The opposition of the Helicopter money by the BOJ governor Kuroda has shaken the markets a bit as all the overstretched markets enter a corrective phase in the near term. Yen (105.81) has strengthened already and may rise further towards 105-104, taking not only Nikkei down but affecting the general sentiment too.
As expected, Dow (18517.23, -0.42%) entered a corrective phase just after achieving our target of 18600. A break below 18450-400 can extend the correction for another couple of sessions in the absence of buying at these elevated levels right now.
Dax (10156.21, +0.14%) is close to our target/resistance zone of 10300-400 which may not be conquered right now. A small correction to 9900 can’t be ruled out before another attempt to rise.
The rally in Nikkei (16660.01, -0.89%) fell marginally short of our target of 17150-250 as it turned back. A consolidation in the range of 16400-17000 looks likely in the near term.
Shanghai (3026.60, -0.41%), despite a brief surge above 3045, failed to generate any bullish momentum which indicates the intention to continue the sideways mode in the band of 3015-50 for a few more sessions.
Nifty (8510.10, -0.65%), contrary to expectations, failed to break above the resistance 8580-90. A break below the weekly low of 8475 may weaken the index in the near term and may extend the correction to 8400-8300.
All metals show indication of further sideways consolidation. Higher than expected inventories in US has pushed Energy lower.
Gold (1326.00) bounced back sharply from the support band of 1305-1290 just as expected but the sideways phase in the range of 1305-1340 may continue for another couple of sessions as no fresh money inflow is seen right now.
Silver (19.70) found short covering emerging from 19.20, close to our support of 19.10. Following Gold, it may be stuck in the range of 19.10-20.00 for the next few sessions before making up its mind.
Brent (47.31) and WTI (45.74) have deceived us twice in the last few sessions as both the times it turned down after indicating a possible breakout on the higher side. The supports of 45.90 for Brent and 44.50 for WTI are being tested again which forces us to wait the consolidation out and wait for a break from the range of 45.90-47.60 for Brent and 44.50-46.10 for WTI before favoring any direction.
Copper (2.246) is lacking any momentum to break above 2.27 right now, which is necessary for further rise to 2.29-32. The chances of range bound movement in the range of 2.21-27 looks stronger in the near term.
Sharp recovery seen in Dollar-Yen (105.83) from resistance at 107.50 on news that there is no possibility of helicopter money (distributing money to the public created by the country's central bank) and that the Governor Mr. Kuroda has said that there is no need for it. A possible test of 105-104 opens on the downside.
Nothing major to take from the ECB meeting yesterday. Euro (1.1023) remains above 1.10 and could try to move towards 1.095 eventually. Could shift the near term trade zone a little down to 1.11-1.095.
Dollar Index (96.906) came down yesterday but while above 96.58, chances of rallying towards 97.50 is still open.
Pound (1.322) has been trapped in the 1.33-1.30 region and no clarity is seen just now unless the range breaks on either side. Need to wait and watch for more cues from the markets.
Aussie (0.7468) seems to have entered into a sideways phase and could consolidate in the 0.745-0.752 region in the near term.
Dollar-Rupee (67.17) is trapped in the 67.00-67.30 region and may not see any major movement just now. Need to keep an eye on Nifty and the Indian yields for some cues. Possible break on the upside could be considered but we need more clarity and confirmation in the initial sessions next week.
The Japanese yields have shot up sharply in the last few sessions with the sharp rise in Dollar-Yen but could now see some pause as the currency pair may see a short correction in the coming sessions. The 30Yr (0.25%) is slightly down from 0.263% and could come off a little more in the near term.
The UK 10-5Yr (0.45%) has risen sharply and may continue to move up towards 0.47-0.48% in the medium term with some small interruptions.
The UK yields by themselves also look positive. They could rise in the near term and could probably try to recover 50% of the post-Brexit fall.
The US 10-5Yr (0.46%) is finding some difficulty to rise above resistance at 0.46% and if that holds, a short correction back to 0.43% could be expected. Need to see if it is able to break above 0.46%.
Slight initiation of a downward correction seen in the US yields. Next week could be a correction phase for the US yields. The 5YR, 10Yr and 30YR are trading at 1.09%, 1.55% and 2.28% respectively.
12:30 18:00 CA Inflation Y/Y
...Previous 2.1 %
...Expected 0.00 % ...Previous 0.00 % ...Actual 0.00 %
US Philifed Index
...Expected 5.1 ... Previous 4.7 ...Actual -2.9
US Existing Home Sales
...Expected 5480 K ...Previous 5510 K ...Actual 5570 K