STOCKS
A good day for Equities yesterday, with Europe, Japan and USA following the good news from Hong Kong that the extradition bill (which had sparked the protests over the last several weeks) has been withdrawn.
The Shanghai (3003, +1.54%) rose past 2950 yesterday and trades higher today as well. It has an important trendline Resistance near 3050 on the Monthly Candles now, but might target 3200 in the longer term if it manages to break above 3050.
Solid rise in the Nikkei (21138.89, +489.75, +2.37%), breaking well above its earlier range resistance at 20800. Immediate Resistance at 21277 (21-week MA). Break thereof, if seen, can take the market further up towards 21500.
The Support at 11850 on the DAX (12025.04, +114.18+ 0.96%) held well as DAX traded gap up yesterday. As in the case of Nikkei, the 21-week MA at 12102 provides near-term Resistance now. A break thereof can set up a test of 12450 in the medium term.
The Dow (26355.47, +237.45, +0.91%) too rose well enough yesterday (with Support at 26000 holding), but has been unable to break above 26500 yet. A rise past that (if seen) would bring in further bullishness, but might not be very easy.
Amidst the relative bullishness in global Equities yesterday, the Indian markets saw a muted rise yesterday. The Nifty (10844.65, +46.75, +0.43%) and Sensex (36724.74, +0.44%) both rose, but underperformed the other markets. we imagine that they might be good Longs today, given that they have more room to catch up with the other indices on the upside. The Nifty might test 10975 and the Sensex could see 37125.
COMMODITIES
Gold seems to lack strength to breach its range on the upside. Silver remains strong, but might see an intermediate dip before moving further higher. Oil has surged back into its sideways range and can move up within the range. The US crude inventory data release today will need a watch to see if oil can sustain higher. Copper has surged and needs to be seen if it can sustain higher which would avoid a fresh fall.
Gold (1548) is struggling to gain strength to break the 1520-1555 range on the upside. As mentioned yesterday, a strong rise past 1555 is needed to see the prices moving higher towards 1585-1590. While below 1555, the sideways range will remain intact and gold can fall to 1535 and even lower in the coming days.
Silver (19.45) sustains higher and remains strong. An intermediate dip to 19.35 and 19.20 looks possible before we see a fresh rise to 20.4-20.5. The outlook will continue to remain positive as long as silver trades above the 19-18.7 support zone.
Copper (2.61) sustained above 2.50 and has surged towards 2.60 as expected. Support will now be in the 2.5750-2.57 region. While it holds and a subsequent break above 2.62 will see copper moving further higher to test 2.64-2.65 on the upside and will prove our bearish view of seeing 2.35 on the downside wrong.
Brent (60.45) has surged breaking above 59 thereby negating the chances of an immediate fall to 56 which we had been expecting. It is back into is 57.50-61.50 sideways range and can test the upper end of the range.
Similarly, WTI (55.95) risen past the resistance at 55.10 and is retaining its 53-57.5 sideways range. Within this range a rise to 57 and 57.5 is likely while it remains above 55.
FOREX
Dollar has declined sharply and has has room to dip further. Euro can test 1.1090-1.1110 while it sustains above 1.10. Dollar-Yen has risen sharply and is looking bullish to break above the key resistance level of 106.8. Aussie remains positive but has a crucial resistance ahead which will need a watch. Pound has surged after the government failed to win a majority for its call for a snap election. The news that the US-China trade talk has been scheduled for October has dragged the USDCNY lower which can now dip further test the next crucial support level of 7.1150. This could now aid the Dollar-Rupee to break 71.95 and test the next supports at 71.80 and 71.73 today.
Dollar Index (98.93) has come-off much below our expected level of 98.55. While below 98.55 a further fall to 98.15 and 98.05 is likely in the near term.
Euro (1.1032) has surged above 1.10 and has an immediate support at 1.1025 while above which a further rise to 1.1055 is possible. The downside pressure has eased and while above 1.10, the Euro can slowly inch higher towards 1.1090 and 1.1110 in the coming days.
Dollar-Yen (106.62) has surged above 106 again and has negated the fall to 105.50-105.25 mentioned yesterday. The key resistance level of 106.8 can be tested now. The bias is turning bullish for the pair to breach 106.8 and rise to 107.20 and 107.50 in the coming days. We will have to wait and watch.
EUR-JPY (117.6) has risen sharply above 117 but has a crucial resistance at 118 which will need a watch. A strong break above 118 is needed to prove our bearish of seeing a fall to 114 wrong.
As expected, Aussie (0.6817) has extended its upmove towards 0.6820. The near-term view is positive. However, a crucial resistance is coming up at 0.6845 which needs to be broken to retain the current upmove and avoid a fall-back to 0.6800 and lower levels again.
Pound (1.2245) has surged above 1.22 and can revisit 1.2300-1.2310 levels on the upside. A strong rise past 1.2310 will be bullish to see a further rise to 1.24 going forward for which the Pound has to sustain above 1.22.
USDCNY (7.1340) has declined much beyond our expected level of 7.14. It can now test the next crucial support level of 7.1150 which might hold on its first attempt and produce a bounce to 7.14 again.
The strength in the Chinese Yuan can drag the Dollar-Rupee (72.12) today below the support level of 71.95 which has held yesterday. A test of the next supports 71.80 and 71.83 is possible today.
INTEREST RATES
The fall in yields have taken a breather. The US Treasury yields remained stable at the near-end and rose at the far end. The German yields on the other hand have risen across tenors. An intermediate bounce in both the US and German yields looks likely within their overall downtrend. The 10Yr GoI has risen yesterday and can move further higher if it manages to breach the immediate resistance level of 6.57%.
The 2Yr (1.49%) and 5Yr (1.38%) were stable while the 10Yr (1.52%) and 30Yr (2.01%) were up 4 bps and 7 bps respectively. The 30Yr seems to be getting support near 1.95% and a close above 1.98% this week can take it further higher to 2.08%-2.09% in the near-term before the broader downtrend resumes. Similary, the 10Yr can test 1.58% before the preferred fall to 1.28% happens.
The German 2Yr (-0.90%) and 5Yr (-0.91%) were up 3bps and 4bps respectively. The 10Yr (-0.68%) and 30Yr (-0.16%) were up 5bps and 8bps respectively. The 30Yr has been oscillating around -0.20% and has room to test -0.13% on the upside within its overall downtrend. The 10Yr can see an intermediate bounce to -0.62% and then can resume its downtrend.
The 10Yr GoI (6.55%) is sustaining above 6.50% and has risen yesterday. Immediate resistance is at 6.57% a strong break above which can take the yield higher to 6.61% and 6.63% and negate the expected fall to 6.43%-6.42%.
