STOCKS
Global Equities moved up well yesterday, possibly on hopes of positive outcome from the US-China talks scheduled for October. However, we see Resistances overhead in the near term, and would want to be careful about becoming overly optimistic much ahead of time. India underperforms, need to see if it will move up today.
Huge rise on the Dow (26728.15, +372.68, +1.41%) last night to a high of 26836.30. Beware, however, of near term Resistance near 26900 just overhead on the Daily Candles and near 27000 on the Monthly Line charts.
The Nikkei (21218.16, +132.22, +0.63%) has near term Resistance right here on the Daily Line, but may have more room on the upside towards 21500 on the 3-day Candles.
As mentioned yesterday, 3050 might provide Resistance on the Shanghai (2991.02, ++5.15, +0.17%) on the Monthly Candles.
If the DAX (12126.78, +101.74, +0.85%) manages to sustain its rally above the 21-week MA (12102) mentioned yesterday, it may have more room on the upside than the other indices.
The KOSPI (2008) has been rising since end-August, but has near-term Resistance coming up near 2037 on the Daily Candles.
The Nifty (10847.90, +3.25, +0.03%) and Sensex (36644.42, -80.32, -0.22%) were flat/ weak yesterday, underperforming the other markets. They might be worth buying today if they are able to sustain above 10800-750 and 36500-36400 respectively today.
Overall, markets might not try to break above Resistances today ahead of the weekend and might see mild profit-taking. Be wary of that.
COMMODITIES
Sharp fall in gold and silver on profit-booking following the news that the US and China are set to resume their trade talks in October. Gold looks vulnerable for further fall while silver can consolidate within its overall uptrend. Oil surged after the US reported a higher draw-down in its inventories than the market was expecting but has come-off sharply from the highs and keeps the sideways range intact. The US Crude stocks declined 4.8 million barrels as against the market expectation for a draw-down of 2.5 million barrels. Copper has surged to test a key resistance which has to be broken now to see further rise.
Gold (1518) has broken its 1520-1555 range on the downside. Next support is at 1510 a break below which can drag it further lower to 1490-1485. Cluster of resistances are poised in between 1525 and 1530 which can cap the upside now.
Silver (18.72) has tumbled much beyond our expected level of 19.20 and has negated the rise to 20.4-20.5 that we had expected. Immediate support is at 18.5. While it holds, silver can consolidate between 18.5 and 19.2 in the near term. A break below 18.5 can drag it to 18 and 17.7.
As expected, Copper (2.63) surged to test 2.65 and has come-off slightly from there. It needs to be seen if it can manage to rise past 2.65 and target 2.68 on the upside. Inability to break above 2.65 can drag it to 2.55 and 2.52 again.
Brent (60.80) spiked to 62.40 and has come-off from there. A strong close above 61.50 today will be bullish to see 63 levels next week. Inability to breach 61.50 can drag the prices lower and keep it in the 57.50-61.50 range for some more time.
WTI (56.35) tested its upper end of the 53-57.50 range and has come-off from there. It has to sustain above 56 to retest the 57.50 again and avoid a fall to 55.50-55.
FOREX
Dollar index has bounced but has a key resistance ahead which has to be breached for it to move further higher and avoid a fresh fall again. Euro has support near current levels while above which the near-term view remains positive. Dollar-Yen has broken above the key resistance level of 106.8 and is bullish. Aussie sustains a higher and keeps the bullish view intact. Pound has surged and can test the key 1.2380-1.2400 resistance zone after which a corrective fall is possible. USDCNY has bounced and can consolidate in the 7.12-7.18 range. Dollar-Rupee remains mixed and need to see a breakout on either side of 71.78 or 72 to give a clear idea on the next move.
Dollar Index (98.45) dipped as expected to test 98.15 and has bounced from there. It needs to be seen if it can rise past 98.55 or not which will then pave way for a test of 99 and 99.25. While below 98.55, a test of 98 is possible in the near term.
Euro (1.1034) surged to 1.1085 ad has come-off sharply from there. It has supports at 1.1025 and 1.10 while above which the outlook is bullish to test 1.1085 and 1.1115 on the upside.
As expected, Dollar-Yen (107.02) has risen breaking above 106.8 and is bullish to test 107.2 and 107.5. Supports are at 106.8 and 106.5.
EUR-JPY (118.10) has risen above 118 and is bullish to test 119 while it remains above the support level of 117.7. The fall to 114 that we had been expecting is now negated.
As expected, Aussie (0.6815) sustains above 0.6800 and keeps the bullish view intact to test 0.6845. As mentioned yesterday, the level of 0.6845 is a crucial resistance which needs to be broken to retain the current upmove and avoid a fall-back to 0.6800 and lower levels again.
Pound (1.2328) has risen past 1.2310 and can now test 1.2380-1.2400 as mentioned yesterday. A corrective fall thereafter to 1.2350-1.2300 cannot be ruled out. A strong break above 1.24 is needed for the Pound to sustain this upmove and extend it up to 1.2500-1.2550.
USDCNY (7.1510) has bounced from the low of 7.1227 and could revisit 7.17-7.18 levels on a break above 7.16. Broadly, we expect the pair to consolidate between 7.12 and 7.18 for some time.
Dollar-Rupee (71.8450) was stuck in between its support at 71.78 and resistance at 72. We need to wait for a breakout on either side of 71.78-72 to see whether the pair is going to rise towards 72.25-72.50 or fall to 71.52-71.42.
INTEREST RATES
As expected both the German and the US Treasury yields have moved as the concerns on the US-China trade war front eased after the announcement of the talks scheduled for October. Both the US and the German yields have room to move further higher. However, key resistances are coming up for them which can cap the upside and keep the overall downtrend intact. The 10Yr GoI has to sustain above 6.55% in order to move higher towards 6.63%-6.65% and avoid a fall to 6.50%.
The US 2Yr (1.55%), 5Yr (1.44%), 10Yr (1.58%) and 30Yr (2.07%) were up sharply between 6 and 8 bps. As mentioned yesterday, the 30Yr can test 2.09% and then can move lower again. The 10Yr has room to test 1.65% which is expected to hold and keep the broader downtrend intact.
The German 2Yr (-0.85%), 5Yr (-0.85%) and 10Yr (-0.59%) were up between 3 and 5 bps while the 30Yr (-0.04%) was up sharply by 8 bps. The 10Yr has resistance near current levels at -0.56% which can cap the upside and drag it lower again. The 30Yr can move into the positive territory and test 0.05% on the upside after which the broader downtrend can resume.
The 10Yr GoI (6.5762%) was stuck in between 6.55% and 6.60% yesterday. While above 6.55% a rise past 6.60% and a test of 6.63%-6.65% on the upside is likely in the near term.
