STOCKS
Dow (25502.18, +0.16%) has just broken above immediate resistance near 25500. If the current rise sustains above 25500, Dow could continue to move up towards 25750 in the medium term. Dax (12598.21, -0.14%) on the other hand has dipped below 12600 and could test 12400 before again bouncing back from there
Nikkei (22562.10, +0.24%) has dipped and is ready to test the lower level of the near term range of 22400-22800 as mentioned yesterday. A break below 22400 is needed to keep the bearish momentum intact. Else, a bounce from 22400 would keep the current narrow range active for some more time.
Shanghai (2731.11, +0.96%) is almost stable. As mentioned yesterday, scope of testing 2650 on the downside remains open with equal possibility of moving up towards 2800. The index is currently trading right in the middle of the 2650-2800 zone.
Nifty (11387.10, +0.23%) traded below 11400 yesterday. A test of 11500 still looks possible in the next 2-3 sessions before coming off sharply towards 11200.
COMMODITIES
Brent (73.98) is likely to trade in the narrow range of 72.50-74.00 this week while WTI (69.09) looks bullish above 68. WTI may target 70-71 in the medium term.
Gold (1217.90) is likely to remain stuck in the 1230-1200 region for a couple of weeks. Sideways range is likely to continue majorly this month. No major movement expected just now. A test of 1210 on the downside looks possible.
Copper (2.7350) is trading above 2.70 and while that holds, a bounce back to 2.80 is possible. However, we need to be careful because there are equal chances of falling towards 2.65, if a break below 2.70 is seen.
FOREX
Euro (1.1561): As per expectation, Euro moved lower yesterday, seeing a low of 1.1530. The previous low of 1.1508 and support near 1.145 on 3 day line chart are crucial levels which could produce a bounce. A break below these levels would make Euro bearish towards lower support near 1.135-1.130 on weekly line chart.
Dollar Index (95.314): Dollar Index saw a high near 95.52 yesterday and could move higher towards resistance on daily line chart near 96.0-96.2 by next week. Having breached the 95 level last week, the weekly line chart suggests it could remain bullish in the near to medium term atleast.
Dollar Yen (111.32): Dollar Yen continues to move quietly just above support near 111 on daily candles. While above 111, an uptrend towards resistance near 113-114 is possible in the next 1-2 weeks.
Euro Yen (128.69): As mentioned yesterday, Euro Yen looks bearish towards support near 127.5 on daily line chart and could test it in 1 week’s time. EURUSD’s downmove towards 1.145 could help Euro Yen test 127.5. The crucial horizontal support near 127 on weekly line chart would have to break for Euro Yen to turn bearish below 127 in the medium term.
Pound (1.2944): As per expectation, Pound moved lower yesterday, seeing a low near 1.294. As mentioned yesterday as well, it could attempt a test of support on daily candles near 1.290-1.288 in the next 1-2 sessions.
Dollar Rupee (68.885): Dollar Rupee is likely to limit its upside at 68.90 from where a fall back towards 68.50 is possible this week.
INTEREST RATES
After having tested the 3% resistance last week, the US 10 year bond yield has again come off from there. If it moves below 2.9% again, there is crucial support near 2.82-85%, which it was not able to break below in Jun-Jul ’18.
This week is also supposed to see auctions of $26 bn of 10 year notes and $18 bn of 30 year notes by the US Treasury. Whether a greater supply of bonds reduces bond price and thereby raises yields will have to be seen.
The trade war rhetoric has again got impetus lately after China also threatened to impose $60 bn worth of retaliatory tariffs on USA. Some more of this rhetoric could lead to a ‘risk off’ sentiment amongst investors, taking the 10 year yield towards 2.8%.
US 10 year yield (2.94%), 30 Year (3.09%), 5 Year (2.81%), 2 Year (2.65%):
The Japanese 10 year yield (0.12%) continues to stay in the 0.11%-0.13% zone. A breach above 0.13% would open up levels near 0.20%. A test of 0.09% on the downside before it moves back up beyond 0.13% is possible in this week.
The German 10 year bond yield (0.39%) seems to be coming off from resistance on medium term chart near 0.4% . A downmove towards 0.3% could now be seen in the coming sessions.
