STOCKS
Most Equity indices were quiet yesterday, but by and large held on to Friday’s gains, which might be good for some more near-term gain. However, most markets may also face near-term Resistances which could trigger profit-taking/ consolidation.
The Dow (23531.35, +98.19, +0.42%) moved up a little more yesterday, building on Friday’s rally. A test of 24000 is possible but gains beyond that might not be easy in the near term.
Dax (10747.81, -19.88, -0.18%) looks good for a test of the 10900 Resistance we have been mentioning for a few days now. Whether or not we get a rise past that is to be seen.
In line with expectation Nikkei (20200, +161, +0.80%) seems to be headed up towards 20500. Further gains past that are unclear at the moment. A weaker Yen (108.72) would help.
Shanghai (2528, -0.19%) trades a mite lower today, but still looks like it can move up to strong Resistance at 2550-2575 in the near term.
Sensex (35850.16, +155.03, +0.43%) and Nifty (10771.80, +44.45, +.041%) have immediate Resistances at 36100 and 10900 respectively. The trajectory of the Sensex and Nifty appears to be different from that of the other global indices and the mentioned Resistances may either push the Sensex/ Nifty strongly or give way to a strong rise later on. Keep a watch there.
COMMODITIES
Oil prices continue to trade higher. Saudi Arabia plans to aggressively cut oil exports in order to boost prices as news suggests supporting the stock prices. Also markets expect some easing of trade dispute from the US-China talks that began yesterday. Rising momentum is likely to continue this week, taking the prices to higher.
Brent (57.54) and Nymex WTI (48.75) look bullish towards 58 and 50 respectively in the near term.
Gold (1287.50) has come off from resistance near 1300 as seen on the weekly line chart and while that holds, we could see a slight dip towards 1270. Silver (15.68) is also trading lower as resistance near 16 on the 3-day candle is holding well. A test of 15.50/00 looks likely in the near term.
Copper (2.6380) is stable at levels seen yesterday. On the daily candles, 2.68 is a resistance which could push prices to 2.55 in the near term indicating upcoming bearishness while the 3-day and weekly line charts show possibility of a rise towards 2.80. While below 2.68/70, we may consider are-test of 2.55 to be seen first.
FOREX
Overall currencies look weak against the US Dollar except Pound and Aussie which may move higher in the coming sessions.
Dollar Index (95.83) tested 95.64 before bouncing back from there. Daily candles show a possible rise in Dollar Index towards 96.50-97.25 in the coming sessions while support at 95.50 holds just now. Unless a break below 95.50 is seen, Dollar Index is tilted to the upside in the near term. We would keep an eye on the weekly candles that indicate a fall to 94.50, if immediate support at 95.50 breaks.
Euro (1.1450) is trading just at resistance levels of 1.1550-1.1500 and could face rejection back towards 1.1350-1.1300 in the near term. Broad sideways range-trade is likely to continue within 1.1550-1.1300 for some more sessions before a sharp break is seen on either side.
Dollar Yen (108.68) is almost stable just now. While there is some scope of Nikkei (view Stock section above) to rise in the near term, Dollar-Yen could be pulled up towards 110. The 3-day and weekly line chart show 108 to be an important support that is likely to hold in the medium term.
Euro-Yen (124.46) is testing earlier support turned resistance near 124.84 and if that holds, the pair could come off to re-test 123.6-122.8 on the downside before rising higher in the longer run.
Pound (1.2771) is trading just below 3-day and weekly resistance at 1.28 which seems to be on the verge of breaking on the upside. If Pound manages to sustain above 1.28 in the near term, we could see a rise towards 1.29-1.30 eventually. Else a fall back towards 1.25/24 would come into the picture.
Aussie (0.7141) is looking bullish towards 0.73, despite Copper (see commodities section above) trading weak. Aussie rising towards 0.73 could possibly be positive for Copper as well towards 2.70 in the near term.
USD-CNY (6.85) is testing support on the 3-day and weekly candles and while that holds, a rise back towards 6.90 could be on the cards. On the downside, the pair could be limited to 6.80 just now.
Dollar Rupee (69.69) is volatile and while below 70, there is scope of testing 69.20-69.00 before bouncing back from there. Today trade could be seen in the 70.00-69.40 region and while the US Dollar strengthens a bit, our expected fall towards 69.20/00 could be delayed.
INTEREST RATES
Contrary to expectations of a dip towards 2.10%, the US 2Yr (2.54%) has moved up a bit yesterday from 2.50% on Friday. The 5Yr (2.53%) has also moved up from 2.50%, but the 5-2 Yr Spread (-0.01% now) has dipped below 0.00% again. We might see Yields rise a little more in the near term before starting to fall again in the medium/long term.
The US 10Yr (2.69%) may move up a bit towards 2.72% before starting to fall again.
Yields in India have moved up further due increasing concern over the fiscal deficit, with the 10Yr GOI (7.5076%) now trading above our mentioned Resistance at 7.50%. We will wait today to see if our expectation of a fall towards 7.10% will be delayed or not.
