STOCKS
Equities look mixed overall. Dow has moved up further on Friday and has a crucial resistance coming up the 35000-35100 region which will have to be broken to become bullish for a further rise. The US markets are closed today. DAX continues to trade mixed around 15600 and has equal chances to move either ways inside its 15400-15800 range. Nikkei is coming down gradually and can test 28500 and even 28000. Shanghai has declined sharply within its 3500-3625 range and need to see if it can sustain above 3500 in the coming days or not and retain the range. Sensex and Nifty have bounced on Friday and can move up further within their 52000-53000 and 15600-15900 range respectively.
Dow (34786.35, +152.82, +0.44%) has moved above 34700 and needs to be seen if it can sustain higher. 35000-35100 will be the next important resistance zone to watch. Dow will have to rise past 35100 (revised up from 35000 mentioned all through last week) in order to gain fresh bullish momentum and rise to 36000. Else a fall back to 34000-33500 again cannot be ruled out.
DAX (15650.09, +46.28, +0.30%) continues to hover around 15600 and remains mixed in the near-term. A strong rise past 15800 is needed to see a fresh rise to 16000-16100 and even higher. 15400 is an immediate support and a break below it can take it down to 15200-15000. For now the 15400-15800 range remains intact.
Nikkei (28612.57, −170.71, -0.59%) has been coming down gradually. A test of 28500 looks likely and a break below it can drag it to 28000. As mentioned last week, 28000 is a crucial long-term support which is likely to hold and keep the broader uptrend intact. While above 28000, the long-term trend is still up and a rally to 31000-32000 is still a possibility. Only a break below 28000 will be bearish to see 27000-26000 on the downside.
Shanghai (3526.40, +7.64, +0.22%) is trading slightly higher after having fallen sharply on Friday. A test of 3500 – the lower end of its 3500-3625 range is likely now. A break below 3500 can see a deeper fall to 3450-3400. Thereafter a fresh rise is possible. While above 3400 the broader view of seeing 3700-3800 on the upside remains intact.
Sensex (52484.67, +166.07, +0.32%) and Nifty (15722.20, +42.20, +0.27%) have bounced on Friday and could move up further today following the rise in US markets on Friday. Sensex can attempt to test 53000 again and Nifty 15800/900. We reiterate that a strong rise past 53000 (Sensex) and 15900 is needed to become bullish and see a fresh rise to 54000 (Sensex) and 16000-16200 (Nifty) going forward. Else the 52000-53000 (narrow) or 51000-53000 (broad) and 15600/700-15900 (narrow) or 15400-15900 (broad) range could remain intact for some more time.
COMMODITIES
Crude prices have dipped a bit and could be ranged for the very near term while below respective resistances. Another attempt to test resistances can be possible by the end of the week before any sharp decline sets in. Gold, Silver and Copper have risen from respective supports and while above 1760, 26 and 4.10, view is bullish towards 1800/20, 27-28 and 4.30/40 respectively.
Brent (75.95) tested 76.43 last week before dipping slightly from there. $77/78 seems to be holding well now and while that holds, a dip to 74-72 could be possible on the downside. A break above $77/78 can take the price higher to $80 before any sharper decline is seen.
WTI (74.99) on the other hand is holding below $76 just now and could remain ranged below $76 for 2-3 sessions before again attempting to bounce back. Immediate support is seen near $74.
Gold (1789.40) has immediate trend support at 1760 and while the price trades above 1760, there is scope for a rise to 1800/20 I the near term. View is bullish while above 1760.
Silver (26.68) has risen well above 26.50 and could be headed towards 27-28 in the near term. On the near term charts, there is scope for a rise to resistance at 28 in the next few sessions before a sharp decline is seen. View is bullish towards 28 while above 26.
Copper (4.2740) is likely to trade within 4.30-4.10 for the very near term. Thereafter, a break above 4.3 can take it higher towards upper resistance at 4.40. Broad range of 4.10-4.40 may continue to hold.
