STOCKS
Indices trade higher. Dow can rise to 36500-37000 if sustains above 35750. Dax is bullish with some interim corrections while above 15100. Nikkei and Shanghai are bullish too towards 29000/29500 and 3700 respectively. Indian equities look strong too but could see some profit taking today.
Dow (35754.75, +35.32, +0.099%) has risen today. The resistance at 35750 has been broken. If the index stays above 35750 then the view would be bullish towards 36500-37000.
DAX (15687.09, -126.85, -0.80%) has come down slightly since yesterday. The index has failed to stay above the support at 15800. While above 15100, the view is bullish to see a test of 15900.
Nikkei (28818.53, -42.09, -0.15%) has come down slightly after rising sharply yesterday. The view is bullish to see a test of 29000/29500. Failure to breach 29500 can take the index to 28000 again.
Shanghai (3678.69, +41.12, +1.13%) has risen sharply and can test 3700 before we see a reversal. The 3625 resistance has been broken and now it can act like a support for the near term.
Nifty (17469.75, +293.05, +1.71%) rose sharply yesterday. The index needs to stay above 17400 for the perspective to be bullish towards 17600/800 in the coming sessions. Else it may get back to the 17400-16800 range.
Sensex (58649.68, +1016.03, +1.76%) also rose significantly. The index needs to break above 59000 for the view to be bullish towards 60000.
COMMODITIES
Crude prices have risen sharply and needs to pause and reverse, else could open up chances of a further rise towards 78/80 on Brent and towards 75/76 on WTI respectively. Gold is bearish while below 1800/1790.Silver can trade within 22-24. Copper has risen well and could test 4.45/50.
Brent (76.59) tested 76.70 in line with pour expectation of testing 77 on the upside as mentioned yesterday. We need to see if Brent faces rejection from 77 else could be open for a rise to 78/80 again on the upside. Watch price action near 77 over this week.
WTI (73.21) has risen above our expected 73 and a sustained rise above 73 can take the price higher towards 75/76 on the upside. Immediate view is bullish while above 73.
Gold (1783.30) trades below the resistance level of 1800-1790. While below 1800-1790, Gold has scope to fall towards 1760. Only a sustained break above 1800 can take it higher towards 1820 again which may take some time.
Silver (22.36) has dipped a bit but continues to remain ranged within 22-24 for now.
Copper (4.3755) has been rising and got some positive momentum after indication of positivity for the Chinese economy as the central bank announced easing of policy yesterday. Copper can rise to test 4.45/50 before pausing there. Immediate view is bullish.
FOREX
Strength seen in Euro and Chinese Yuan that could help Rupee strengthen a bit too today. Watch for a trade below 75.50 on USDINR today. Euro has scope to rise towards 1.14/1.1450 before coming off from there. Chinese Yuan has strengthened after the Central bank announced easing of policy yesterday. The Yuan could strengthen towards 6.30. Dollar Index can trade within 95.50-97 and is headed towards the lower end of the range. Aussie and Pound looks bearish for the near term. EURJPY has risen well and could test 130 before pausing.
Dollar Index (96.01) tested 95.84 before rising higher today. We need to keep a close watch to see if it re-tests 95.50 on the downside and breaks lower. A break below 95.50 would confirm bearishness towards 95-94.50 in the medium term. Till then we expect 97-95.50 to hold.
Euro (1.1333) has broken as expected above 1.13 and could rise to test 1.14-1.1450 on the upside. The mentioned levels are important resistances and a fall from 1.1400/50 can again bring down Euro towards 1.12. We would be cautious to see if any indication is seen for a break above 1.1450 which could be bullish for the medium term. Watch price action near 1.1400/50 while we expect a range of 1.12-1.1450 to hold for now.
EURJPY (128.91) has risen sharply and could test 130 before pausing. Thereafter we need to see if the cross rises further or sees a corrective dip to 128.50/30.
Aussie (0.7165) may hold below 0.72 to see a short corrective dip before again rising towards 0.7250-0.73 on the upside. 0.70 is now a strong support that could hold in the longer run.
Pound (1.3200) has fallen to 1.32 and looks likely to break lower to head towards 1.3150-1.3100 in the near term. Note that in the longer run, 1.32 could act as a decent resistance if the rate breaks lower and could open up chances of a fall to 1.28. Watch price action near 132 which is very crucial.
Dollar-Yen (113.72) has risen within the 112-114 range and is headed to test the upper end of 114. We need to watch closely to see if the pair manages to break above 114 to head higher towards 114.50 or falls from 114 itself towards 113-112 again. Further View is unclear while the 112-114 range holds for now.
USDCNY (6.3442) fell sharply as expected after the Chinese Central bank indicated easing of monetary policy negating the impact of the new Covid variant on the economy and signaling strength. The pair can fall further towards 6.30/25 on the downside while below 6.35. Near term view is bearish.
{USDINR (75.4550) fell from 75.57 yesterday to close lower and that decline may sustain today taking the pair down towards 75.30/20. NDF quotes 75.38 just now and the strength in Chinese Yuan and Euro could help Rupee to strengthen a bit today. That said while the spot trades again below 75.50, it would reduce chances of testing 75.75/80 on the upside in the near term.
INTEREST RATES
The US Treasury yields continue to surge at the far-end. The expected broad range remains intact, and the yields have room to move up further towards the upper end of their range ahead of the US Federal Reserve meeting next week. The German yields have risen back sharply but have resistances ahead that can cap the upside and keep the broader bearish view intact. The 10Yr and 5Yr GoI have declined sharply yesterday and can now move down towards their lower end of the range. The Reserve Bank of India left the interest rates unchanged at 4%.
The US 2Yr (0.70%) Yield remains stable while the 5Yr (1.28%) has inched up slightly. The 10Yr (1.53%) and the 30Yr (1.90%) continue to surge. The 30Yr has risen past 1.85% and while this sustains a revisit of 2% levels is possible. The 10Yr can test 1.65% again while it remains above 1.5%. As mentioned yesterday, the expected broad range of 1.35%-1.65% (10Yr) and 1.7%-2% (30Yr) remains intact for now.
The German 2Yr (-0.69%), 5Yr (-0.56%), 10Yr (-0.32%) and 30Yr (0.02%) have risen back sharply across tenors. 0.05% (30Yr) and -0.25% (10Yr) are key resistances ahead. While they hold, our view of seeing a fall to -0.45% / -0.5% on the 10Yr and -0.1% / -0.2% on the 30Yr will continue to remain intact.
The Indian 10Yr (6.3468%) had failed to sustain the break above 6.38% and has declined sharply yesterday. While below 6.38% now, a further fall to 6.3% is possible in the coming days. 6.3%-6.4% can be a broader range of trade now.
The 5Yr (5.6620%) has fallen-back as expected and indeed sharply well below 5.68%. While below 5.68%, a test of 5.63%-5.62% is possible.
