STOCKS
Donald Trump’s press conference on Friday focusing more on Hong Kong rather than China (as was feared) has given a breather. But will have to see how the on-going protests in the US is going to impact the US markets today. Dow hovers near the crucial resistance level of 26000 which will need a close watch. DAX can see a dip in the near-term before resuming the uptrend. The Asians are trading in green. Nikkei and Shanghai are trading strong and will have more room to move up this week. Sensex and Nifty have also closed on a strong note last week and are bullish to rise further.
The resistance at 26000 on the Dow (25383.11, −17.53, -0.07%) seems to be holding well for now. A break below 25000 can drag the Dow lower to 24500-24200 in the near-term. While 25000 holds, the index can remain stuck in between 25000 and 26000 for a few days. We will have to wait and watch.
DAX (11586.85, −194.28, -1.65%) also seems to lose momentum to breach the 12000-12100 resistance immediately But the broader view is bullish with strong support in the 11300-11200 region. While a test of this support zone cannot be ruled out in the near-term, a fall below 11200 is unlikely. A sideways consolidation between 11200-12100 is a possibility for some time and the DAX is likely to breach 12100 eventually and rise to 12400-12500.
Nikkei (22135.75, +257.86, +1.18%) has risen breaking above 22000. The expected corrective fall has not happened from 22000 but might be seen after an extended rise to 22500 as mentioned on Friday. A pull-back from 22500 can drag the index lower to 21500-21000 and then a fresh leg of upmove can resume. The broader bullish view of seeing 24000 on the upside remains intact.
Shanghai (2902.92, +50.57, +1.77%) has risen sharply breaking above 2850 as expected and is now hovering around 2900. The rise above 2850 indicates the resumption of the uptrend. A strong close above 2900 now will pave way for a test of 2975 in the coming days.
Sensex (32424.10, +223.51, +0.69%) has further decisively above 32000 and keeps our bullish view of seeing 33000 on the upside. The chances are high for the Sensex to rise beyond 33000 towards 34000 and higher levels. But whether this rally above 33000 happens straight away from here itself or after a slight dip from 33000 will have to be seen.
Nifty (9580.30, +90.20, +0.95%) has risen further and keeps our bullish view intact of testing 9700 on the upside. The region between 9700-9750 is a key resistance which might hold on it first test and trigger dip to 9500 or even lower. But the broader outlook will continue to remain bullish to revisit 10000+ levels again now while the Nifty sustains above 9250.
COMMODITIES
Commodities are trading higher and look bullish in the near term. Gold, Silver, Copper and Crude prices all look bullish for the next few sessions.
Brent (37.87) and Nymex WTI (35.53) have broken above our expected 37.50 and 35 levels respectively and could be indicative of further bullishness in the near term. We would look for a rise towards $40 on Brent now with a possible dip expected from there while WTI could rise towards $41, if the rise above $35 sustains.
Gold (1751.80) has moved up and is likely to test 1760-1775 in the near term. Note that 1775 could act as a near term trend resistance and if holds could again push back the price towards 1710. Overall 1775-1700 range is likely to hold unless a break on either side of the range is seen.
Silver (18.75) has opened with a gap up and is headed towards our expected 19 in the near term. Thereafter, if the metal manages to rise above 19, we may look for higher levels; else a corrective dip from 19 could be expected.
Copper (2.4540) is holding above support at 2.40 and could move up in the near term towards our earlier mentioned 2.50/55. Near term is bullish.
FOREX
Dollar Index trades weak and looks bearish for the near term while Euro could rise towards 1.12 or higher. Dollar Yen is stable within the narrow range and needs to break on either side to set further direction. Aussie and Pound look bullish just now but could soon face resistances in the upcoming sessions. EURJPY is bullish while Euro continues to rise. Yuan has strengthened a bit and could move towards 7.10/08 in the medium term. Dollar Rupee could trade lower today; we would look for a dip below 75.50.
Dollar Index (97.97) has fallen sharply and could be headed towards 97.40 initially. A maximum fall to 97.00-96.40 mentioned on Friday remains intact but 97.40 could prove to be a decent interim support. View is bearish on Dollar Index while below 98.75.
Euro (1.1138) is bullish while Dollar Index trades lower. Our earlier mentioned possibility to test 1.1250-1.1300 remains intact.
Dollar-Yen (107.67) has been trading within the narrow sideways range of 107.30-108.00 for quite some time now and needs to break on either side to give directional clarity for the medium term. Till then the sideways ranged trade is likely to continue.
EURJPY (119.93) could continue to rise towards 120.32/35 in the near term as Euro continues to move up. Near term looks bullish.
Pound (1.2404) has moved up well but could find trend resistance near 1.2445 from where a dip looks possible in the near term. Upside could be limited to the next 2-3 session before a corrective dip is seen.
Aussie (0.6736) has been rising as expected and could test our expected 0.6760 in the next couple of sessions. 0.6760-0.6800 region could prove as an immediate resistance zone from where a dip could be expected back towards 0.6680. Watch price action near 0.6760-0.6800 in the near term.
USDCNY (7.1161) is falling sharply after testing 7.1766 on the upside last week but has immediate trend support at 7.11 which if holds may again produce a rise towards 7.13. A break below 7.11, if seen would drag the currency pair lower towards 7.10/08 in the medium term giving some relief to EM currencies.
USDINR (75.6250) did fall to 75.48 as expected but rose back sharply from there to close higher. We may look for a dip back to support levels near 75.50/45 or even lower in the near term. Stronger Euro and Yuan could be Rupee positive.
INTEREST RATES
The US Treasury yields have dipped on Friday ahead of the US President’s press conference. There is room for the yields to dip in the near-term before our preferred rise happens. The German yields have key resistances ahead that can cap the upside and trigger a reversal to resume the broader downtrend. The 10Yr GoI has risen above 6% and looks bullish to move up further.
The US 2Yr (0.16%) and 5Yr (0.31%) Treasury yields were stable while the 10Yr (0.66%) and 30Yr (1.43%) had dipped slightly on Friday The 30Yr has dipped below 1.45% but can find support at 1.40% and keep our bullish view of seeing a gradual rise to 1.50%-1.60%. In case of a break below 1.40%, a dip to 1.30% is possible which will then delay our preferred rise to 1.50%-1.60% mentioned above. The 10Yr is retaining its 0.50%-0.71% sideways range and can come down to test the lower end of the range (0.58%) in the near-term.
The German 2Yr (-0.68%), 5Yr (-0.65%), 10Yr (-0.45%) and 30Yr (0.0%) yields have dipped across tenors. Our view remains the same. Resistances are at 0.05% on the 30Yr and -0.40% on the 10Yr which can cap the upside for now. We expect the German yields to reverse lower in the coming days to resume their broader downtrend and target -0.10%/-0.20% (30Yr) and -0.60% (10Yr) on the downside going forward.
The 10Yr GoI (6.0131%) has risen above 6% on Friday, a little quicker that we had anticipated. We had expected the 10Yr GoI to remain stuck in the 5.95%-6% range for some more time. While above 6%, our preferred rise to 6.15%-6.20% that we have mentioning is likely to be seen in the coming days.
