STOCKS
The UK and EU reaching a Brexit deal seem to have minimum impact of the equities barring an initial spike seen on the DAX. It looks like the market is waiting to see whether this deal is getting approved in the UK Parliament or not. But broadly the equities remain positive although there is room for some intermediate dips in some indices such as the DAX. Nikkei continues to remain stronger among the lot. Shanghai is hovering above a crucial support. Dow remains higher but seems to lack momentum. India’s Sensex and Nifty are near key resistances and can see an intermediate dip before reversing higher again.
Dow (27025.88, +23.90, +0.09%) is holding around 27000 but is not gaining momentum. However, we retain our bullish view to see a test of 27250-27300 and then 27500 on a break above 27300 in the short term. Support is in the 268000-26750 region and then a much deeper one is at 26500.
DAX (12654.95, -15.16, -0.12%) spiked to a high of 12814.49 and has come-off sharply from there. While below 12700, an intermediate dip to 12500 looks possible within the overall uptrend. The broader picture continues to remain bullish however.
Nikkei (22589.71, +137.85, +0.61%) continues to sustain higher and inched further up. The bullish view remains intact to test 2700 and 23000 in the coming days. Immediate support is at 22400 and the next important one is at 22230.
Shanghai (2982.36, +5.03, +0.17%) dipped to 2969.56 and is trying to reverse higher. The support at 2975 seems to be holding. As mentioned yesterday it will have to be seen if Shanghai can sustain above 2975 or not to avoid a fall to 2950-2930 and keep the bullish view intact.
Nifty (11586.35, +122.35, +1.07%) has risen towards 11600 in line with our expectation. It has resistances at 11600 and 11700 which if holds can trigger an intermediate dip to 11500 in the near term. But the broader picture is bullish while above 11400 to see a revisit of 12000 levels on the upside.
Sensex (39052.06, +453.07, +1.17%) has resistance at 39250 from where a near-term corrective dip to 39000 and 38750 is possible.
COMMODITIES
The EIA reported an inventory build of 9.3 mln barrels for week ended Oct 11, much higher than the market expectation of 4mln barrels. Crude is almost stable and is trading slightly higher. Gold, Silver and Copper have also moved up but look bearish on the charts. Hence, any upmove seen in the very near term could be short lived.
Brent (59.69) and WTI (53.96) have moved up. While below 54 and 61.30, Brent and WTI could still have some scope of seeing a fall in the near term. 58 and 51 remain immediate downside target for Brent and Nymex WTI.
Gold (1495.20) and Silver (17.55) have also moved up. Gold is holding well in the 1520-1480 region and could test 1500/20 before falling from there. Note that medium term looks bearish. Silver also looks bearish towards 17.0-16.50 while immediate trend resistance below 18 holds on the daily candles.
Copper (2.5990) is likely to continue trade in the 2.6250-2.55 region for the near term, before breaking on either side. On the longer term charts, resistance near 2.65 looks strong and could eventually push Copper towards 2.50 in the medium term.
FOREX
Dollar Index (97.62) fell sharply breaking below our expected 97.75. On the 3-day candles there is support at 97.50 while the weekly candles suggest more room towards 97 on the downside. We may allow for a further fall towards 97 before a bounce is seen from there.
Euro (1.1125) has moved up in line with our expectation to test 1.1125 on weakness in the Dollar Index. A rise beyond current levels could extend towards 1.12 before a fall from there is seen. We do not expect a break above 1.12 within the current rise.
Dollar-Yen (108.57) has scope of rising towards 110.0-110.50 on the 3-day candles. Near term is bullish while above 108.50.
EUR-JPY (120.81) has come off from 121.40, the weekly trend resistance. While below 121.40, the pair could fall towards 120-119 levels in the near term before attempting further rise.
Aussie (0.6833) can test previous high of 0.6895 seen in Sep’19 from where a dip is possible. Note that above 0.68, two important resistances seen are 0.6895 and 0.70.
Pound (1.2849) rose sharply to 1.2989 after news of Brexit deal yesterday. and while that holds, the currency pair may test 7.05 again in the near term with a possible extension to 7.02/01.
Dollar Rupee (71.1650) could test 71.00-70.93 on the downside while below 71.25.#usdinr-candles-Daily”>The USDCNY (7.0773) has come down from 7.1030 We would watch price action below 71.25 closely.
INTEREST RATES
The resistances on the US Treasury yields are holding for now. It has to be seen if they can continue to hold and drag the yields lower in the coming days. The German Yields remains higher and keeps the bullish view intact. The approval of the Brexit deal in the UK Parliament will be crucial to decide whether the German yields can sustain the uptrend or not next week. The 10Yr (07.26 GS 2029) GOI has bounced from a key support and can move further higher.
The US 2Yr (1.59%), 5Yr (1.57%), 10Yr (1.74%) and 30Yr (2.22%) Treasury yields are turning down from their key resistances. The 10Yr has dipped from 1.78% and the 30Yr is reversing from its resistance level of 2.25%. It will have to be seen if these resistances continue to hold and drag the 10Yr to 1.68%-1.65% and the 30Yr to 2.18%-2.15% or not.
The German 2Yr (-0.68%), 5Yr (-0.64%), 10Yr (-0.41%) and 30Yr (0.11%) sustains higher. Our bullish view is intact to see a rise to -0.33% on the 10Yr and 0.20% on the 30Yr in the coming days.
{The support in the 6.65%-6.64% region mentioned yesterday on the 10Yr (07.26 GS 2029) GOI (6.7067%) has held very well and the yield has bounced as expected. A test of 6.75% on the upside is likely which has to be broken in order to take the yield further higher towards 6.80. While 6.75% holds, the 10Yr (07.26 GS 2029) can remain range bound between 6.65% and 6.75% for some time.
The 10Yr (06.45 GS 2029) GOI has closed higher yesterday at 6.4968% as compared to 6.4661% on Wednesday.
