STOCKS
We have been cautious on global Equities on Monday after their rally the previous day, but they seem to be holding onto gains. The environment is more conducive for Equities now, with Gold (Spot 1490) falling and Dollar-Yen (107.68) rising. Still, we have to be careful about Resistances overhead.
Dow (26909.43, +73.92, +0.28%) managed to close above 26900 yesterday, the immediate resistance we were looking at. If the rally sustains and breaks above 27000 also, the next bullish target will be 27500, with chances of a dip to 26400-300 being reduced.
As expected, the Nikkei (21511.30, +119.20, +0.56%) has come up to test 21500-550 on the 3-day Candles, aided by the rally in Dollar-Yen. A near term profit-taking dip towards 21100-20950 is possible. In the longer term, there should be chances of the market continuing to sustain above 20500.
Similarly, the KOSPI (2044.72, +12.64, +0.62%) has immediate Resistance coming up at 2050 on the 3-day Candles. A test thereof could trigger near-term profit-taking towards 1990-85.
The Shanghai (3015.78, -5.42, -0.18%) sustains above 3000 for now. It may have deeper Support in the 2975-2950 region. If and while that holds, there could be some chances of seeing a further rally towards medium term Resistance at 31000.
The DAX (12268.71, +42.61, +0.35%) continues to hold strong. Near-term Support is seen in the 12100-12050 region. While that holds, the rally could extend past 12350 towards 12500 as well.
Indian markets were closed for Moharram yesterday. The Nifty (11003.05) could move up today, but has important Resistance at 11100, which may well hold on first testing. A break thereof, if seen, could be very bullish.
COMMODITIES
Recovery in equities and the bond yields are taking the sheen-off from gold and silver. Though an intermediate bounce is likely, gold and silver are likely to remain pressured on the downside and looks vulnerable for further fall. Copper looks mixed in the near term. Oil can dip to test its supports before reversing higher again.
As expected, Gold (1492) fell to test 1485 and has bounced from the low of 1482. While above 1485, a corrective rally to 1505 or 1515 is possible in the near term. But the recent downmove has turned gold vulnerable to decline further. A strong break below 1485 can accelerate the fall towards 1460 and even lower levels in the coming weeks.
Silver (18.11) also fell to test 17.85 as expected. It made a low of 17.78 and has bounced from there. While above 18, an intermediate bounce to 18.40-18.50 is possible after which a fall-back to 18-17.75 and even lower levels looks likely.
Copper (2.62) has been oscillating between 2.60 and 2.65 over the last few days. As mentioned earlier, a strong rise past 2.65 is needed to move further higher towards 2.68. Else, while below 2.65, a fall to 2.58 and even lower levels are possible.
Brent (62.59) surged to 63.78 and has come-off from there. While below 63, a dip to 61.8 and even 61.30 is possible in the near term after which a rise back to 64 can be seen.
Similarly, WTI (57.71) has come-off from its high of 58.76. However it has supports at 57.30 and 57.10 which can limit the downside and trigger a bounce again towards 58-59 in the coming days.
FOREX
Dollar index is stuck in between its support and resistance and looks mixed in the near term. Euro is looking bullish to breach 1.1060 and rise in the near term. Dollar-Yen remains strong and can move further higher which can take the Euro-Yen cross also up. Pound has to break above 1.2385 decisively to resume the upmove. Aussie can see a corrective fall if it breaks below 0.6850. USDCNY has resistances at 7.1250 and 7.14 and can fall to in the coming days while it remains below this support. Dollar-Rupee can break 71.50 and test 71.40-71.34 and even lower levels in the coming days.
Dollar Index (98.37) continues to oscillate between its support at 98 and resistance at 98.55. The near-term view is mixed. A breakout on either side of 98 or 98.55 will decide whether the dollar index is going to move up to 99-99.25 or fall to 97.75-97.50.
Euro (1.1049) has good support at 1.1015 which is holding well as of now. While above this support, the bias is bullish for it to breach 1.1060 and rise to 1.1090-1.1100 in the coming sessions.
As expected Dollar-Yen (107.63) as surged above 107 and indeed much beyond our expected level of 107.50. The bullish outlook is intact to test 108 and 108.15 while it remains above 107.50.
The surge in Dollar-Yen taken the EUR-JPY (118.91) sharply higher above 118 towards 119 in line with our expectation. The cross has room to test 119.60 and 119.90 on the upside. Supports are at 118.60 and 118.40.
The upmove in Aussie (0.6858) is facing resistance at 0.6875. It has to sustain above 0.6850 to keep the possibilities alive of testing 0.6900 on the upside. A break below 0.6850 can trigger a corrective fall to 0.6825 and even 0.6800. We will have to wait and watch.
Pound (1.2344) has risen back above 1.23 and is oscillating between 1.23 and 1.24. A strong rise past 1.2385 will be bullish for the pair to test 1.2440 and even 1.2500 in the near term.
USDCNY (7.1178) has bounced after breaking briefly below 7.10 yesterday. Key resistances are now at 7.1250 and 7.14. While these resistances hold, a fall to 7.0680 and 7.0650 looks likely in the short term.
Limited upside in the USDCNY could restrict the Dollar-Rupee (71.7050) from moving sharply higher and keep it pressured on the downside. As such the Dollar-Rupee can break 71.50 and fall to 71.40-71.34 and even lower in the coming days. Resistances are at 71.77, 71.80 and 71.87.
INTEREST RATES
Strong surge in the US Treasury yields as concerns of the US-China trade war seems to be fading away after the announcement of the talks in October. But it will have to be seen if the yields can sustain higher or not. German yields have also inched higher but has resistances coming up near current levels which has to be broken in order to sustain the upmove. The 10Yr GoI can dip to 6.55%-6.54% before reversing higher towards 6.63% and 6.65%.
The US 2Yr (1.66%), 5Yr (1.57%), 10Yr (1.71%) and 30Yr (2.19%) have surged across tenors. The 10Yr and 30Yr have risen much beyond our expected levels of 1.65% and 2.09%. We will have to wait and see if they can sustain this rise. The 30Yr has resistance near current levels at 2.21% while the 10Yr has room to test 1.80% in the near term.
The German 2Yr (-0.85%) remains stable while the 5Yr (-0.83%) and 10Yr (-0.55%) were up 2 bps and 4 bps respectively. The 30Yr (0.03%) surged 8 bps and has moved into to positive territory as expected. Both the 10Yr and 30Yr has resistances at current levels which has to be broken for them to move further higher towards -0.45% and 0.15% respectively. We will have to wait and see.
The 10Yr GoI (6.5754%) oscillates around 6.60%. A dip to 6.55%-6.54% looks likely before our preferred rise to 6.63%-6.65% happens.
