STOCKS
Almost all indices except Shanghai look bullish for the near term. Shanghai needs to sustain above 2800 to move up in the medium term, else chances of further fall remains on the cards.
Dow (24919.66, +0.58%) is moving up as expected and may test 25250 in the next couple of sessions. Thereafter, a rejection from resistance at 25250 could produce a short dip towards 24750 or lower.
Dax (12609.85, +0.53%) is also headed upwards and may test 12800-13000 over the coming sessions. Near term looks bullish.
Nikkei (21891.55, -1.38%) opened with a gap down and has come off to test 21800 from levels near 22400 tested yesterday. While 21600 supports, the index has some scope to move up again towards 22600-22800 levels. A break below 21600, if seen would be bearish towards 21000.
Shanghai (2784.02, -1.54%) is again down to levels below 2800. Scope of testing 2700-2650 is still on the cards. Near term is likely to be bearish. However, we do not expect a fall below 2650 in the longer run.
Nifty (10947.25, +0.87%) closed at 10947 in line with our expectation and as mentioned in yesterday’s edition. If the rise sustains, the index could gather momentum and rally towards 11000-11200 in the coming sessions. Else the index could dip back to test 10850 over today and tomorrow before resuming the upmove. Overall the break of 10850 may trigger a medium term rally in Nifty.
COMMODITIES
Commodities may see some dip in the coming sessions. Copper, Gold and Silver are likely to come off in the medium term while Crude prices are also set to a short term corrective dip.
Brent (78.08) dipped from levels near 78.80 seen yesterday. Near term trade within 77-79 is possible. Downside could be limited to 76. On the other hand, Nymex WTI (73.56) looks bearish for the medium term with a possible chance of falling towards 72 in the coming sessions. A sharp fall in WTI, if seen could drag down Brent also to lower levels.
Gold (1251.70, -0.29%) has once again dipped from 1260 and could re-test 1240 in the coming session before resuming its rise towards 1280 in the medium term.
Silver (15.98, -0.73%) is now trying to break below 16 after trading in the broad sideways range of 17.40-16.00 since Jan’18. Watch price action near 3-day candle support at 15.80, which if breaks could indicate bearishness in the longer run.
Copper (2.7490, -3.19%) has fallen sharply along with fall in the Chinese Stock index. Copper looks weak just now but has a mild support near 2.70, which if holds could push the prices back to levels above 2.80/90. Else a break below 2.70 would open up chances of further fall towards 2.60-2.50 in the near to medium term.
FOREX
Euro (1.1731): Euro saw a low near 1.169, from where it has bounced back towards 1.174. If it moves above the 55 days MA near 1.176, it could turn reasonably bullish towards 1.185. This bullish move is more preferred currently.
Dollar Index (94.19): Dollar Index’s upmove yesterday was stopped by the 21 days MA near 94.48. It could move towards support near 94 on daily candles in today’s session. A break below 94 for the Dollar Index could correspond with a breach above 1.176 for the Euro. If that happens, the Dollar Index could become bearish towards the 13 weeks MA near 93.44.
Dollar Yen (111.09): As per expectation, Dollar Yen moved further up towards 111.50 but had its upmove restricted by the previous high near 111.4 (it saw a high yesterday at 111.35). It is now testing resistances on all charts and looks set for a downturn. The global flight towards safe haven assets (in wake of the developing trade war) could further trigger such a down turn in Dollar Yen.
Euro Yen (130.32): If Euro Yen ends the week below 130.25 (21 weeks MA) the chances of a downmove next week increases. Although it has broken resistance near 130 on short term charts, we would still wait for a week close above 130.25 to change our view from bearish to bullish.
Pound (1.3261): Pound could test resistance on daily candles near 1.33 in today’s session. We prefer a downmove back towards 1.32 by Friday after that.
Dollar Rupee (68.83): An upmove beyond 68.95 in today’s session could make USDINR bullish towards 69.10 and beyond. However, Euro’s hold of support @ 1.169 could be slightly positive for the Rupee.
INTEREST RATES
US Treasury 3 year note auctions yesterday generated little demand from investors thereby decreasing prices and raising US bond yields. The US 2 Year tested highs near 2.59% while the 10 Year touched 2.87%. However, trade war worries were reignited by news that the US is planning to impose tariffs on $ 200 bn worth of Chinese goods in September. As this move gets more certain, the rush towards safe haven assets (like Govt bonds will only increase, helping yields fall).
US 10 year yield (2.844%), 30 Year (2.948%), 5 Year (2.743%), 2 Year (2.563%):
US 10 Year yield needs to break horizontal support zone of 2.84%-2.82% which has been restricting a decisive downmove towards 2.75% since May. Response in the next set of auctions today and tomorrow could further help in understanding the demand for US bonds –any increase in demand would take yields down.
The US 30 year yield also needs to break the 2.94%-2.92% zone to be able to go lower. However, support line on medium term chart (coming from June ’16) could act as a strong support.
German 10 year bond yield (0.32%) seems to be forming a downward channel on short term chart, which could lead to a gradual fall towards 0.2%.
