STOCKS
Dow (25628.91, +0.50%) has moved up as expected and could soon rise towards 25750 in the next couple of sessions. The resistance on the 3-day and weekly candle charts has finally broken on the upside and is indicative of further bullishness in the medium term.
Dax (12648.19, +0.40%) moved back to levels above 12600 yesterday contrary to our expectation of testing 12400 on the downside. There is room on both sides towards 13000 and 12400-12200 but while the Dow rises, Dax could also move up in the near term. While above 12600, we could negate immediate bearishness towards 12400-12200.
Nikkei (22750.48, +0.39%) has risen sharply and could test resistance above 22800 on the daily candles. A fall from there would keep the index ranged for some more time or push it sharply to fall below 22400 in the medium term. We watch price action above current levels for directional clarity in the coming weeks.
Shanghai (2772.32, -0.25%) rose up to test 2800 yesterday but is trading low just now. Overall near term trade is likely to be seen in the 2800-2700 region with little preference of a fall towards 2650.
Nifty (11389.45, +0.021%) came off from immediate resistance to close at lower levels. While the resistance zone of 11400-11500 does not produce a sharp rejection, the index could continue to trade within 11300-11500 region for a few more sessions. Clear resistance is visible on the weekly line charts and suggest a corrective dip from here in the near to medium term.
COMMODITIES
Brent (74.59) and WTI (69.23) have risen slightly. WTI tested 70 for 2-consecutive sessions but came off sharply to close at lower levels. If 70 holds just now, we may see another dip towards 68 by the end of this week. Brent looks bullish towards 76 but if the WTI falls, upside for Brent could be limited in the near term.
Gold (1220.50) has been trading along the medium term resistance line on the daily candles and while that holds, Gold could come off towards 1210 or even lower in the next 2-3 sessions. Trade is likely to remain ranged just now with a maximum downside target of 1200 in the medium term.
Copper (2.7620) is holding within the 2.80-2.70 region just now. A rise towards 2.80 is possible by end of this week. Overall view remains ranged.
FOREX
Euro (1.1603): Against our expectation, Euro bounced from support near 1.153 yesterday, back towards 1.16. It could climb higher towards 1.167 today (13 weeks MA could provide resistance near 1.167). If it comes off from 1.165-1.167, we could still look for a break below 1.153-1.151 in the next few sessions. However, a breach above 1.167 would lead to a test of resistance near 1.17.
Dollar Index (95.15): Dollar Index dipped yesterday after having seen a high near 95.52 on Monday. It has support at 94.8 (21 days MA) and 94.5 (trendline support). A test of 94.8 would correspond to Euro testing 1.165-1.167 while a test of 94.5 would correspond to Euro testing 1.17. While it stays above 94.8-94.5, the preference is for another upmove towards 95.5 and then towards 96 in the next 1 week.
Dollar Yen (111.37): Support near 111 on daily candles continues to hold for Dollar Yen. While above 110.59, the preference is for Dollar Yen to see another leg of upmove towards 113 and beyond.
Euro Yen (129.24): Euro Yen moved up yesterday from levels near 128.60 towards 129.20-30 due to the Euro’s rise. Maybe Euro Yen could move up to test the 13 and 21 days MA near 129.60-130.20 in the next 1-2 sessions and then again resume its downmove towards support near 127.5 on daily line chart by next week.
Pound (1.2937): Pound is seeing muted movement near 1.294-1.298. However, having broken below crucial long term support on weekly candles near 1.3050, the trend is bearish and a test of support on daily candles near 1.290-1.288 could happen this week.
Dollar Rupee (68.6875): In the near term, maybe we see a dip towards 68.60-50 in Dollar-Rupee over today-tomorrow.
INTEREST RATES
The US 10 year bond yield had tested the psychologically important 3% level last week and came off from there towards 2.93% – possibly due to a rise in the trade war rhetoric. The ongoing US Treasury auctions have again raised the yield closer to 3%. If today’s 10 year bond auction (of $26 bn) and the 30 year bond auction (of $18 bn) later in the week dont get adequate demand, the 10 year yield might rise to 3% again in the next 1-2 sessions.
In the weeks ahead, if it moves below 2.9% again, there is crucial support near 2.82-85%, which it was not able to break below in Jun-Jul ’18. Note that the US-China trade war rhetoric is only expected to intensify in the weeks ahead – this could lead to a ‘risk off’ sentiment amongst investors, taking the 10 year yield towards 2.8%.
US 10 year yield (2.97%), 30 Year (3.11%), 5 Year (2.84%), 2 Year (2.67%)
Following resistance levels are of crucial importance for Japanese yields. A breach above these levels by Japanese yields could trigger the US 10 year to breach 3%.
The Japanese 10 year yield (0.11%) : resistance @ 0.129% (previous high)
The Japanese 30 year yield (0.85%) : resistance @ 0.85% (long term resistance on medium term chart)
