STOCKS
The uncertainty over further developments on the US-China trade talks continues to weigh on the global equities and keeps them mixed. However, the broader view remains negative as the key resistances on major indices like the Dow, DAX, Nikkei are still holding well. Probably, we might expect a sideways consolidation before a fresh leg of downmove begins. Sensex and Nifty are holding above their supports and looks bullish.
Dow (25585.69, +95.22 +0.37%) has been consolidating over the last two weeks within its downtrend. The near term view is negative to test 25250 and 25000. Key resistances are at 25750 and 26000.
DAX (12011.04, +58.63, +0.49%) remains vulnerable to break 12000 and fall to 11800-11600 which would signal a trend reversal. But while the immediate support at 12000 holds, a sideways move between 12000 and 12200 is possible before we see the above mentioned fall.
Nikkei (21169.02, +51.80, +0.25%) is getting support near 20900. While above 20900 a rise to 21250 and 21450 is possible. But only a strong break above 21500 will negate our bearish view for a fall to 20500.
Shanghai (2850.33, -2.67,-0.09%) continues to hover around 2850 and remains vulnerable to test 2800.
Sensex (39434.72, +623.33, +1.61%) is holding well above its support at 38500. The outlook is bullish to test 41000.But a sideways consolidation between 38500 and 39500 cannot be ruled out before we see a fresh rally to 40500-41000.
Similarly, Nifty (11844.10, +187.05. +1.60%) can consolidate between 11600 and 11900 in the near term before targeting 12350 and 12500 levels.
COMMODITIES
A pull-back in the US dollar, weakness in the equities and increasing hopes for a rate cut from the US Federal Reserve is supporting gold and silver. Both can see further upticks in the near term. Copper can extend its corrective rally before the overall downtrend resumes. Oil has bounced but has key resistance ahead which can hold and keep the downtrend intact.
While Gold (1286) sustains above 1275, it can rise to 1290-1292 or even 1300 on a break above 1292.Broadly gold can consolidate between 1265-1300 before the overall downtrend resumes.
Silver (14.60) has support at 14.50 and can test 14.75-14.80. Thereafter it can reverse lower and keep the downtrend intact for a test of 14.25 and 14.
As expected, Copper (2.70) has inched further higher and is heading towards 2.71-2.72. Though there are chances of the current corrective bounce extending to 2.75, the overall view will continue to remain bearish for copper to reverse lower and target 2.62-2.60 over the medium term.
Brent (68.80) has strong resistance between 70 and 71 which will cap the upside and keep the bearish view intact for a test of 66-64.
Similarly, the resistance between 60 and 61 can cap the upside in WTI (58.55) and keep the view negative for a fall to 56-54.
FOREX
Dollar trades higher. UK and US markets are closed today. Currencies could see stable movement today.
Dollar Index (97.58) could test 97.30 which is a very near term support and is likely to hold producing a bounce back towards 98.
Euro (1.1211) has risen in line with our expectation of a rise in Euro mentioned on Friday’s edition. 1.11 has produced a sharp bounce and Euro could move higher towards 1.1265 before pausing. Near term looks bullish.
Euro-Yen (122.71) could be capped at 123 on the upside from where a rejection could take it down to re-test support at 122.
Dollar Yen (109.46) has fallen again from levels near 110.50 last week and could re-test support region of 109.00-108.50 before bouncing back towards 110.50. View for the next 1-2 sessions is bearish.
Aussie (0.6930) has risen above 0.69 and while the rise sustains, Aussie could head towards 0.70
USDCNY (6.89) has come off instead of moving higher towards 6.95. While below 6.92/91, USDCNY could test 6.86/85 which could prove to be a decent support in the near term.
USDINR (69.5350) has come down in line with our expectation. Our earlier mentioned 69.25/00 remains intact and the pair could be seen moving lower towards our target over the next 2-3 sessions.
INTEREST RATES
The US yields are closer to near term support levels and soon see a corrective bounce. The US 30Yr (2.75%) could test 2.72%, the 10Yr (2.33%) could test 2.30%, 5Yr (2.12%) could bounce from 2.10% in the near term.
The US-Japan 10YR (2.40%) is testing immediate support levels and while it bounces from here, it could pull up Dollar Yen along with itself in the near term. The yield spread could bounce back towards 2.50%.
The Japan yields have fallen from trend resistance and could be headed lower in the next 3-4 sessions. A fall towards -0.10% could be on the cards for the 10Yr yield (-0.069%)
