STOCKS
Markets seems to be digesting Trump’s tweet to increase tariffs on Chinese goods. Though equities tumbled have bounced back from their lows. We need to see how the market behaves for a few sessions to get a clarity. Sensex and Nifty are managing to hold their sideways range. But the weak earnings numbers and weak growth outlook keeps the bias negative for them to break the range on the downside.
As expected Dow (26438.48, -66.47, -0.25%) tested 26000 yesterday but has bounced back sharply. It needs to be seen whether it sustains above 26250 and breaks 26500 to revisit 26700 levels. Given the kind of volatiliy and uncertainty we can expect Dow to trade in the broad 26000-26700 range.
DAX (12286.88, -125.87, -1.01%) has to rise past 12300 to bring back the bullishness. Else it can fall back to 12100 levels and will remain bearish for a test of 12000.
Nikkei (22087.37, -171.36, -0.77%) has support at 21850 which can keep the uptrend intact for a test of 22500 over the medium term.
As expected Shanghai (2924.67, +18.21, +0.63%) has bounced after testing the 21-MA on the weekly (2873). It can test 2950-2980 in the coming sessions.
Sensex (38600.34, -362.92, -0.93%) and Nifty (11598.25, -114.00, -0.97%) retains their 38500-39500 and 11550-11800 range respectively. Sensex can test 39000 and Nifty can see 11700 in the near term and can reverse lower again. Broadly our bias remains bearish for these indices to break the range on the downside.
COMMODITIES
Risk appetite following Trump’s tweet on Sunday to increase tariffs on Chinese imports and a sharp sell-off in the equities are helping gold to sustain higher. Copper is in a corrective rally. Oil has bounced but has key resistance which can halt the upmove and push it lower again.
Gold (1283.8) remains higher within its 1266-1292 range. The renewed trade US-China trade tension might allow the upside to extend beyond 1292 towards 1295-1300. However, the bigger picture is bearish to break 1266 and fall to 1260 and 1255.
Silver (14.93) has resistance at 15.05 which needs a close watch. A break above it can see 15.15-15.20 while a pull-back from there can test 14.80
The corrective rally in copper (2.83) can extend till 2.86-2.87 before a fresh fall begins targeting 2.80-2.78 levels again.
WTI (62.30) can test 63-64 while it sustains above 62. The downtrend can resume thereafter targeting 60 again.
Brent (70.28) can test 71 has room to move up even to 72 after which a fresh fall to 68-66 can be seen again.
FOREX
Dollar index (97.46) has support just below current levels and lower at 97. If the supports hold and produce a bounce, the index could rise towards 98-99 in the medium term. View is bullish.
Euro (1.1205) could test daily resistance near 1.1225-1.1230 over the next 1-2 sessions before again falling towards 1.12 or lower. Any rise beyond 1.1230 could be limited to 1.1250-1.13 on the upside and is likely to see an eventual fall in the longer run.
The Euro-Yen (124.05) has bounced well and could rise back towards 125 while support near 123.40/60 holds.
Dollar Yen (110.71) is trading below earlier support turned resistance at 111. While the pair trades below 111, there is scope for some ranged movement in the 111-110 region. Note important support is seen near 109.70-110.00 region that could be tested in the near term before dollar Yen bounces back towards 111.
Aussie (0.70) has recovered back to trade at 0.70. It would be important to see if Aussie rises up from here just now to again move up towards 0.71/72. Else a fall from here again could make it vulnerable to a fall towards 0.6950-0.6900.
USDCNY (6.7703) is trading higher today after closing at 6.76 yesterday. We continue to look for a rise towards 6.80/81 (wrongly mentioned as 7.80/81 yesterday) in the next few sessions.
Dollar-Rupee (69.4150) rose yesterday as major currencies weakened against the US Dollar. Trade within 69.50/60-69.25 looks possible just now. Charts suggest a possible break above 69.60 leading to a rise towards 69.65-69.97 in the near term. We would keep a close watch on the price action near immediate resistance at 69.50/60.
INTEREST RATES
The US Yields have fallen in line with our expectation. The 30Yr (2.89%) could fall towards 2.85%, 10Yr (2.48%) could fall towards 2.45/40%, while the 5Yr (2.27%) could test 2.25-2.20% in the near term. Yields look bearish just now.
The German-US 10YR (-2.47%) could rise towards -2.43/40% in the near term. -2.43/405 is an important near term resistance from where a rejection is possible. For now the yield spread is likely to rise in the coming sessions.
The US-JGB 10Yr (2.54%) has been falling from trend resistance and could fall further towards 2.50-2.45% in the coming sessions. This could be bearish for Dollar Yen in the near term.
