GOOD MORNING! STOCKS
It is back to risk on with the tensions coming down dramatically and the US showing a benign inflation (0.3% MOM & 2.6% YOY) with a solid rise in existing home sales (2.6%). The equities are enjoying it but the US market is yet to catch any momentum.
Dow (17113.54, +0.36%) keeps trading sideways without any kind of momentum and the range, slightly modified to 16850-17200, prevails for now and a break is required for a trending move. The Dax (9734.33, +1.27%) has bounced back nearly from the long term support of 9500-9350 and on a break above 9750, may extend the bounce to 9800-70 levels.
Nikkei (15347.28, +0.03%) has reached a steady state with contracting volatility and the 5 week long range of 15000-500 may still remain unbroken. Shanghai (2079.63, +0.20%) is the index to watch right now as it has broken the trendline resistance at 2078 and tests the final resistance at 2090 now, a break above which may signal a major reversal, targeting 20150-80 initially. This resistance at 2090 will be increased slightly every day now on.
Nifty (7767.85, +1.09%) showed no sign of any top formation as it closed above 7750 firmly and signaled further upside. Unless a correction of 60+ points take place now, our bias will remain bullish.
Gold (1307.80) is trying to come down and even though it gets bounced from 1290 or 1300 levels, the bounce doesn’t seem strong enough. The conflict between the bulls and the bears seems to continue for now. The Dollar is positive against major currencies which may pull down Gold. A break below 1300 and we may see the resumption of the longer term downtrend towards 1290-1280 and even 1260.
Silver (20.963) is fluctuating in the broad range of 20.5-21.8. The sideways consolidation is yet to continue for some more sessions. Gold-Silver ratio (62.38) is also ranged in the 62.5-63 region. Overall trend is down.
Copper (3.2080) has bounced from support near 3.17-3.18 and may now target 3.25-3.30 in the coming sessions. Near term is bullish.
Nymex WTI (102.090) came off from crucial near term resistance near 106 and may head towards 100 in the coming sessions. Brent (107.28) on the other hand is stable and is heading upwards targeting resistance near 109 levels.
The only currency hitting a year low is Euro, after failing to form a bottom near 1.3475-1.3500 as expected. With the safe haven of Yen unperturbed, the weakness in Euro looks more likely originating from some Eurozone problem.
Euro (1.3462) has broken down below 1.3475 as it trades at an 8 month low. Right now, it is tottering at the monthly trendline support at 1.3450, below which the door to 1.33 and 1.31 opens up. Expect all bounces to face selling pressure from the area of 1.3475-3500.
Dollar-Yen (101.42), just like Nikkei, continues trading sideways in the range of 101-102, which still shows no sign of breaking. Euro-Yen (136.56) suffered from heavy selling pressure from 137.50-70 just as expected and may drop further if fails to overcome 1.3770 levels in the coming days.
Pound (1.7072) is yet to break above the latest swing high of 1.7191 to continue the rally, resulting in an extension of the corrective mode in the range of 1.7050-1.7200. Expect more price action inside this range.
Aussie (0.9434) is looking strong after a break above 0.9420 on the back of a stronger Shanghai index and may test 0.9460-0.9520 levels now as it tries to bounce from the lower end of the 5-week long band of 0.9320-0.9500.
Dollar-Rupee (60.24) created an Inside Day as it traded in the range of the previous session. Keep an eye on the break of 60.15-32 for the immediate intraday direction with the bullish option open until 60.15-10 is broken convincingly.
The 10Yr Bund Yield (1.17%) has risen sharply while EURUSD (1.3463) saw a sharp fall as expected. The German-US 10 Yr (-0.44%) has bounced sharply from support and may rise towards -0.2% in the near term.
The US 30Yr (3.26%) and the 10Yr (2.47%) remained stable near lower levels after after lower than expected CPI data came yesterday. The 5Yr (1.66%) reduced, flattening the 30Yr-5Yr yield curve. Overall we may see a rise in the US yields.
The US-Japenese 10Yr Yield (1.93%) is stable and testing support near current rate and may bounce from here in a couple of sessions towards 2.00%.
The 10Yr GOI-US Spread (6.22%) and the GOI 10 yr yield (8.69%) have come down by 1 bps. As said earlier, the Indo-Us spread may fall further in the coming sessions given that the Us 10 yr yields are rising.
1:30 GMT or 7:00 IST AU CPI
...Expected 0.5 % ...Previous 0.6 % ...Actual 0.5 %
8:30 GMT or 14:00 IST UK BOE Minutes
...Expected 0-0-9 % ...Previous 0-0-9 %
US Core CPI (MoM)
...Expected 0.20 % ...Previous 0.36 % ...Actual 0.05 %
US Existing Home Sales
...Expected 4980 K ...Previous 4910 K ...Actual 5040 K