STOCKS
The longer term bullish prospect could be playing out in most Equity indices now after the fillip from the Powell, FOMC Minutes and the Trump-Xi truce, but evidence is needed that interim Resistances are broken. Failing that, we cannot rule out a near term corrective dip in most indices, which might give better buying opportunities later.
Even though there was a gap-up open on the Shanghai (2654.80, +2.57%) yesterday, it is yet to break above Resistance at 2670 (wrongly mentioned as 2650 yesterday), which is needed to negate any chances of a fall and confirm chances of a rise towards 2800+.
And, although the Nikkei (22438) rose to a high of 22699 yesterday, it needs to see follow-through buying today to move up to 23000. While the bullish possibility exists some confirmation would be useful.
The Nifty (10883.75, +7.00, +0.06%) has been unable to break above 11000 yet. The corresponding level on the Sensex (36241.00, +0.13%) is 36500. While these hold, we cannot fully rule out a corrective fall from here.
The expected rise to 11600 almost happened on the DAX (11465.46, +208.22, +1.85%) yesterday with a high of 11567, but the market drifted lower by close. That said, with good Support at 11200 now (up from 11000), the long-term outlook is bullish now.
Like the others, the Dow (25826.43, +287.97, +1.13%) moved up to almost 26000 but slipped back to close right on a near-term Resistance. A bit of a dip or consolidation near the current level cannot be ruled out before a further rise past 26000.
COMMODITIES
Crude prices are likely to remain volatile this week with news from the OPEC and US-China worries looms. Major commodities like the Gold and Silver look bullish and could see some decent rise in the near term. Crude prices could rise as well this week.
Brent (62.16) and WTI (53.46) are trading higher. Brent has been trading within the 58-62 region for the last 5-6 sessions and a break above 62 is a decent indication of an upmove for the coming sessions. If Brent manages to sustain above 62, it could soon start moving higher towards 64-66.
WTI (53.46) could head towards 56 while above 52. Near term looks bullish.
Gold (1240.80) is testing resistance near 1240 just now. The earlier resistance near 1230 has now been revised up to 1240. While the current upward momentum continues, Gold price could rise towards 1260 in the near term. View is bullish while above 1240.
Silver (14.52) has also risen well and could head towards 14.75-15.00 in the near term.
Copper (2.8095) has moved up but could face rejection from levels near 2.85/88 in the near term. A sustained rise above 2.88 is needed to initiate fresh upmove towards 2.95-3.00. Else a fall back towards 2.75 is possible from 2.88/90 levels.
FOREX
Watch important supports on the Dollar Index, Pound and Aussie near 96.50, 1.27 and 0.73 while USDJPY and Euro are likely to respective resistances near 114 and 1.14.
Dollar Index (96.82) is within a near term channel uptrend as seen on the daily candles. While trend support near 96.50 holds, Dollar Index continues to remain bullish and could eventually move up towards 97.50-97.75 again in the near term.
Euro (1.1367) continues to trade in the narrow 1.14-1.13 region and this could probably last only for 2-3 sessions more before a break on either side is seen, deciding the further course of direction. Considering the important resistance near 1.1400-1.1450, Euro could have some scope of testing 1.12 on the downside.
Dollar Yen (113.33) continues to trade below important resistance near 114.00-114.50 and while that holds, medium term trend for USDJPY looks bearish with a possible fall from current levels soon taking it down towards 112.
Pound (1.2735) could soon see a bounce towards 1.29 while support near 1.27 holds.
Aussie (0.7357) has clearly broken the near term trend resistance on the 3-day candles and while above 0.7350, Aussie looks bullish towards 0.74-0.75 levels. 0.73 could now act as a decent support level.
Dollar Rupee (70.46) recovered sharply yesterday pulling itself to 70.46 from an intra-day low of 69.86. While above 70, there is scope of testing 70.60 on the upside followed by some range-trade in the 70.60-70.00 region for some time.
INTEREST RATES
Whoosh! Massive dip in US Yields yesterday, especially at the Far end. The 30Yr is down from 3.32% to 3.23%. The US 10Yr (2.95%) has seen a good dip below 3.00% yesterday, but the 2Yr (2.803%) has not yet fully broken below 2.80%. With this, the 10-2Yr Spread has dropped to 15.5bp, below the previous low of 19bp. The 5Yr trades at 2.801%, showing a mild inversion compared to the 2Yr at 2.803%.
The 10Yr can now dip some more towards 2.90-2.86%. This is significant as it quite likely establishes a top for the 10Yr and negates chances of a near-term rally in yields ahead of the FOMC. Now we need to see the 2Yr fall with greater speed to avert the Curve-inversion that is starting to happen all over again.
In India, contrary to expectations of a further dip towards 7.55%, the 10Yr GOI (7.6264%) moved up a bit from 7.60%, perhaps in response to the rise in Crude. However, the longer term trend looks bearish for Yields now and as such 7.70-7.80% could be a potential Resistance to look at. NOTE that the Indo-US Yield Spread (4.588%) is expected to dip towards 4.45% and this too may pull the GOI yield lower, especially since the US yields have dipped yesterday.
