STOCKS
US equities are gaining momentum but the Asians are looking mixed. Nikkei is range bound with a bullish bias while the Shanghai is moving down within its sideways range. Sensex and Nifty has key supports near current levels which has to hold to prevent them from further fall.
Dow (26656.39, +145.34, +0.55%) has negated our expectation for an intermediate dip to 26250. Instead the index has risen from around 26500 itseld. The bullish outlook is intact for a test of 26750. A strong break above 26750 will then pave way for a test of 26900 and 27000.
DAX (12235.51, +13.12, +0.11%) is inching higher and is heading towards its crucial 12275-12300 resistance region. Whether the index breaks above 12300 or not will be crucial. Inability to breach 12300 can trigger a corrective fall to 12100 or even lower thereafter.
Nikkei (22264.50, +4.76, +0.02%) retains its 22050-22350 range. As mentioned yesterday, the bias is bullish within this range for the index to break 22350 and rise to 22700 in the coming days.
Shanghai (3183.45, -15.14, -0.47%) trades below 3200 and can dip to test 3150 in the near term. A bounce thereafter will keep the 3150-3280 sideways range intact.
Sensex (38564.88, -80.30, -0.21%) has an immediate support at 38500 which if holds can trigger a bounce to 39000 in the coming sessions. But a break below 38500 can drag it further lower to 38000.
Nifty (11575.95, -18.50, -0.16%) has support near 11550 a break below which can target 11500. A bounce from 11550 can test 11650 or even 11700 in the near term.
COMMODITIES
A surge in the US dollar index coupled with the rally in the equities have dragged gold and silver lower. Copper is hovering around a crucial suppport. Oil is holding higher on the US ending the waivers on Iran exports. But we expect the rally to lose steam soon. A close watch is needed on the US pressuring the OPEC to increase the supply and whether the OPEC has any plans on the same front to ease the situation.
Gold (1270) seems to have resumed its down move after taking a breather for a couple of days. The bearish view is intact for a fall to 1265 and 1260.
Silver (14.81) has tumbled below 14.90. Immediate support is at 14.75. If it holds, a bounce to 14.9 is possible. But a break below it will see silver tumbling towards 14.5 and even 14 in the short term.
Copper (2.89) fell to test 2.88 and has bounced slightly from there. A strong rise past 2.90 will see a rise to 2.95-2.96 and will keep the sideways move intact. But, inability to move above 2.90 from current levels will be negative. It will keep the possibility high of copper tumbling to 2.84 and 2.82 breaking below 2.88 in the coming days.
Brent (74.12) is holding higher. Though there is still room on the upside, the current rally could be capped at 75.50-76. A corrective fall to 73-72 is possible thereafter.
Similarly, WTI (65.95) has strong resistance around 67 which can halt the current rally and trigger a reversal. A pull-back from 67 can target 65-64.
FOREX
US Dollar is trading strong against major currencies while Euro and Aussie have fallen and look weak for the near term. Dollar-Yen is stable unable to decide which direction to take. Failure to fall from here could take it higher towards 113. Chinese Yuan and Indian Rupee could see some weakness.
The Dollar Index (97.66) tested 97.78 yesterday, breaking above the multi-month resistance near 97.70/75 before closing the session at 97.59. The rise was boosted by a stronger than expected US new home sales data at 692K against market expectation of 647K. Previous data for Feb’19 has been revised lower from 667K to 662K. Fears of economic slowdown could possibly get reduced while data shows positive indication. The US 1st quarter GDP data is due on Friday and would be crucial. A stronger than expected GDP would be positive for Dollar Index in the coming sessions taking it towards 98 or higher in the medium term.
The Euro (1.1213) has held below resistance as expected and now looks weak towards 1.12-1.1170 in the coming sessions.
The Euro-Yen (125.44) has broken below immediate support near 125.5 and while the pair sustains lower, it could test 125 in the next 2-3 sessions. Clear break below 125 would open up 124.
Dollar-Yen (111.87) has been stable without any major movement. While above 111.70, the pair is expected to move higher towards 112.50-113.00 in the near term. Rejection from resistance at 112 is yet to be seen, if any. We need to be cautious and look for a break on either side for more directional clarity.
The Aussie (0.7036) has come down sharply on Dollar strength. The fall was also boosted by a fall in CPI data (for Q1) which came at 0% (Q/Q) against expectation of 0.5%. The Y/Y figure came in at 1.3% against expectation of 1.5%. While Aussie trades below 0.7050, it could test 0.70 or even lower in the next few sessions.
USDCNY (6.7180) has moved up and is nearing upper resistance of 6.72/73. A break above 6.73 would give clear bullish indication for the medium term with an upside target of 6.75; else a fall from 6.73/72 would push it back towards 6.70. Preference is for a rise towards 6.75.
Dollar-Rupee (69.62) moved up to test 69.83 before the pair came down after the 3yr USDINR buy/sell swap results came out in the last hour of the trading session yesterday. While Dollar-Rupee trades above 69.50, it could test 70.0-70.2 in the near term. Fall below 69.50 would take it down towards 69.30. Upside looks more likely.
INTEREST RATES
The US yields dipped yesterday. The 2Yr (2.35%), 5Yr (2.36%), 10Yr (2.56%) and 30Yr (2.98%) fell from 2.39%, 2.39%, 2.59% and 2.99% seen yesterday. The 5Yr could fall towards 2.35-2.32% while the 10Yr could test 2.54/50% in the next few sessions. The 30Yr could fall towards 2.95/90%.
The US-JGB 10YR (2.60%) is testing immediate resistance and if falls sharply from here, could pull down Dollar-Yen too from current resistance near 112. But at the same time Dollar strength could keep Yen stable. It would be important to see if the spread comes down from current levels and brings in a fall in USDJPY too in the near term.
The 10Yr GOI (7.6148%) is looking bullish towards 7.65/70% in the near term. Downside is likely to be limited at 7.55%.
