STOCKS
Dow Jones and the Asian indices Nikkei and Shanghai remain bullish and can move further higher while the DAX continues to look mixed. Sensex and Nifty are in danger of further fall as the sell-off in the Indian indices intensifies.
Dow Jones (25,891.32, +8.07, +0.03%) can test the psychological resistance level of 26,000 in the near-term and can surge to 26,200-26,300 on a break above it thereafter.
DAX (11,309.21, +10.01, +0.09%) remains mixed as it continues to oscillate around 11,300. A failure to gain momentum from current levels can pull the index lower to 11,000 in the near term. The index can broadly remain range bound between 11,000 and 11,400
Nikkei (21,452.25, +149.60, +0.70%) retains its momentum and can head further up towards 21,600-21,700.
Shanghai (2,756.06, +0.42, +0.015%) can see an intermediate dip to 2,730 if it fails to breach 2,765 – the 200-day moving average. But the overall outlook remains bullish and an eventual break above 2,765 will pave way for a test of 2,800.
Sensex (35,352.61, -145.83, -0.41%) and Nifty 50 (10,604.35, -36.60, -0.34%) failed to sustain the intraday bounce on Tuesday. Sensex has declined below the key support level of 35,500 and can fall further to test 35,000 in the coming days. Nifty 50 hovers just above the crucial support level of 10,600. It looks vulnerable to break it and fall towards 10,450 in the coming days.
COMMODITIES
Oil remains stable with a possibility of a corrective fall before the overall uptrend resumes. Gold, Silver and Copper retains the bullish view and have risen sharply on the back of the weakness in dollar.
Gold (1,343) has risen sharply and is heading towards 1,350-1,360 as expected. Intermediate resistance is at 1,345 a break above which will pave for this rally. Silver (16) is likely to test 16.20 in the coming days.
Copper (2.87) has surged to 2.87 as expected. A crucial trendline as well as the 100-week moving average resistance is poised around 2.89. Inability to break it can trigger a pull-back move to 2.85 or 2.83 in the coming days.
WTI (56.17) and Brent (66.15) remains stable around 56 and 66 respectively. The broader view remains bullish remains intact. WTI can test 58-60 and Brent can rise to 68-70 in the short term. However, a corrective fall to 64.5-64 on Brent and 54.5-54 on WTI cannot be ruled out in the near term before we see the next rally.
FOREX
US Dollar is looking weak for the near term. Currencies could trade in the positive for the next 1-2 sessions. Pound, Aussie, Euro and Dollar-Yen are all heading towards near term resistances from where they could face rejection in the medium term.
Dollar-Index (96.44) is trading lower as expected and is heading towards 96.00. A short bounce from 96 is possible while the medium term could see a test of 95. View remains bearish.
Euro (1.1351) is rising towards 1.1375 which is the 21-MA on the daily charts. A rejection from 1.1375 could push back Euro towards 1.13 or lower again. Watch price action near 1.1375.
Euro-Yen (125.79) is heading towards immediate resistance at 126 and a rejection from there looks likely in the near term pushing the pair back towards 124-123 levels.
Dollar Yen (110.81) has some scope of rising towards resistance at 111.50 in the near term before coming off from there. Near term looks bullish just now.
Pound (1.3070) has risen sharply after Theresa May’s spokesman said that the meeting between UK and European commission President Jean-Claude Juncker would be significant. While markets are optimistic on Brexit negotiations, Pound could test 1.31-1.32 on the upside before coming off from there in the medium term. Note that immediate resistance is seen at 1.31 and higher at 1.32.
Aussie (0.7173) has also risen and has some room on the upside towards resistance at 0.7250.
USDCNY (6.7221) has come off sharply and looks bearish for the near term. Support on the daily chart is seen at 6.70 from where the pair may bounce back in the medium term.
Dollar Rupee (71.35) could come down towards 71 while 71.50/60 holds. Weaker US Dollar could sustain for a couple of sessions more, aiding some strength in the currencies. At the same time if the yield and crude prices rise, Dollar-Rupee could be forced to move back to 71.50/60 again.
INTEREST RATES
The US yields are almost stable and have some room on the downside to test immediate support levels. The 2Yr (2.50%), 5Yr (2.47%), 10Yr (2.64%) and 30Yr (2.98%) are down 1-2 bps from levels seen on Monday but could come off towards 2.47%, 2.44%, 2.60% and 2.95% respectively.
The German-JGB 10Yr (0.14%) has risen as expected but could trade sideways within 0.15-0.12% region for some time.
The US-JGB 10YR (2.68%) is above immediate support levels and look bullish towards 2.80% for the medium term, indicating a possible rise in the Euro.
The 10Yr GOI (7.5804%) could remain below 7.60% for a few sessions before resuming its rise towards 7.65/70% in the longer run.
