STOCKS
As mentioned on Friday the DAX and Nikkei have risen further and seems to be gaining strength. The Dow also seems to join them with its rise above 24000 on Friday ignoring the bad job/unemployment numbers. These three indices can see further rise this week to test their key resistances from where they can reverse lower again. Shanghai has come up to its key resistance and will need a watch to see if it breaks above it or not. Sensex and Nifty continue to look mixed and will need a watch for a few days to get a clear cue on the direction of move. But broadly, the bias is positive to see a rise in the near-term while the Sensex and Nifty sustains above their support levels of 31000 and 9000.
Dow (24331.32, +455.43, +1.91%) risen and closed above 24000 shrugging-off the bad jobs/unemployment data released on Friday. The near-term outlook is bullish while the Dow sustains above 24000. A rise to 24700-25000 can be seen first now before the fall to 22000-21500 happens.
DAX (10904.48, +145.21, +1.35%) has risen further in line with our expectation. Our near-term bullish view of seeing 11000-11350 on the upside remains intact. Thereafter the index can reverse lower again. Support is now at 10700.
Nikkei (20461.14, +282.05, +1.40%) is holding well above 20000 and has risen further as expected. The outlook is bullish and a further rise to 21500 and even 22000 looks possible now while the Nikkei remains above 20000.
Shanghai (2905.50, +10.16, +0.35%) has risen further and come up to the crucial 2910-2915 resistance zone. It will have to be seen if the index can breach 2915 and rise to our medium-term target of 3050 straight away from here. Inability to breach 2915 can trigger a corrective fall to 2875-2850 or even lower first which in turn will delay the rally to 3050. We will have to wait and see.
Nifty (9251.50, +52.45, +0.57%) seems to be lacking momentum and continues to remain mixed in the near-term. The index can remain range-bound between 9000 and 9400. A strong rise past 9400 is needed to bring the possibilities of seeing 9600-9700 on the upside into the picture. While the Nifty sustains above 9000, the bias is positive to see a break above 9400.
Sensex (31642.70, +199.32, +0.63%) is struggling to breach 32000 and can remain stuck in between 31000 and 32000. We reiterate that a rise past 32000 is needed to strengthen the index to move up to 33000-34000 on the upside. A strong break below 31000 on the other hand will increase the danger of seeing 30000-29000 on the upside.
COMMODITIES
Crude prices trade stable and could move up towards interim resistances before a short dip is seen. However, longer term trend points to the upside. Gold looks stable while Silver could be poised to see a rise from here. Copper is bullish while above 2.40.
Brent (30.50) and Nymex WTI (24.25) both look stable. WTI could face interim resistance near $29-30 which if holds could see a decent dip in prices for a short term before prices start moving up again. Brent could face similar resistance near $35-37.5 before seeing a short dip from there. Overall crude prices look bullish just now towards interim resistances while the longer term view of an uptrend remains intact.
Gold (1710.40) has to trade below 1740 to keep alive possibilities of a fall from here. Near term trade is likely to be seen within 1660-1740. Unless a break on either side is seen, it would be difficult to project the longer term direction.
Silver (15.86) looks bullish on the near term charts with support at 15.5 holding on the daily candles. A further break above 16.5 would confirm the upmove.
Copper (2.4235) has broken above the crucial level of 2.40 and has moved up contrary to our expectation of a fall from there back towards 2.25. While the break above 2.40 holds and sustains, we may expect a further rise towards 2.50 in the near term to be followed by a short corrective dip.
FOREX
Dollar Index is likely to see range trade in the 99-100.5 region in the near term. Euro may remain above 1.08 while USDJPY also trades in a very narrow range with lack of directional clarity just now. EURJPY looks bullish while above 114.43. Pound looks bearish while Aussie has scope for a rise from current levels.
Dollar Index (99.69) fell sharply to almost test 99 post NFP data release on Friday but has recovered most of it. Note that 99 now holds as a strong support and while that holds, the index could attempt to rise again towards 100.0-100.5.
Euro (1.0845) has immediate support at 1.08 and while that holds, Euro could try and move up in the near term. While Dollar Index is likely to trade in the 100.5-99 region for some time, Euro could possibly hold above 1.08 too in the near term.
Dollar-Yen (106.81) is trading in a very narrow range of 106-107. There is lack of further directional clarity just now and we would wait to see price movement near current levels.
EURJPY (115.84) has bounced well from 114.43 and while that holds, near term looks bullish for EURJPY towards 117.
Aussie (0.6552) looks bullish towards 0.66-0.67 while above 0.64.
Pound (1.2426) has immediate resistance at 1.25 on the daily candles and while that holds, a dip from here back to 1.22 could be expected. Else a break above 1.25 is needed to take the Pound higher. Watch price action near 1.25.
USDCNY (7.0767) could test 7.06/05 while below 7.10 before again bouncing back higher in the longer term.
USDINR (75.55) could open near Friday’s close. View is bearish for a fall towards 75.20/00 in the medium term. While Euro trades above 1.08 and Yuan looks strong against the US Dollar, Rupee could have chances of strengthening too in the near term. On the upside 76 continues to remain as strong resistance.
INTEREST RATES
The US Treasury yields have bounced-back sharply from their lows seen on Friday. Key resistances are coming up which will need close watch this week to see if the Treasury yields can continue to move up or will reverse lower again. The German yields have room on the upside and can move up in the near-term before resuming their downtrend. The 10Yr GoI has come closer to its crucial support from where it can see a bounce.
The US 2Yr (0.16%), 5Yr (0.35%), 10Yr (0.70%) and 30Yr (1.41%) Treasury yields have risen-back sharply across tenors from their lows seen on Friday. Our near-term bullish view remains intact. Key resistances are coming up in the 1.43%-1.45% region and 1.75%-1.80% for the 30Yr and 10Yr respectively. Whether the yields manage to breach these hurdles or not will determine if the yields can continue to move up or will reverse lower again. We will have to wait and watch.
The German 2Yr (-0.79%), 5Yr (-0.76%), 10Yr (-0.54%) and 30Yr (-0.08%) remain stable. As we had mentioned on Friday, there are chances to see an intermediate rise before the broader down trend resumes. As such the 30Yr has room to test 0%. The chances of the upside extending beyond 0% will have to be seen. The 10Yr on the other hand can rise to -0.45%/-0.40%.
The 10Yr GoI (5.9672%) has come down to the crucial support level of 5.95%.%. A bounce from here can take the yield higher to 6.05%-6.10%. As mentioned on Friday Evening Comments it will be important to see if the bounce-back move can extend beyond 6.10% or not in order to see if 5.95% will continue to hold or will be broken eventually for the broader downtrend to resume. We will have to watch closely the price action around 5.95% today.
