STOCKS
Dow and DAX are moving up within their 33500-35000 and 14800-15500 range respectively. The bias is bullish to see an upside breakout of this range. Nikkei has to break above 28500 to become bullish and avoid a fall to 27000-26000. Shanghai is back into its 3350-3500 range and can fall towards the lower end of this range now. Sensex and Nifty have broken above their crucial 50500 and 15100 resistances respectively. A strong follow-through rise today will be bullish.
Dow (34207.84, +123.69, +0.36%) is moving up within its 33500-35000 range. The sideways range can remain in place for some time. We reiterate that from a bigger picture, 33500 and 33000 are crucial supports while above which the bias is bullish to break 35000 and see a rise to 36000. A strong break below 33000 is needed to turn bearish.
DAX (15437.51, +67.25, 0.44%) is coming closer to the upper end of its 14800-15500 range. As we have been mentioning earlier, the bias is bullish within this range to break 15500 and rise to 15700-15800 eventually. Thereafter a fresh fall is possible. DAX has to fall below 14800 to become bearish.
Nikkei (28373.82, +55.99, +0.2%) tested 28500 as expected and has come-off from the high of 28584.18 today. Our view remains the same. A fall to 27000-26000 cannot be ruled out while below 28500. A sustained break above 28500 is needed to negate this fall. The price action in the coming sessions will need a close watch.
Shanghai (3474.51, −12.05, -0.35%) has dipped further and keeps intact our view of seeing a fall to 3450-3400. As mentioned Friday, the index is back into its 3350-3500 range and can fall towards the lower end of this range. The chance of a rise past 3525 has been negated.
Nifty (15175.30, +269.25, +1.81%) and Sensex (50540.48, +975.62, +1.97%) have risen above their crucial levels of 15100 and 50500 respectively. It is important to see if they can get a strong follow-through rise today in order to become bullish for a further rise to 15200-15400 (Nifty) and 51500-52000 (Sensex). That will negate the danger of seeing 14800-14600 (Nifty) and 49000 (Sensex) that we were mentioning earlier.The price action today will need a close watch.
COMMODITIES
Commodities are mixed today. On one hand crude and precious metals have risen well and could continue to move up in the near term while on the other hand Copper has moved down sharply and could fall to 4.40/30 before bouncing back from there again. Crude prices are broadly ranged and need to break on either side of the range to give more directional clarity for the longer run. Gold has risen above 1880 indicating bullishness towards 1900 or even higher. Silver is bullish too while above 27.0-27.50.
Brent (66.90) and WTI (64.03) have risen well from levels seen last week. Overall trade within $70-64 for Brent and $61-67 for WTI continues and a break on either side would soon give some clarity on further direction and indicate which way the prices would choose to move. But while Brent and WTI remains below $70 and $67, view is sideways to bearish for the prices.
Gold (1886.20) has finally risen above 1880 and could be soon headed towards 1900 and higher. View is bullish while above 1880.
Silver (27.81) trades higher and while above 27.0-27.5, view is bullish for a retest of 28+ levels in the near term.
Copper (4.4775) has fallen sharply as resistance near 4.60 seems to have held strong. The price may test immediate support near 4.40/30 before again attempting to rise back from there. Near term view is bearish towards 4.40/30.
FOREX
Dollar Index is within a sideways range and need to break on either side to decide further direction. Euro also looks ranged within 1.2250-1.2150 and unless a break on either side is seen, it would be difficult to say further direction. EURJPY trades below 133.50 and a break below 132.35 would drag it lower towards 132 or lower. Pound and Aussie look bearish just now. While Aussie has some scope for a bounce back from 0.77, Pound looks bearish towards 1.41. USDCNY needs to break above 6.44 to see a proper upmove else a range of 6.44-6.42 may hold. USDINR has fallen contrary to our expectation of seeing ranged movement above 73. A break below 72.80 if seen today would be bearish for the pair.
Dollar Index (90.039) has been trading within the broad 90.30-89.68 region for the past 4-sessions and is unable to decide on which direction to move further. Any break on either side of this range would be important driver of the price and decide the next course of movement from here. That would be crucial as a break above 90.30 would indicate a rise towards 91.00-91.50 while a break below 89.50 would be bearish towards 88-86 in the longer run. We watch price action closely on the index.
Euro (1.2180) has supports near 1.2150-1.2130 which need to hold to keep the upside bullish possibilities intact and indicate a rise above 1.2250 in the medium term. Till a break on either side is seen, we expect sideways trade within 1.2250-1.2150/30.
EURJPY (132.68) has dipped well from 133.50 but the cross could face support near 132.50-132.35 for a bounce back soon. A fall below 132.35 would be bearish towards 132.
Dollar-Yen (108.93) has risen slightly and could test 109-109.50 while above 108.50. Only a break below 108.50 would trigger further fall in the medium term.
Aussie (0.7722) has immediate support at 0.77 and while that holds, we may expect a bounce back to higher levels of 0.7800-0.7815.
Pound (1.4142) fell sharply from 1.4232 and now looks bearish for the near term towards 1.41. Thereafter a break or bounce from 1.41 would be crucial to watch.
USDCNY (6.4356) looks stable and need to rise above 6.44 to head higher. Else a sideways range of 6.44-6.42 could hold for some more time.
USDINR (72.8350) closed lower on Friday contrary to our expectation of seeing a ranged trade above 73 followed by a rise to 73.25/50. If the pair now breaks below 72.80, we may have to allow for a further fall to 72.60/50 in the near term. Watch price action near 72.80 today to see if the pair breaks or bounces from here. On the offshore, the rate quotes at 72.8390 indicating the onshore spot might open near the Friday close.
INTEREST RATES
The US Treasury yields remain stable and can trade in a narrow range for some time within their broad sideways range. The German yields could see a corrective dip in the near-term and then can resume their overall uptrend. The 10Yr GoI can consolidate in a narrow range for some more time before breaking lower and resume the downtrend.
The US 2Yr (0.15%), 5Yr (0.82%), 10Yr (1.62%) and 30Yr (2.32%) Treasury yields remain stable. As mentioned on Friday, 1.6%-1.7% on the 10Yr and 2.3%-2.4% on the 30Yr can be the narrow range of trade possible within their respective broad range of 1.45%-1.8% and 2.15%-2.5%. Broadly, we expect the Treasury yields to remain in a sideways range for some time.
The German 2Yr (-0.67%), 5Yr (-0.52), 10Yr (-0.13%) and the 30Yr (0.42%) yields have dipped slightly. A corrective dip to test the supports at -0.20% (10Yr) and 0.35% (30Yr) look possible in the near-term before the uptrend resumes to target 0% (10Yr) and 0.55% (30Yr) over the medium-term.
The 10Yr GoI (5.9639%) is managing to hold above 5.95%. The near-term outlook is mixed. The narrow consolidation above 5.95% can continue for some more time before the yield breaks lower to test 5.9% on the downside.
