STOCKS
The near-term correction in the equity indices that we had mentioned on Friday seems to be not happening. Instead the major indices have risen sharply breaking above their intermediate resistances after the jobs data release on Friday. The Dow has risen past 27000, DAX has risen above 12500 and the Nikkei is above 23000. All these indices can now move further higher to test their next strong resistances and then can see a corrective fall. Shanghai can consolidate before move higher. Sensex and Nifty can also break above their intermediate resistances today and move higher from here itself taking cues from the global indices without seeing a correction.
Dow (27110.98, +829.16, +3.15%) has surged to test 27000 on the upside much faster that we had expected. The chances of seeing a corrective fall breaking below 26000 that we had mentioned on Friday stands reduced. As such we now see high chances for the Dow to move further higher towards 28000. The level of 28000 is an important resistance which can hold on its first test and trigger a corrective fall to 26500-26000.
DAX (12847.68, +417.12, +3.36%) has surged breaking above 12500 and has negated the chances of seeing a near-term correction to 12200-12000. The index looks strong and can target 13500-13800 before a correction happens.
Nikkei (23052.72, +188.99, +0.83%) has risen past 23000. The bullish view is intact and the Nikkei can move up to 24000 in line with our expectation in the coming days. The rise above 23000 has reduced the chances of seeing a corrective fall to 22000-21500 mentioned on Friday.
Shanghai (2937.52, +6.72, +0.23%) has risen within our preferred range of 2900-2950. A strong break above 2950 is needed to gain momentum and move up further towards 2975. While below 2950 the index can continue to consolidate between 2900 and 2950 for some more time before moving higher eventually.
Nifty (10142.15, +113.05, +1.13%) can break above its intermediate resistance level of 10160 taking cues from the rally in the global equities. As such our preferred rise to 10500-10750 can happen without seeing a corrective dip to 9800 that we have been mentioning last week.
Similarly, Sensex (34287.24, +306.54, +0.90%) can target 36000 on the upside straight away from here with out seeing a corrective dip to 33000 that we had mentioned on Friday.
COMMODITIES
Crude prices rose on Friday after the OPEC+ announced that it the deal on Saturday, has raised selling prices for its crude exports to all destinations for July in an attempt to boost oil prices. Overall crude direction is tilted to the upside and looks bullish for the near term. Gold and Silver trade lower and Gold prices look more bearish than Silver for the near term. However, Copper looks bullish for the longer run but could face some interim resistances above current levels.
Brent (42.51) and Nymex WTI (39.57) have risen well and could be headed towards our expected upper levels of $45 and $41 respectively from where a possible correction could be expected. Immediate view is bullish for crude prices.
Gold (1689.00) and Silver (17.65) have declined. The fall in Gold below 1700 has been seen finally after a long sideways trade seen within the 1680-1740-1780 region. This break on the downside is now a clear indication of further bearishness for the coming sessions. Our first target would be to see 1640 in the next few sessions if the falling momentum remains intact. Resistance on the upside is seen at 1720. For Silver, we had mentioned a fall towards 17.5-17.00 to be seen in the near term from where a bounce could be seen. Watch price action on Silver for the next few sessions. Only a clear break below 17, if seen would tilt the directional view to bearish. Till then we may expect a bounce from 17.
Copper (2.5425) has dipped slightly today after seeing a test of almost 2.60 on Friday in line with our expectation. Note that 2.60/65 region could be interim resistance zone which if holds, could keep copper prices lower for sometime before the metal attempts to rise sharply in the longer run. Watch price action near 2.60/65. Downside is likely to be limited to 2.45 which is an immediate trend support.
FOREX
Stiff resistances are seen in most currency pairs. Dollar Index could rise from current support while Euro, EURJPY look bearish for the near term. Pound and Aussie has resistances too above current levels which could be tested soon before a dip is seen. Yuan has strengthened well but its impact on Rupee could be limited as we may expect Yuan to weaken again towards 7.10 if support on USDCNY holds near 7.08.
Dollar Index (96.88) bounced back from 96.44, almost testing our mentioned target of 96.27. A bounce back from here could be seen now towards 97.65 in the sessions to come. View is bullish for now.
Euro (1.1291) tested 1.13840, moving higher than our expected resistance at 1.1350 but has come off sharply from there indicating a near term top is in place. A fall towards 1.12-1.1195 could be on the cards before the exchange rate again starts to move up.
Dollar-Yen (109.48) has continued to move up and could be headed towards 110 in the coming sessions as mentioned on Friday.
EURJPY (123.64) has come off sharply from 124.43 and could be seen trading lower towards 123 in the near term.
Pound (1.2704) is trading near interim resistance at 1.2730 levels and while that holds, Pound could see a dip in the near term towards 1.2580 or lower. But failure to face rejection from 1.2730 could indicate further bullishness targeting 1.28 on the upside.
Aussie (0.6972) has risen slightly but has to break above 0.7034 to rise further in the near to medium term targeting 0.71/72. While very near term looks bullish, watch price action near 0.034.
USDCNY (7.0813) has come down to test our target of 7.08. While there is immediate support at 7.08, we will have to see if the currency pair manages to break below 7.08 to head towards 7.06/05 before a bounce is seen. Note 7.08 is immediate support and we see lower support near 7.06/05 region.
The strength in USDINR (75.5975) was surprisingly curbed by RBI intervention last week not allowing Rupee to strengthen below above 75. With Euro and Chinese Yuan trading strong, we might expect a 1-2 session of strong trade for the Rupee but another round of weakness could be in place if Euro and Yuan faces rejection from current levels.
INTEREST RATES
The rally in equities continues to boost the momentum in bond yields. The US Treasury yields have risen further following the strong jobs data release on Friday. The bullish view is intact and the Treasury yields can rise further. The German yields have also rise well across tenors and keep our bullish view intact. The 10Yr GoI remains mixed and could be range bound in the near-term before a fresh rally happens.
The US 2Yr (0.21%), 5Yr (0.46%), 10Yr (0.89%) and 30Yr (1.67%) Treasury yields continue to move higher and keep our bullish view intact. As mentioned on Friday, with the current momentum continuing, we see high chances of the yields moving higher to 1% (10Yr) and 1.80% (30Yr) in the coming weeks.
The German 2Yr (-0.61%), 5Yr (-0.55%), 10Yr (-0.28%) and 30Yr (0.25%) have risen further as expected across tenors. The bullish view is intact. The 30Yr can rise to 0.35% while the 10Yr has room to test -0.20% on the upside in the coming days.
The 10Yr GoI (6.0321%) remains mixed and has been stuck in a narrow range of 6%-6.05. As mentioned on Friday, we expect the yield to remain in the range of 5.95%-6.10% for some time. Eventually we prefer the 10Yr GoI to breach 6.10% and move up to 6.20% in the coming weeks.
