Morning Brief: July 17

STOCKS

Major stock indices have shot up yesterday. Dow and Dax have rallied up and Nikkei has opened at higher levels. Shanghai may be in a pause mode for some time. Nifty looks bullish for the week.

Dow (22057.37, +1.19%) has been trading sideways since mid-Aug only to build base and gather more momentum for a sharp surge as seen yesterday. Immediate resistance is seen near 22100 which is likely to break on the upside targeting 22400 soon.

Dax (12475.24, +1.39%) also opened with a gap up and rose higher. The bullish momentum looks strong just now and could take the index to levels near 12750-12800 again in few sessions.

Nikkei (19742.20, +1.00%) opened today with a sharp gap up above our immediate resistance near 19600. A test of 19900-20200 levels is on the cards for the near term.

3400 could act out as a decent resistance for Shanghai (3375.37, -0.03%) in the next few sessions. A slight fall in the near term could be helpful to gain some more momentum to resume the longer term uptrend. If not an immediate fall, we could see some sideways consolidation between 3400-3300 zone.

Nifty (10006.05, +0.72%) could re-test 10100 or higher in the coming sessions while immediate support near 9900 holds. Thereafter a slight corrective dip is possible.

COMMODITIES

Gold (1329) moved lower in line with our short term bearish view due to overbought condition and renewed strength in Dollar Index. Immediate trading range for Gold is now 1327-1363 and a close below 1327 could open up 1303 levels as well. Similarly Silver (17.75) has also moved lower and trading within the range of 17.40-18.01.

Copper (3.03) has also come down in line with our expectation and trading within the range of 3.00-3.16 and a daily close below 3.00 could open up 2.90 levels as well.

No directional move had been seen in Brent (53.80) as it is hovering around the support of its near term trading range of 53.30-55.60.Only a close below 53.30 could open up 51 regions, otherwise it might move up towards 55. WTI (48.06) is also trading at yesterday's level, within its narrow range of 47.22-50-48.70. Only above 48.70, the higher resistance of 50.20 can come into consideration.

FOREX

As it turns out, Dollar-Yen (109.36) has broken above the 108.70-90 region, bringing it back into the earlier 108-111 range. However, the market may stall for a while between 109.00-110.00 for a couple of days. A break above 110 is needed to propel the market to higher levels.

The Euro-Yen (130.74) has risen along with Dollar-Yen, within an overall uptrend that can target 132+. This might also help Euro-Dollar (1.1960) to maintain its overall uptrend by remaining above trend Support at 1.1900.

The Pound (1.3177) has done well for itself by rising from 1.28 since 23rd August. We have been looking for further upside to 1.3270 as well. But, it could run into profit-taking soon if it is unable to move up to 1.3270 immediately, say today itself.

The Aussie (0.8011) is testing the Support at 0.8000. Deeper Support seen near 0.7965 as well. While these hold, we continue to be bullish overall, targeting 0.82. At the same time, we acknowledge the chances of a near term dip to 0.7965 as well.

Further short-covering being seen in the Dollar-Yuan (USDCNY = 6.5439). Chances of seeing 6.5750 now.

Dollar-Rupee closed at 63.86 yesterday, but trades near 63.99/64.03 on the NDF market, following the rise in the Dollar Index (91.875), which might move up to 92.00-20 this week. If so, Dollar-Rupee could see 64.20.

INTEREST RATES

The benchmark US 10Yr yield (2.12%) moved higher as it is trading above 2.08% regions. It is trading within a bearish channel since 10th of July 2017 and only a daily close above 2.16-18% regions could help to get out of the same.

EUR/USD moved lower due to lack of upside momentum in both German-US 2 Yr Spread (-2.03%) and the German-US 10Yr Spread (-1.73%).

Muted price action has been seen in across all the Japanese Bond yields. Japan 10Yr yield hovering around at 0.00% levels while the 30Yr (0.81%) and the 5Yr (-0.14%) are almost unchanged.

UK Gilts yields has rebound marginally as UK 5Yr and 30Yr Gilt Yields (5Yr 0.45% and 20Yr 1.55%) are up by 2-3 pips. The UK 10Yr (1.02%)is also moved higher with an immediate resistance at 1.07% regions.

Author: Kshitij Consultancy ServiceWebsite: http://www.kshitij.comKshitij Consultancy Service>These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. 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.More from the author