Dow (25410.03, -1.16%) and Dax (12490.73, -0.29%) have both dipped yesterday contrary to our expectation of further rise. Dax could test 12400 while below 12600 as mentioned yesterday while Dow could re-test 25000 in the near term.
Nikkei (22309.05, -0.36%) has come off from levels below 22600 and while that holds some dip towards 22200 or lower is possible in the coming sessions before it again attempts to move up. Near term looks bearish just now.
Shanghai (3252.80, -1.19%) also dipped as the resistance on the 3-day seemed to have held well. The index could come off towards 3250 in the near term. View is bearish for the coming sessions.
Nifty (10554.30, -0.27%) and Sensex (34346.39, -0.29%) are almost stable while a slight dip was seen yesterday. A sideways consolidation is possible in the coming sessions within 10620-10380 on Nifty and 34500-33750 on the Sensex.
Brent (66.32) has dipped, contrary to our expectation of a rise towards 68-69. This raises chances of a break below 66, which can then target 65 in the near term. Immediate rise towards 68-69 may be negated while below 67.
WTI (62.67) fell from levels near 64 instead of rising towards our mentioned 65 levels. It may possibly come down to test 62.
Brent-WTI Spread (3.65) may test interim resistance near 3.70/75 levels from where another dip looks likely in the next few sessions.
Gold (1317.43) also moved down contrary to our bullish expectation towards 1360/70 levels. Note immediate support near 1310 which if holds may gain push the index back towards 1340-1350 in the near term.
Copper (3.1785) is also down against our expectation to test 3.30. Near term dip is possible towards 3.15 before trying to move up again.
The new US Fed Chairman (Jerome Powell) yesterday re affirmed the Fed’s plans of gradual rate hikes in 2018 due to strong confidence in rising US growth and inflation. These words from him have injected some temporary strength for the Dollar.
The Dollar Index (90.412) is close to resistance on the weekly candles (near 90.5) and we expect the same to hold in the near term. If it breaches 90.5, there are 2 strong resistances at 91 (3 day line chart and weekly line chart) and at 91.5 (weekly candle chart), which should produce a dip for the index.
Euro (1.2217) is holding above Support at 1.22 on the 3 day line chart. But, earlier bullishness is dented and will have to be re-examined. It has a good long-term Support at 1.2150 as seen on daily line chart, which can still produce a sharp rise, perhaps even up to 1.26 before the ECB meeting on 8th March.
Dollar-Yen (107.24) rose to a high near 107.70 last night, well above the intra-day bullish target of 107.25 we mentioned yesterday morning. Importantly, though, it has remained below the crucial long-term Resistance at 107.90-108.00, suggesting chances of long-term bearishness.
The Euro-Yen (131.02), is again testing support on daily candles near 131 and in case, the Euro strengthens towards 1.25-1.26 in the coming week while the Dollar Yen stays in the 106-108 zone, Euro Yen could rise towards 132.
Pound (1.3895) has dipped below support near 1.39, and could now test lower support near 1.38 on daily and 3 day candles before seeing a bounce.
Dollar-Rupee (65.12): The Dollar Rupee NDF rose to 65.15 yesterday night after Powell’s comments. We retain yesterday’s projection for now: Medium-term bullish towards 65.40.
US 10 Year Yield (2.9081), US 30 year Yield (3.1654), US 5 year yield (2.6788), US 2 year yield (2.2741) : As per our expectation yesterday, the 10 Yr, 30 Yr and 5 Yr did indeed move up. The 2 year yield is at a record high level (above the 2.25-2.26 levels seen last week after the auctions).
Powell’s comments might just prove to be the market mover for the 10 Yr yield to move towards 3%. In case the US GDP data later today matches upto Powell’s bullish outlook on the US economy, we might well see yields rise in this week itself. If it falls short of expectations, we might see the yields hover around current levels for few more days.
(Long term resistance levels for the 4 yields have been as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively – a decisive breach of these levels could happen sometime in March.)