STOCKS
Short-covering on equities as the US-China talk is underway. The global equities have room on the upside but the bigger picture favors further fall going forward. We will have to wait to know the outcome of the trade talks which could set the trend for next week.
Dow (25828.36, -138.97, -0.54%) has recovered sharply from its low of of 25517.39. It can test 26000, but need to see if the Dow can make a strong close above it for the week today. However, while below 26250 the outlook is bearish to break 25500 and test 25000.
DAX (11973.92, -206.01, -1.69%) is bearish and has been declining in line with our expectation. A test 11900-11850 is likely after which a bounce-back move is possible.
Nikkei (21576.17, +174.04, +0.8%) has key resistances at 21750 and 22000 which can cap the current bounce and trigger a fall in the short term.
Shanghai (2921.88, +70.93, +2.49) can test 2950-2970 while it remains above 2900.
Sensex (37558.91, -230.22, -0.61%) and Nifty (11301.80, -57.65, -0.51%) might see some short-covering rally to 38000-38300 and 11400-11450 respectively before the overall downtrend resumes.
COMMODITIES
Gold remains stable within its sideways range. Copper has bounced and can move further up before reversing lower again. Oil can see an interim bounce before resuming its overall downtrend.
Gold (1285.1) remains stable above 1280 for now within its 1266-1292 sideways range. While below 1298, the outlook is bearish for a fall to 1270-1260
As expected Silver (14.81) fell to 14.70. Though it has bounced, a dip to 14.60 is possible in the coming sessions.
Copper(2.79) has bounced sharply from near 2.73. While above 2.76, an interim rise to 2.82 and 2.85 is possible. But the bigger picture remains bearish for a fall to 2.70-2.68
WTI (62.45) may see a rise to 63-64 in the near term while to holds above 62. Need to watch if it has surpass 64 or not. We expect it to turn down again from 64.
Similarly, Brent (70.29) can test 71.5 in the coming sessions and can see a pull-back to 69-68 from there.
FOREX
US-Trade talks are to continue today also with the tariff on $200 bln goods to be implemented today after 12:01 am ET. However, there is some hope that both countries would get into a deal, the imposition of tariffs could bring in some volatility in the second half of today’s session.
USDCNY (6.8052) has fallen despite the trade talks and the looming trade tariffs on the Chinese imports. However, the charts suggest important resistance at 6.85 on the upside which could hold in the medium term bringing in some corrective dips over the next 1-2 sessions.
Dollar Index (97.38) has dipped a bit but is expected to trade above 97 in the near term. While the index sustains trade above 97, there could be chances of a rise back towards 98 or higher.
Euro (1.1228) has risen slightly but could see near term range trade within 1.1225-1.1150 as seen on the daily candles.
The Euro-Yen (123.43) has scope of testing 122 on the downside while below 124. Only on a sustained rise above 124, we may expect near term to turn bullish.
Dollar Yen (109.91) tested 109.47 yesterday before trading slightly higher today. It would be important to see if 109.50-109.00 holds well and is able to produce a decent bounce back towards 110 or higher. 109 would be crucial decider of medium term direction. While 109 holds, chances of testing 110.0-110.5 remains intact.
Aussie (0.70) seems to be trading sideways above 0.70 and while that sustains, the currency could move up towards 0.7050-0.7100 in the coming sessions. Downside extension to 0.69 is not fully negated and would come into the picture if Aussie breaks below 0.70. Preference is for a ranged movement above 0.70 just now.
Dollar-Rupee (69.95) has tested a high of 70.24 on the offshore NDF yesterday and that could be reflected on a possible OTC opening above 70 today. While we keep chances of 70.30 intact note that it is an important near term resistance and could hold pushing Dollar Rupee down from there back towards 69.80. Only on a break above 70.30, we would look at a test of higher resistance near 70.50/60. Repeat: 70.30 and 70.50/60 would be crucial levels to watch in the near term that would decide further direction of the currency pair going forward.
INTEREST RATES
The US 30-5Yr (0.61%0 has some scope of moving down towards 0.50% and while that falls the 30YR could start falling, pulling along the other yields of shorter time frame. The 30Yr (2.88%), 10Yr (2.46%) and 5Yr (2.27%) are almost stable just now. But we could soon see a sharp fall coming in for the US yields in the near term. Preference is for a fresh fall to be seen in the US yields next week.
The Japan yields have mode up. The 10Yr (-0.04%) and 30YR (0.54%) have risen from -0.04% and 0.537% respectively and look bullish for the near term.
The US-JGB 10Yr (2.50%) has fallen but could see a small temporary corrective bounce from here. Although the spread looks bearish for the medium term towards 2.45%, immediate bounce looks possible that could hold for a few sessions before giving way.
The German yields have dipped as expected. The 5Yr (-0.472%), 10Yr (-0.047%) and the 30YR (0.599%) are down from -0.46%, -0.043% and 0.602% seen previously. Near term looks bearish for the German yields as the 5Yr, 10Yr and the 30Yr could target -0.48%, -0.07% and 0.57% respectively as mentioned yesterday.
The German-JGB 10Yr (-0.01%) has fallen as expected and could now test -0.5% before pausing or rising back from there.
The UK yields are also falling and look bearish in the coming sessions. The 5YR (0.82%), 10Yr (1.13%0) and the 20Yr (1.58%) are down by 1bps and could fall towards 0.75%, 1% and 1.50% respectively. This could indicate a fall in Pound too in the near term.
The Indian 10Yr GOI (7.4937%) is stuck in the 7.45-7.50% region just now and is unable to break below 7.45% to move towards lower support near 7.40%. We need to keep a close watch to see if it break above 7.50/55% to turn towards upside for the early sessions next week.
