STOCKS
Barring the Indian indices, the major global indices are continuing to move up. While the Indian equities look vulnerable for further fall, the global indices can continue to move higher in the near term.
Dow Jones (25,543.27, +117.51, +0.46%) retains its strength and risen breaking above the intermediate resistance at 25,450. As mentioned yesterday, Dow can rally towards 35,700 and 25,800 in the coming days.
DAX (11,167.22, +41.14, +0.37%) sustains higher but seems to lack momentum. However, while DAX remains above 11,100-11,050 support zone, the outlook is positive to see a rally towards 11,300.
Nikkei (21,155.44, +10.96, +0.052%) broken above 21,000 decisively and will gear-up for a test of 21,500 and 21,750 in the coming days.
Shanghai (2,712.83, -8.23, -0.30%) is gaining strength as it has risen above 2,700 and is likely to test 2,750 in the coming sessions.
Sensex (36,034.11, -119.51, -0.33%) and the Nifty 50 (10,793.65 -37.75 -0.35%) witnessed late selling yesterday. The bearish outlook is intact. Sensex can fall to 35,800 and the Nifty 50 can test 10,700 in the coming sessions.
COMMODITIES
Gold continues to remain stable within the expected sideways range while silver looks little weak in the near term. Copper still has room for a corrective fall before the overall uptrend resumes. Oil is heading towards its key resistance which if it holds or not will decide the next move.
Gold (1,308) oscillates between 1,300 and 1,325 as expected. While above 1,300 the bias remains positive for a break above 1,325 and a rise to 1,350-1,360.
Silver (15.61) seems to be little weaker than gold. The support at 15.55 is holdiing well as of now. While above 15.55, a bounce to 15.8 is possible in the near term. But a break below 15.55 can drag silver lower to 15.4 and 15.2.
Copper (2.77) remains weak and has declined below 2.78 as expected. As being mentioned over the last few days, a dip to 2.76 and 2.75 is likely in the coming days.
Brent (63.90) has crucial resistances at 64 and 64.3. A strong break above 64.3 will open doors for a test of 66 in the short term. But while below 64.3, a pull-back to 62 cannot be ruled out. WTI (54.10) on the other hand, can move up to 55.5 on a break above 54.5.
FOREX
Contrary to our expectation of a falling Dollar-Index, we saw a rise back to levels above 97. This has erased some gains seen on the major currencies over the last few sessions. While the currencies could again see some weakness against the US Dollar in the rest of the sessions this week, we look for crucial resistance near 98 on Dollar Index to hold in the medium term.
Dollar-Index (97.12) surprised with a bounce back to levels above 97 contrary to our expectation of heading lower towards 96.30/25. The rise came in after CPI inflation for Jan’19 came in at 0% M/M from Dec fig of -0.1%, rising at an annualized 1.6%. . Core CPI came in at 0.2% (M/M), and 2.2% (Y/Y). While the Dollar Index trades above 97, further upmove is possible towards 97.50-98.00 levels.
Euro (1.1271) also came off to levels below 1.13, contrary to our expectation of a continued rise towards 1.14. If the fall below 1.13 sustains, we could possibly see a gradual fall towards 1.12 soon. The fall in Euro was indicated by a lower German-US yield differential (mentioned in the interest rates section yesterday) and while the differential trades lower, Euro could be bearish.
Euro-Yen (125.08) is trading within the 124-126 region and could remain so for the medium term. While there is some scope of testing 126 on the upside, while the Euro trades below 1.13, Euro-Yen could possibly come off in the near term towards 124.
Dollar Yen (110.97) could be headed towards 111.50 in the near term. Near term view is bullish while the pair trades above 110.50.
Pound (1.2857) and Aussie (0.7108) have come off slightly from levels seen yesterday on fresh rise in the US Dollar. It would be important to see if Pound remains above immediate support at 1.2830 or breaks lower to target levels of 1.2750-1.2700 again. On the other hand, Aussie could trade in the 0.7150-0.7050 region for a few sessions.
USDCNY (6.7656) moved up instead of falling further towards 6.7350 mentioned yesterday. The pair is holding within a down channel as seen on the daily candles and while the channel holds, USDCNY could remain below 6.78, eventually falling towards 6.74/72.
Dollar Rupee (70.8050) could possibly move up today further towards 70.90-71.00 on fresh strength in the US Dollar. However, while below 71, we could still expect a possible fall towards 70.60 again eventually. Weekly line charts show support near 70.40 which has held so far and could keep the pair higher for some more sessions.
INTEREST RATES
A rise in CPI inflation data has lead to a rise in yields along with the rise in the US Dollar. The US yields have moved up as expected. The 2Yr (2.53%) and the 5Yr (2.52%) yield have risen by 1bps while the 10Yr (2.70%) and 30Yr (3.03%) are stable. As mentioned yesterday the 5Yr can rise to 2.54% by tomorrow while the 10Yr and 30Yr could also move up to 2.73% and 3.06% respectively. Near term looks bullish for the US Yields.
The German-US 2Yr differential (-3.09%) has come down as expected bringing down Euro also with it. The differential could test -3.10% from where a short bounce could be expected. A break below -3.105 could indicate further fall for the medium term indicating continued bearishness for the Euro. The German-US 10Yr (-2.57%) could fall towards -2.60/625 in the near term before pausing within the current fall.
The 10Yr GOI (7.466%) fell to test 7.43% yesterday almost in line with our expectation. While support near 7.38/40% holds, we could see a rise towards 7.55/60% again in the medium term.