FOREX
Dollar index has bounced well and can be headed towards resistance at 93 before falling from there. In the meanwhile Euro has some chances of falling towards 1.18 again. But while 1.18 holds as a decent support we may expect an eventual rise over this week and the next. EURJPY may hold above 131 and eventually rise towards 132 in the near term. Aussie can rise towards 0.76 while Pound needs to see a break above 1.3850 to move up further in the near term. USDCNY may move up towards 6.48/50 while downside could be limited to 6.44. Dollar Rupee came down well from 74.8725 on Friday and if the fall sustains it could be headed towards 74.40 else an attempt to rise towards 75 cannot be negated. Watch price action near current levels.
Dollar Index (92.334) has bounced from 92.16 and can rise towards 92.70 if the upward momentum continues to hold. We may look for a possible test of immediate resistance near 93 before falling sharply towards 92 or lower again in the coming 1-2 weeks. A rise from current levels to 93 could keep Euro weak for the near term.
Euro (1.1852) has bounced well after almost falling to 1.18 on Friday. The currency has bounced well and can be expected to move up towards 1.19 again. But note that if the Dollar Index rises from current levels, the Euro might fall back to 1.1830-1.1800 in the near term before a medium term rise is seen. Watch price action on the Dollar Index near current levels.
EURJPY (131.68) has bounced a bit and if it manages to move up further, it can rise towards 132. Failure to rise from current levels can drag it down back towards 131.30-131.00 in the medium term. Watch price action near current levels.
Dollar-Yen (111.09) has dipped a bit but if the Dollar Index heads towards 93, we may expect the Dollar-Yen to re-rise towards 111.50 or higher. Note that 112 is an important resistance above current levels and is likely to hold in July and push the pair towards support near 110-109.50.
Aussie (0.7515) tested 0.7444 before bouncing back to 0.7533 on Friday and has again dipped from there. 0.7450/30 is now the important level above which Aussie can rise towards 0.76 in the near term. A range of 0.7430-0.76 can hold for the near term.
Pound (1.3824) recovered the sharp fall seen on Thursday last week itself and now trades stable but a bit lower. While below 1.3850, view remains bearish for a fall to 1.3795 or lower. A sustained rise above 1.3850 is needed for the Pound to rise towards 1.3850-1.39.
USDCNY (6.4650) could be ranged within 6.44-6.48/50 region for the near term. Need to watch price action if the pair breaks on either side of the mentioned range.
USDINR (74.7450) came down sharply to close at 74.7450 after a test of 74.8725 on Friday. Support is seen at 74.40 while resistance is seen at 75 which still has some scope to be tested in the near term. A broad range of 75-74.40 can hold for this week.
INTEREST RATES
The US Treasury yields have declined sharply on Friday following the uptick in the US unemployment rate . The US unemployment rate has increased from 5.8% in May to 5.9% in June. The Treasury yields are coming closer to their crucial range supports. A strong bounce-back move is needed this week in order to avoid the downside break of the range and a much deeper fall. The US markets are closed today. The German Yields are also coming down and looks vulnerable to break their supports contrary to our expectation. In that case our earlier bullish view will get negated. The 5Yr GoI has risen on Friday and has little room on the upside to test its resistance which will have to be broken to move up further.
The US 2Yr (0.23%), 5Yr (0.86%), 10Yr (1.42%) and 30Yr (2.04%) Treasury yields fell sharply across tenors. The 10Yr is close to its crucial support zone of 1.4%-1.35%. The 30Yr on the other hand has room to test 1.9% on the downside. The 10Yr and 30Yr will have to hold above these supports in order to keep the expected sideways range intact and also to avoid a much deeper fall from here. The price action in the coming days will need a close watch.
The German 2Yr (-0.68%), 5Yr (-0.61%), 10Yr (-0.24%), 30Yr (0.27%) yields have dipped further. The rise that we have been expecting so far seems to be not happening. The 10Yr and 30Yr looks vulnerable to their supports at -0.30% and 0.25% respectively and fall to -0.45% (10Yr) and 0.10% (30Yr) in the coming days. Such a fall will negate our earlier bullish view. We will have to wait and watch.
The 5Yr GoI (5.75%) has risen on Friday. It has room to test 5.8% and 6% in the near-term. A strong rise past 6% is needed for it to gain momentum and rise further. Inability to rise past 6% can drag it to 5.5% and 5% again in the coming days.
