STOCKS
Following the decision to delay the tariffs on Wednesday, the US has hinted yesterday that an interim deal is possible. This has given a further boost to the global equities. The Dow has surged and has room to move further higher. DAX and Nikkei are looking strong but are coming closer to their crucial resistances which need a watch. India’s Sensex and Nifty need a strong bounce from current levels to avoid further fall. The Chinese markets are closed today for a public holiday.
The Dow (27182.45, +45.41, +0.17%) sustains higher above 27000 and keeps our bullish view intact to test 28000. A strong rise past 27500 can accelerate the rally.
The DAX (12410.25, +51.18, +0.41%) has been moving higher and is heading towards 12500 in line with our expectation. As mentioned yesterday, 12500 is an important resistance on the weekly chart from where a fall on the back of profit-booking is possible.
Nikkei (21962.21, +202.60, +0.93%) retains its momentum and is heading towards 22000 as expected. It will have to be seen if the index can rise past 22000 or not. A pull-back from 22000 cannot be ruled out on the back of profit booking.
Nifty (10982.80, -52.90, -0.48%) has declined below 11000 and need to be seen if it can bounce-back again taking cues from the global equities. If so a rise to 11100 will come back into picture again. But inability to rise past 11000 can keep the Nifty pressured on the downside to test 10900-10800 in the coming days.
Similarly, Sensex (37104.28, -166.54, -0.45%) has to sustain above 37000 to keep the possibilities alive of it bouncing back towards 37250 and 37500 again. A break below 37000 on the other hand can drag it o 37000.
COMMODITIES
Commodities broadly look mixed. Gold and silver could trade sideways in the near term. Copper is trying to break above a key resistance. Oil looks weak and vulnerable for a further fall in the coming days.
Gold (1497) has come-off sharply from the high of 1524 and looks mixed in the near term. It could oscillate between its support in the 1485-1480 region and 1520 for some time. A breakout on either side of 1480 or 1520 will decide the next move.
Silver (18.04) can consolidate between 17.75 and 18.50 before a fresh leg move emerges breaking the range on either side of 17.75 or 18.50.
Copper (2.65) is trying to rise past 2.65 which if materializes can take it higher to 2.68 – the next important resistance. A further rise past 2.68 will prove our bearish view for a fall to 2.55-2.53 wrong.
Brent (60.35) fell much beyond our expected level of 60 but has bounced-back sharply from the low of 58.92. The near-term outlook is bearish to test 58 on the downside while it remains below the 61.00-61.30 resistance region.
Similarly, WTI (55.02) looks vulnerable to test 53.70 and even 52.85 on the downside in the coming days. Strong resistance is at 55.60 and then in the 56.00-56.20 region.
FOREX
Dollar index looks mixed in the near term. The Euro has bounced from a crucial support and might see a fresh rally going forward if it can sustain above 1.10. Dollar-Yen retains its momentum and can move further higher. The Euro-Yen cross is coming closer to a crucial resistance which will need a close watch. Aussie is hinting a top formation and might see a corrective fall while Pound remains sideways and mixed. The USDCNY keeps the bearish view intact. Dollar-Rupee can decline further to test the key supports at 71 and 70.83-70.80.
As expected, Dollar Index (98.37) moved up to test 99 but has come-off sharply again. The immediate outlook is mixed with equal chances of seeing a rise to 98.60 or a fall to 98-97.80 from current levels.
In line with our expectation, the Euro (1.1065) tumbled to test 1.0925 but has risen-back sharply from there. The pair could remain range bound between 1.10 and 1.11 for some time. However, the sharp bounce from1.0925 is positive from a medium-term perspective to take the Euro higher above 1.11 eventually.
The Dollar-Yen (108.03) witnessed a corrective fall to 107.5 as expected and has also bounced from there. As mentioned yesterday, the pair can now target 108.7 and 109 on the upside while it remains above 108.
The EUR-JPY (119.73) cross has surged and could test its crucial resistance level of 121 on a strong break above 120. We will have to watch if the cross can manage breach 121 or not.
Aussie (0.6870) continues to consolidate above 0.6850. An early sign of a top formation is visible on the charts. It leaves the possibilities high of the pair breaking below 0.6850 and fall to 0.6820-0.6800 in the coming days. A strong rise past 0.6900 is needed to negate the above mentioned fall.
Pound (1.2330) continues to oscillate between 1.23 and 1.24 and remains mixed. We will have to wait for a breakout on either side of 1.23 or 1.24 to get a cue on the next direction of move.
USDCNY (7.0792) has declined further in line with our expectation. The bearish view is intact to test 7.0680-7.0650 on the downside from where a bounce is possible.
The Dollar-Rupee (71.1350) has declined sharply breaking below 71.34 and can now test 71 and 70.83-70.80 on the downside. The region between 70.83-70.80 is a key support which might hold on its first test.
INTEREST RATES
Easing concerns on the US-China trade war front has been supporting the Treasury yields to recover sharply over the last few days. However, the Treasury yields are coming closer to their key resistances which needs a close watch to see if the break above them or not. The German yields have moved up sharply across tenors. The 10Yr GoI remains bullish.
The US 2Yr (1.72%), 5Yr (1.64%), 10Yr (1.79%) and 30Yr (2.26%) have moved up further in line with our expectation. As mentioned yesterday, the 10Yr has come closer to its key resistance level of 1.80% which needs to be broken for it to extend the upmove. Similarly, the 30Yr has resistance in the 2.28%-2.29% which can be tested now.
The German 2Yr (-0.73%) 5Yr (-0.75%), 10Yr (-0.52%) and the 30Yr (0.03%). The 10Yr has risen above the key resistance level of -0.55% and need to be seen if it can sustain and close above it today in which case it will be bullish for next week. On the other hand, the 30Yr is poised at a crucial resistance level of 0.03% and have to be seen if it can manage to rise past this hurdle.
The support in the 6.65%-6.63% on the 10Yr GoI (6.6641%) is holding well and keeps the broader bullish view intact to test 6.73%-6.75% on the upside.
