STOCKS
Dow is gathering momentum and can move up further in line with our expectation. The US jobs data release today will be important to watch. DAX remains weak below its resistance and continues to look vulnerable for a fall. Nikkei and Shanghai can fall within their sideways range. Sensex and Nifty can remain subdued in a narrow range for a few sessions before a fresh rally happens.
The Dow (27386.98. +185.46. +0.68%) seems to be gathering momentum and has moved up further. The outlook is bullish while above 27000. As mentioned yesterday a rise to 27600 can be seen now and a break above 27600 will pave way for 28200.
DAX (12591.68, −68.57, -0.54%) continues to face resistance at 12800. Our bearish view of seeing 12000 and even 11500 on the downside remains intact while the DAX trades below 12800. A strong rise past 12800 is needed to negate this fall.
Nikkei (22302.64, −115.51, -0.52%) has come down below 22500. While below 22500, the chances of seeing a rise to 22700-23000 stands reduced. Instead a fall to 22000-21500 can be seen. As mentioned yesterday Nikkei can remain in a broad range of 21500-23000. Within this range, the chances are looking high now for the index to move down.
Shanghai (3348.04, −38.42, -1.13%) is stuck in between 3330 and 3400 over the last few days. We retain our view of seeing a fall to 3300-3250 again while the index remains below 3400. A close below 3350 can accelerate this fall. Broadly, Shanghai can continue to trade in the 3180-3450 range for a few more weeks.
Nifty (11200.15, +98.50, +0.89%) oscillated around 11200 and has closed on a mixed note. As mentioned yesterday a narrow range of 11000-11250 (revised higher from 11200 mentioned yesterday) can be seen in the near-term. However, the broader view is bullish while above 11000 and the Nifty is likely to breach 11250 and rise to 11400-11600 eventually.
Similarly, Sensex (38025.45, +362.12, +0.96%) oscillated around 38000 yesterday and could spend some time in the 37300-38300 (narrow) or 37000-38200 (wider) range for some time. An eventual break above 38200 will then pave way for a fresh rise to 39500-40000 over the medium-term.
COMMODITIES
Crude and Copper prices remain stable. Gold and Silver have surged further but we would be cautious to look for a corrective dip in the next few sessions.
Brent (45.12) and WTI (41.97) have dipped slightly from levels seen yesterday. We may expect some sideways movement in the near term while below 45.27 and 42.50 respectively.
Gold (2081.60) and Silver (29.13) have surged further but if the Dollar Index manages to bounce from current levels, precious metals can get a breather and get into a corrective dip for some sessions. Watch for a possible dip in the next few sessions for Gold and Silver before resuming the rise. Near term is expected to see some correction.
Copper (2.8950) does not show any major movement and continues to trade around 2.90. We would wait to see a break on either side of the 2.85/80-3.00 region to confirm on further direction.
FOREX
Dollar Index shows some signs of a reversal with a possible double bottom formation but we would wait for further confirmation on a sustained rise from here. Euro also needs to break below 1.18 to head towards 1.17. Pound, Aussie, EURJPY, Yuan all looks weak just now and could fall against the US Dollar. Dollar-Rupee may also move up today.
Dollar Index (93.05) has risen a bit from 92.52 but needs to sustain the rise in order to rise back towards 94 and higher. On the daily chart, there is possibility of a double bottom formation but needs confirmation on a further rise from here, heading to levels above 94+. While below 94, we may have to wait and see how the index moves in the coming week.
Euro (1.1837) has dipped from 1.1916 and could be forming a double top. The validation of such a pattern would be confirmed if the Euro falls below 1.18 initially and further below 1.17. A break below 1.18 would reduce chances of 1.20 on the upside. However, we would wait to see further movement from here to decide o further direction.
EURJPY (124.99) has dipped from 125.59 and if the it fails to bounce back from 124.60, we may have to negate a rise towards 126-127 that we had mentioned yesterday. For now we watch price action near 124.60.
Dollar-Yen (105.54) has immediate resistance near 106.50 which if holds could keep the pair lower. A fall to 105 is possible in the near term.
Aussie (0.7213) has broken above 0.72, the immediate resistance that we had been mentioning since the last few days. While it holds above 0.72, near term looks bullish for a rise towards 0.74.
Pound (1.3115) has dipped below 1.32 which seems to be holding for the near term. Some more dip could be possible while 1.32 holds, dragging Pound down towards 1.30.
USDCNY (6.9645) has moved up from levels below 6.95 seen yesterday. A test of 6.9835 could be possible before a dip back to lower levels is seen.
USDINR (74.9350) rose back to close higher after testing 74.77 yesterday. If the bounce sustains, we may expect a rise above 75 today taking the pair towards 75.20/25 in the near term.
INTEREST RATES
The Central Banks seem to have gone into wait and watch mode after having given a few rounds of stimulus packages. Following the US Federal Reserve, the Bank of England and the Reserve Bank of India left the rates unchanged yesterday and decided to continue with the on-going stimulus packages without any change. The US Yields have dipped slightly and continue to hover above their key supports. A strong bounce from current levels will be needed to avoid further sharp fall. The German yields remain lower and are keeping our bearish view intact. The 10Yr GoI has risen above 5.85% and is now bullish to move up further.
The US 2Yr (0.11%), 5Yr (0.21%), 10Yr (0.52%) and the 30Yr (1.19%) have dipped again failing to extend the bounce seen in the early Asian trades yesterday. 0.50% on the 10Yr and 1.18% on the 30Yr are key supports which need to hold in order to keep the chances alive of seeing a bounce to 0.60%-0.65% (10Yr) and 1.25%-1.30% (30Yr). A break below these supports will be bearish to see 0.40% on the 10Yr and 1.10% on the 30Yr going forward. We will have to wait and watch.
The German 2Yr (-0.71%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.12) German yields have reversed lower again failing to sustain the bounce seen on Wednesday. The bearish view remains intact. The 10Yr can fall to -0.60% and the 30Yr can test -0.20% on the downside. -0.45% (10Yr) and -0.05% (30Yr) are the key resistances that can cap the upside in the near-term.
The 10Yr GoI (5.8637%) fell to test 5.80% on the downside as expected but has bounced-back sharply to close above 5.85% yesterday. The break above 5.85% has brought back our view of seeing 5.90%-5.92% on the upside into the picture. While above 5.85% the outlook is bullish.
