STOCKS
The International Monetary Fund (IMF) revising the global growth outlook lower again is weighing on the equities. Asians are trading in the red. Dow has declined below a key support overnight and has room to dip in the near term. DAX, as mentioned yesterday DAX remains weaker among all and looks vulnerable for further fall.
Dow (26150.58, -190.44, -0.72%) has declined below the key level of 26250. It is likely move further lower to 26000 after which a bounce-back move to 26200-26250 is possible.
DAX (11850.57, -112.83, -0.94%) has come-off sharply and is heading towards 11800 as expected. Though an intermediate bounce from 11800 to 11900 or even higher levels cannot be ruled out, the broader view will remain negative for a fall to 11600 and 11550 in the short term.
Nikkei (21647.82, -154.77, -0.71%) tumbled to a low of 21545 but has bounced from there. A test of 21700 looks likely. However, Nikkei has to breach 21750 to regain strength and rally to 21900 and 22000. While below 21750, a test of 21500 and 21400 is possible in the near term.
dc – Shanghai (3216.3, -23.26, -0.72%) has a key support at 3200. If it manages to sustain above this support, a bounce to 3250 and 3280 can be seen in the near term. But a break below 3200 will trigger a corrective fall to 3150 and 3130.
Sensex (38939.22, +238.69, +0.62%) and Nifty (11671.95, +67.45, +0.58%) have been stuck in a narrow range of 38500-39000 and 11550-11710 respectively over the last few days. It will have to be seen whether they can retain this range amid the broader weakness in the global equities. A break below 38500 can take Sensex lower to 38000. Nifty can fall to 11500 and 11450 on a break below 11550.
COMMODITIES
Weakness in equities has helped gold to move higher. Silver looks relatively weaker than gold and may see a dip in the near term. Copper can continue to consolidate in a sideways range. Oil continues to remain positive in spite of a pause in its rally yesterday.
Gold (1303) has risen breaking above 1300 and keeps our near-term view intact for a test of 1310. Immediate support is at 1300. A break below it can drag gold to 1295.
Silver (15.18) has come-off from its high around 15.34 and can fall to 15.10 and 15.05 in the near term.
Copper (2.93) has come-off after testing 2.96 and can retain its 2.89-2.96 sideways range for some more time. As mentioned yesterday, copper needs a strong break above 2.96 to gain strength and move higher to 3.0. The bias is positive to see copper breaking above 2.96 in the coming days.
WTI (64.1) has immediate supports at 64 and 63.7. An intermediate dip to test these supports cannot be ruled out. A bounce thereafter will see WTI rallying to 66.
Brent (70.68) has been oscillating around 71 over the last couple of days. An immediate support is at 70.2. As long as Brent sustains above this support, a rally to test 72.7 – the 61.8% Fibonacci retracement resistance is likely in the near term. Supports below 70.2 are poised at 69.8 and 69.45.
FOREX
Dollar Index has fallen slightly but while above support near 96.75/80, Dollar could trade in a range for sometime.
Dollar-Index (97.06) may hold above 21-day Ma support near 96.80 and while that holds, Dollar Index could inch up a bit towards 97.30/40. Only on a sustained break below 96.80/75, we would look at further downside for the near term. For now 96.75/80 is likely to hold as decent support.
Euro (1.1258) tested 1.12843 yesterday before coming off from there. Note that levels near1.1285-1.130 could produce near term rejection pushing Euro back towards 1.12.
Euro-Yen (125.15) has dipped slightly. There is immediate resistance at 126 which if holds could bring in a sharp rejection towards 124 in the medium term.
Dollar Yen (111.16) has not been able to rise above 111.30 instead it has dipped slightly. Unless the pair bounces from 111, we may look for near term bearishness towards 110.5.
Aussie (0.7112) has risen sharply and could head towards 0.7180-0.7200 levels in the near term. Note interim resistance is seen near 0.72 which if breaks could make Aussie bullish in the longer run.
Pound (1.3054) has also dipped a bit but has support at 1.30 which could keep the Pound higher for the next few sessions. Trade within 1.30-1.3150 is likely to continue for some more sessions.
USDCNY (6.7169) has moved up and could test 6.72-6.73 levels before falling back towards 6.70 in the medium term.
Although Dollar-Rupee (69.30) held below 69.75 as expected but did not pause at 69.40/35, instead moved down lower to test 69.25 on the downside. While the currency pair sustains a break below 69.40, levels of 69.25/00 come into the picture for the near term. We could see a test of 69.25/00 before Dollar-Rupee again bounces back to higher levels of 69.60+
INTEREST RATES
The US yields saw a slight rise yesterday but could not sustain to continue its upmove. Although there is room towards 3% and 2.58% on the 30Yr (2.91%) and 10Yr (2.49%) yield respectively, while the yields remain below 2.92% and 2.52%, the yields could fall towards 2.88% and 2.45% respectively, resuming the longer term downtrend. The 5YR and 2YR yield trades at 2.29% and 2.33% respectively.
The German-US 2YR yield spread (-2.93%) is bouncing from support levels and while that moves up, it could indicate a rise in Euro as well in the coming sessions. It would be important to watch if Euro moves up towards 1.13 or falls towards 1.12 now. MArkets await ECB meeting due today.
The 10Yr GOI (7.5312%) saw a high of 7.5823% but could not sustain to rise to 7.60%. While the yield trades lower, it could come down towards 7.45% pulling down Dollar-Rupee along.
