STOCKS
Weak US retail sales data released yesterday is increasing the concerns of the global growth slowdown. As a result, some profits have been taken-off the table from the global equities that had rallied over the last few days. This may increase the pressure on the Indian indices which have been already falling continuously over the last one week.
Dow Jones (25,439.39, -103.88, -0.41%) has come-off sharply from its high of 25,625. A fall to 25,000 is possible on a break below 25,300.
DAX (11,089.79, -77.43, -0.69%) can dip to test 11,000, a break below which can take it further lower to 10,900. But, a bounce from 11,000 can take the index higher to 11,300 and 11,400
Nikkei (20,886.27, -253.44, -1.20%) has come-off giving back all the gains made on Thursday. Inability to bounce from 20,950 has increased chances of the index falling towards 20,800. Today’s closing will play a significant role in determining the move for next week.
Shanghai (2,702.54, -17.16, -0.63%) has support in the 2,690-2,685 region which is likely to be tested in the near term. A bounce from there can take the index higher towards 2,730 and 2,750 again.
Sensex (35,876.22, -157.89, -0.44%) is heading towards 35,800 as expected. A break below 35,800 can drag the index lower to 35,700 and 35,600 in the coming days.
Nifty 50 (10,746.05, -47.60, -0.44%) can test its key support region of 10,700-10,680. A bounce from this support region can trigger a corrective rally to 10,800 and 10,850. But a break below 10,680 can drag Nifty 50 to 10,600.
COMMODITIES
Gold remains stable. Silver is holding above its key support but looks slightly weaker than gold in the near term. The corrective fall in copper has paused and it is stuck in a narrow range over the last few days. Oil on the other hand is gaining strength after having risen above a key resistance and can move higher in the coming days.
Gold (1,315.40) retains its sideways range of 1,300-1,325. The price action on the daily candles retains the bias bullish for gold to break 1,325 and surge to 1,350-1,360 in the coming weeks.
Silver (15.54) can fall to 15.40 if it breaks below the immediate support level of 15.55.
Copper (2.7625) is stuck in between 2.75 and 2.80 over the last few days. A breakout on either side of 2.75 or 2.80 will decide the next move. A strong break above 2.80 will open doors for a test of 2.83 and 2.85 again. But a break below 2.75 can drag copper lower to 2.74 and 2.73.
WTI (55.01) and Brent (64.86) has risen breaching their respective resistances at 54 and 64. The near-term outlook is bullish. WTI can test 56 and 57 while WTI can move up to 66. Indeed, Brent is looking much stronger than WTI. While Brent remains above 63 in the coming days, even a test of 68 on the upside cannot be ruled out over the medium term.
FOREX
Almost all currencies are trading weak against the US Dollar except the Yen. Near term resistance may hold well for Euro and Dollar-Yuan, while we could see upcoming supports on Pound, Aussie and Euro-Yen.
Dollar-Index (97.08) may be expected to target 97.50-98.00 levels while it sustains above 97. Only on a break below 96.50, we would expect further fall towards 96 or lower.
Euro (1.1285) seems to sustain the break below 1.13. It could well test the previous low of 1.1215 (Nov’18) in the near term. A break below 1.1215-1.1200, if seen would open up chances of testing 1.11 on the downside.
Euro-Yen (124.47) has fallen from levels above 125 seen yesterday and could re-test immediate support near 1240.40. While 124.40 holds, a bounce back towards 125-126 is possible; else a fall towards 123.60 could be seen in the near term.
Dollar Yen (110.29) traded above 110.5 for 2-sessions and is now back below 110.50 re-entering the 110.5-109 region. While the pair trades below 110.50, near term looks bearish.
Pound (1.2792) and Aussie (0.7087) are trading lower. Pound has enough room on the downside towards 1.25 in the longer run but could face some interim support at 1.27. Aussie on the other hand could get some support at 0.7050 from where it could bounce back towards 0.7150-0.72. Failure to hold above 0.7050 would make it vulnerable to a fall towards 0.6950-0.6900.
USDCNY (6.7775) has immediate channel resistance at 6.78 which if holds could push the pair down towards 6.74. Above 6.78, we see resistances near 6.80 and 6.82.
Dollar Rupee (71.17) can come off from 71.20 today re-testing 71.00-70.90 on the downside. Failure to come off from 71.20 would take it higher to test 71.50.
INTEREST RATES
The US yields have fallen and could re-test immediate supports on the downside. The 2Yr (2.50%), 5Yr (2.48%), 10Yr (2.66%) and 30Yr (3.00%) are down from 2.53%, 2.52%, 2.6950% and 3.02% respectively. The 5Yr, 10Yr and the 30YR could come down to test immediate supports at 2.43%, 2.60% and 2.95% before again bouncing back from there. We could see the fall to continue in the early sessions next week.
The German-JGB 10Yr (0.13%) is testing immediate support just below current levels and could bounce from here to higher levels of 0.18% in the near term. This indicates a rise in Euro-Yen in the medium term.
The German-US 2Yr differential (-3.06%) has risen back to re-test trend resistance at -3.05%. It is important to see if the yield spread breaks above -3.05% or comes off to test -3.10% again on the downside. Narrow region of -3.05% to -3.10% is likely to hold for a couple of sessions before gaining some clarity on further directions.
The 10Yr GOI (7.5213%) has scope of rising towards 7.55-7.60% in the near term. While the yield rises, Dollar-Rupee could see a rise too. Downside for the yield is limited to 7.38/40% just now.
