STOCKS
The rally in global equities like the Dow, DAX seems to have taken a pause. There is a possibility of seeing a corrective fall in both the Dow and DAX in the near term. Nikkei continue to look strong among the lot although a corrective fall is possible in the coming days. India’s Sensex and Nifty seems to lose momentum and are looking mixed in the near term.
Dow (27076.82, -142.7, -0.52%) can see a corrective fall to 26850 and even 26700-26600 on a break below 27000. As mentioned yesterday, 27500 is a strong resistance to watch which has to broken to see a rise to 28000.
As expected, DAX (12380.31, -88.22, -0.71%) is witnessing a corrective fall and can test 12300-12100 in the coming days while it remains below 12500.
Nikkei (21967.84, -20.45, -0.09%) remains strong and can test 22100-22300 in the coming weeks. However, as mentioned yesterday, we may have to allow for a corrective dip towards 21750-21600 before we see the above mentioned rally.
Shanghai (3006.57, -24.18, -0.80%) is trading stable in a narrow range above 3000 over the last few days. The broader picture remains bullish to test 3150-3200 and dips below 3000 can find support in the 2960-2950 region.
Nifty (11003.50, -72.40, -0.65%) seems to lack momentum. 10970 is a key level to watch a break below which will drag it to 10900-10800 again. A strong rise past 11100 is needed to turn the outlook positive.
Sensex (37123.31, -261.68, -0.70%) remains mixed between 37000 and 37500 over the last few days. It might come under pressure for a fall to 36500 on a break below 37000. As mentioned yesterday it has to break above 37650 to become bullish.
COMMODITIES
Gold and silver continues to consolidate. Copper has come-off sharply and need to bounce-back strongly to avoid further fall. The drone attack on Saudi’s oil fields over the week end continues to weigh on oil prices. Both Brent and WTI can oscillate between a wide range and can stabilize in the coming days unless any fresh escalation happens.
Gold (1498) continues to consolidate between 1480 and 1520 as expected. As we have been mentioning here for some time, a breakout on either side of 1480 or 1520 is needed to determine whether gold will move up to 1540-1555 or fall to 1460-1440.
Silver (17.85) has to rise past 18 in order to avoid a fall back to 17.40 and 17.25 in the coming days. A break above 18 will give it a breather and take it higher to 18.25 and even 18.5 again.
Contrary to our expectation, Copper (2.64) has come-off sharply giving back all the gains made on Friday. Inability to bounce above 2.65 will negate our bullish view of testing 2.74 on the upside and fall to 2.59 is possible. A break below 2.635 can trigger this fall.
Brent (67.85) remains higher but might stabilize between 65 and 70 in the coming days unless there is any fresh escalation.
Similarly, WTI (61.70) can consolidate between 59 and 65 for some time.
FOREX
Dollar index has risen and can move further higher if it sustains above 98.55. The Euro has declined sharply as against our expectation for a rise and looks vulnerable to revisit 1.0950-1.0920 levels. Dollar-Yen is gaining strength and retain the bullish view. Aussie has declined below a key support indicating a top and can see a corrective fall. USDCNY might rise in the near-term before seeing further fall. Dollar-Rupee was stuck in a narrow range and a breakout on either side of 71.40 or 71.65 will decide the next move.
Dollar Index (98.65) has risen past 98.55 but has to sustain above it. While above 98.55 a rise to 99 and 99.25 is possible. A break above 98.75 can accelerate the rally.
Contrary to our expectation, the Euro (1.1005) has declined sharply breaking below the support at 1.1045. While below 1.1050, the pair looks vulnerable to revisit 1.0950-1.0920 levels.
The Dollar-Yen (108.17) has risen above 108 again and is keeping up the broader bullish view intact. A strong break above 108.25 can take the pair further higher towards 108.5 and even 109 in the coming days. Supports are at 108.05 and 107.90.
The EUR-JPY (119.05) oscillates around 119 and remains vulnerable for a corrective fall to 118.50-118.30. .
As expected, Aussie (0.6845) has broken below 0.6850 confirming a top. A fall to 0.6825 and 0.6800 is likely in the coming sessions. The region between 0.6850 and 0.6860 will now act as a strong resistance.
Pound (1.2416) has come-off after testing 1.25. Immediate support is at 1.24 and the next significant support is in the 1.2370-1.2365 region. Only a strong break below 1.2365 will turn the outlook negative and will prove our bullish view for a rise to 1.2600-1.2630 wrong.
USDCNY (7.0768) is getting support near 7.0620 and might see a corrective rise to 7.10 on a break above 7.08. However, the bigger picture remains weak and a test of 7.05-7.0480 is still possible.
Dollar-Rupee (71.5975) was stuck in between its support at 71.40 and resistance at 71.65 all through yesterday. A breakout on either side of 71.40-71.65 will decide whether the pair will go up to 71.80-71.90 or fall to 71.25-71.00.
INTEREST RATES
Risk aversion in the market after the drone attacks on Saudi’s oil fields have dragged the yields lower again. The US Treasury yields have decline sharply across tenors. A further fall from current levels will indicate the resumption of the overall downtrend. The outcome of the FOMC meeting tomorrow will be a key event to watch. The German yields have also declined across tenors. The Indian 10Yr GoI is holding above its key supports and remains bullish.
The US 2Yr (1.74%), 5Yr (1.67%), 10Yr (1.82%) and 30Yr (2.30%) have declined sharply yesterday. The near-term resistance mentioned yesterday on the 30Yr at 2.42% and for the 10Yr at 1.95% seems to be holding well. A further fall from current levels will indicate the resumption of the overall downtrend and the end of the corrective rally.
The German 2Yr (-0.74%), 5Yr (-0.73%), 10Yr (-0.48%) and 30Yr (0.08%) were down across tenors. But the recent uptrend looks to remain intact and the 30Yr has the potential to test 0.20% on a break above 0.11% while the 10Yr can test -0.40% on the upside.
The 10Yr GoI is holding above its support at 6.68% and is keeping up the bullish view intact. A strong rise past 6.75% can pave way for a fresh rise to 6.80%-6.81%.
