STOCKS
Among the major indices only DAX looks strong to move further higher from current levels. Dow seems to need some fresh positive triggered to move higher. Nikkei and Shanghai looks vulnerable for a fall in the near-term. Sensex and Nifty looks mixed and might consolidate/dip within their overall uptrend.
Dow (27691.49, 0, +0%) has been stuck in between 27500 and 27750 over the last few days. We will have to wait for a breakout on either side of 27500 or 27750 to see whether the Dow is going up to 28000 or will fall to 27250.
DAX (13283.51, +85.14, +0.65%) seem to regain momentum and keeps the broader bullish view intact. While above 13200, a rise to 13400-13500 is likely in the coming days.
The resistance at 23600 on the Nikkei (23301.48, -218.53, -0.93%) is holding well. As mentioned earlier, while this resistance holds, an intermediate dip to 23200 and even 23000 is possible before the uptrend resumes towards our preferred targets of 24000-24200.
Shanghai (2902.94, -11.88, -0.41%) has declined sharply breaking below the key support level of 2950. The near-term outlook is negative. A test of 2870-2865 looks likely in the coming days. Resistance is in the 2915-2920 region.
Nifty (11913.45, +5.30, +0.04%) dipped to test 11850 on Monday and has bounced from there. While the downside can extend up to 11800, we expect the Nifty to remain broadly sideways between 11800 and 12050 for some time before we see a fresh rally towards our preferred targets of 12200-12300.
Sensex (40345.08, +21.47, +0.05%) has room to test 40000 on the downside. It can trade sideways between 40000 and 40750 before the overall uptrend resumes.
COMMODITIES
Optimism of a deal between US and China continue to keep crude prices volatile. But unless a deal is signed and tariffs lifted from both sides, downward pressure on crude prices could prevent a sharp rise in the near term. Overall precious metals and Copper look strongly bearish for the near term.
Brent (61.84) has been fluctuating in the 61-63 region since the last 6-7 sessions trading along the immediate daily trend support. We would watch 61.50/60 as important near term support which if holds could potentially push prices higher towards 64-65. A quick rise in prices would be boosted on any positive news from US-China trade agreement. Broadly, we may see trade between 61-64 just now.
Nymex WTI (56.63) has also been stuck in the 56-58 region and may move higher if 56 holds strong in the near term. While above 56, price looks bullish towards 58-59.50.
Gold (1458.50) has fallen sharply and could test 1440 as immediate target. Break below 1440 would take it further down towards 1400 in the medium term. View is clearly bearish.
Silver (16.79) could get some support anywhere between 16.5-16.0 region from where a bounce looks likely. Near term looks bearish.
Copper (2.6435) has dipped after seeing a false test above resistance at 2.7250. Near term looks bearish towards 2.60.
FOREX
US Dollar trades high. Aussie, USDCNY, EUR-JPY, Pound and Rupee look weak in the near term. Most currency pair trade lower against the US Dollar and is expected to remain weak over the rest of the sessions this week.
Dollar Index (98.34) has moved up and could test 98.63-98.77 on the upside. Near term looks bullish for the Index.
Euro (1.1014) is trading low and could get some support from 1.10-1.095 in the near term.
Dollar-Yen (109.06) has risen on stronger Dollar and a lower Gold price. However, we would watch price action in Nikkei just now as a sharp fall in the equity index could prevent a sharp upmove in Dollar Yen in the near term. 109.50 and 110 are crucial resistances from where a dip to 108.50 looks possible in the near term.
EUR-JPY (120.11) looks bearish for the near term with possible target of testing 119 on the downside. Bearish view remains intact while the pair trades below 121.
Pound (1.2851) could be broadly stuck in the 1.30-1.26 region, both being near term support and resistance levels. While there is immediate scope of testing 1.26 on the downside, we may expect a bounce from there back towards 1.28-1.30.
Aussie (0.6840) has interim support at 0.6825 but on the 3-day chart, the currency is coming off from crucial long term resistance at 0.6950. While Aussie trades below 0.6950, it could be vulnerable to sharper fall towards 0.68-0.6750 in the medium term.
The USDCNY (7.0184) has bounced well from levels above 6.96 and while that holds, the pair could test 7.02-7.04 on the upside before again falling back.
Dollar-Rupee (71.4450) is likely to rise today breaking above 71.50 as NDF offshore trades at 71.7790. The official onshore rate could possibly see a gap up opening today with strong bulls coming into the picture. Such a rise would be contrary to our view of expecting a fall from 71.50 and instead open up chances of 71.85-72.00 in the near term.
INTEREST RATES
The US Treasury yields are coming closer to their crucial resistances which we expect to hold and will need a close watch. Inability to breach these resistances can drag the Treasury yields lower in the coming days. The upmove in the German yields seems to lose steam and near-term corrective fall looks likely. The Indian 10Yr GoI is bullish and can move up further.
The US 2Yr (1.66%), 5Yr (1.73%), 10Yr (1.92%) and 30Yr (2.40%) Treasury yields have dipped slightly. As mentioned on Monday, key resistances are ahead at 1.75% and 1.78% for the 2Yr and at 1.80% for the 5Yr. The 10Yr has resistance at 2% and the 30Yr at 2.50%. We expect these resistances to hold and the Treasury yields can reverse lower in the coming weeks.
The German 2Yr (-0.63%), 5Yr (-0.53%), 10Yr (-0.26%) and 30Yr (0.27%) have dipped slightly across tenors. . The resistance at 0.28% on the 30Yr mentioned on Monday seems to be holding well. While below 0.28%, the 30Yr can test 0.20% in the coming days. The 10Yr on the other hand can test -0.35% on the downside.
The India 10Yr GOI (07.26 GS 2029; 6.7720%) has closed higher on Monday and keeps our bullish view intact to test 6.80%. As mentioned on Monday, the current upove may have the potential to target 6.90% on the upside while the yield remains above 6.70%.
The 10Yr (06.45 GS 2029; 6.5659%) GoI on the other hand is bullish to test 6.60% on the upside. Support is in the 6.53%-6.5250% region.
