STOCKS
The US relaxing some restriction on the Chinese firm Huawei has given some breather to the global equities. The Dow and DAX have recovered after its fall on Monday. Asians are also trading in green. In India, the Sensex and Nifty has supports near current levels which has to hold in order to avoid further profit taking ahead of the election results tomorrow.
Contrary to our expectation for a fall Dow (25,877.33 +197.43 +0.77%) has bounced yesterday. The key near-term resistance at 26000 can be tested which if broken can take the index further highe to 26250 in the short term.
DAX (12,143.47 +102.18 +0.85%) looks mixed in the near term. It has equal chances for either a rise to 12200-12250 or fall to 12000 in the near term. However, from a medium-term perspective while the DAX remains above 12000, the outlook is positive for a rally to 12400.
Nikkei (21354.17, +81.72, +0.38%) has bounced above 21250 again. It can test 21500 and 21750 in the coming days while it remains above 21250.
Shanghai (2902, -3.86, -0.13%) is retaining its 2850-2950 sideways range. A rise to 2950 -the upper end of the range is likely in the near term.
Sensex (38969.80, -382.87, -0.97%) has support at 38800 while the Nifty (11709.10, -119.15, -1.01%) has support near current levels at 11700. While these supports hold, a bounce to 39500-39600 on the Sensex and 11800-11850 on the Nifty is possible today.
COMMODITIES
Strong dollar and a recovery in equities continue to weigh on gold which can push its prices further lower in the coming sessions. Silver remains stable. Copper remains bearish for further fall. Oil has dipped. Brent and WTI can test is key near-term supports and will need a close watch to see if the support holds or not.
As expected, Gold (1273.4) fell yesterday to test 1270. The near-term view remains bearish to test 1265. Resistances are at 1275 and 1280.
Silver (14.42) remains stable around 14.40. A corrective bounce to 14.60 is likely in the short term before we see a fresh fall to 14 over the medium term.
Copper (2.715) is hovering above its range support at 2.71. The view remains bearish for it to test 2.68 in the coming sessions after which a bounce is possible.
Brent (71.86) has dipped below 72 and is turning mixed in the near term. Immediate support is at 71.60 which if holds can trigger a bounce to 73 again. But a break below 71.60 can drag Brent to 71 and 70.50 in the coming sessions.
WTI (62.63) has a crucial support at 62 which is likely to be tested in the coming sessions. We will have to wait to see if this support at 62 holds or not to get a cue on the next move.
FOREX
US Dollar continues to trade strong. Pound and Aussie look bearish in the near term as they tend to trade near important support levels which seem to be breaking on the downside. Dollar-Yen is likely to rise while Yuan may remain stable. Euro looks bearish while Dollar Index moves up to test 98.50.
Dollar Index (98.02) has moved up to 98 and could head towards resistance at 98.50 in the coming sessions. Note that 98.50 and 99 are two important resistance levels that seem likely to hold for the near term.
Euro (1.1162) is slowly inching down towards 1.11 and would be important to see if it breaks below 1.11 within the current down move. Immediate preference is for a rise form support at 1.11 but in case we see a fall below 1.11, the currency could turn bearish for the longer run.
Euro-Yen (123.38) has moved up above 123.20 and while it trades higher, it could test 124 or higher in the coming sessions. The currency pair looks bullish while above 122.
Dollar Yen (110.54) is headed towards 111 in the near term. Near term looks bullish.
Aussie (0.6880) has fallen below 0.69 and could test immediate daily support at 0.6850. A break below 0.6850 could take it further down towards 0.68-0.67 in the medium term. A short corrective bounce from 0.6850 looks possible.
Pound (1.2715) is testing important support at 1.27 which if breaks could make Pound vulnerable to further fall towards 1.25 in the longer run.
USDCNY (6.9064) is slightly trading higher today. 6.90 is an immediate short term support which could keep the pair stable within 6.90-6.95 for a few sessions before Yuan strengthens towards 6.87/85 in the near term.
USDINR (69.72) was almost stable yesterday, trading below resistance near 69.80. We may have to allow for a rise towards 70.00/10 in the near term before a sharp fall targeting 69.50/25 could be seen. If Nifty comes down towards 11600 today, Rupee may see some weakness towards 69.80 or higher.
INTEREST RATES
The US yields have risen as expected. The 30Yr (2.85%), 10Yr (2.43%), 5Yr (2.23%) and 2Yr (2.26%) are trading higher and has some more room on the upside for 1-2 sessions before the yields start falling again. The 30YR could test 2.87% while the 10Yr, 5YR and 2Yr may rise towards 2.47%, 2.26% and 2.30% respectively.
The US 10-5Yr differential (0.20%) is heading towards support at 0.19% from where a bounce could be expected. The bounce in the differential could indicate that the 10Yr could start rising faster compared to the 5YR yield in the near term.
The German-Japan 10Yr spread (-0.02%) has risen from support and looks bullish towards 0.03% in the near term. This is indicative of a rise in Euro-Yen in the near term.
The Indian 10Yr GOI (7.4265%) is trading above 7.40% and while the rise sustains, it could eventually move higher towards 7.50/55%.
The UK yields have risen further. The 5Yr (0.80%), 10Yr (1.09%) and 20Yr (1.54%) are up about 2-3bps and could see some more upmove towards 0.83%, 1.15% and 1.60% in the near term.
The German 10Yr (-0.06%) has risen as expected and could test 0% before again falling from there.
