) might be on course to test support on daily and weekly line charts near 88.5-88.8 this week. On the daily candles, upside for the Dollar Index in the near term looks restricted to 89.5. With a further rise in bond yields (see Interest Rates below), it looks like higher yields are still not impacting the Dollar positively and it would be interesting to see how long this continues.
Euro (1.2401) could find immediate support near 1.24 on the daily candles for now. The ECB kept its rates constant in last Friday’s meeting in face of a robust Euro; however, markets seem to have expected an even more dovish stance, which wasn’t seen, thereby leading to continued strength in Euro. Euro could again test resistance near 1.25 on the weekly line charts if it stays above 1.24.
Dollar-Yen (108.91) continues to stay below 109, impacted by the Bank of Japan chief’s comment that inflation is finally nearing targets, thereby increasing the likelihood for raising of interest rates in future. There is support near 108.5-108.75 on the weekly line charts which should hold for now.
Euro-Yen (134.99) might well target levels near 134.5 if Dollar Yen comes down further to 108.5 and the Euro stays around 1.24. In case there is some weakening in the Euro towards 1.235, Euro-Yen might test support near 134 on the daily candles before moving up.
Pound (1.4117) is currently trading below resistance near 1.42 on the 3 day candles. In case it breaches this resistance again, there is higher resistance near 1.44 on the weekly candles which should hold in this week.
In case Dollar-Rupee (63.60) rises past 63.70, then we can look for 63.80-90. However a rise in the major currencies relative to the Dollar could pull Dollar Rupee down towards 63.40 as well.
US 10 Yr (2.6842%), 30 Yr (2.9324%), 5 Yr (2.4920%) & 2 Yr (2.1283%) are again at record highs as they are seemingly impacted by low GDP numbers in USA.
The volatility in bond yields continues for now, with the 10 Yr- 5Yr spread (0.1922%) just below support on the short term charts and the 30 Yr-10 Yr spread (0.2482%) nearing support near 0.24% on the long term charts. There could be some pause in flattening though from these support levels.