STOCKS
Equities remain mixed. Dow looks vulnerable to dip in the near term. Dax may consolidate/dip before resume the upmove. Sensex and Nifty remains stuck in a sideways range. Japan’s Nikkei and China’s Shanghai are closed today.
Dow (26307.79, -122.35, -0.46%) has declined below the key 21-day moving average support level of 26415. The expected rally to 26750-27000 seems to be getting delayed. While below 26415, Dow can fall to 26100-26050 in the near term.
DAX (12345.42, +1.34, +0.01%) has closed on a mixed note. Though the broader picture remains bullish, a strong rise past 12400 is needed for it to move further higher towards 12450-12500. A break below the support at 12280 can drag it to 12200 before we see further rise.
Sensex (38981.43, -50.12, -0.13%) and Nifty (11724.75,-23.40, -0.20%) remains indecisive in the near term and continue to oscillate within their respective range. Sensex is stuck in between 38500 and 39500 while the Nifty between 11550 and 11800. A fall from current levels to the lower end of the range will mean a head and shoulder reversal formation. So we need to watch it closely.
COMMODITIES
Commodities remain bearish but could see some corrective bounce before the downmove resumes. The expected fall in oil towards the important support has happened and we need to watch it closely now to get a cue on the next move.
Gold (1271) fell to 1266 and has bounced from there. While above 1270, a rise to 1277-1280 can be seen. The 1266-1292 sideways range remains intact for now. As mentioned yesterday gold can consolidate for some more time before falling to 1260-1255.
Silver (14.61) is getting support near 14.55. It can consolidate between 14.55-14.75 for some time before we the fall resumes to 14.30 and 14.
Copper (2.78) fell as expected yesterday to test the 2.78-2.77 support zone. The outlook is bearish. But an intermediate bounce to 2.83-2.84 cannot be ruled out before Copper eventually breaks below 2.77 and tumbles to 2.72-2.70 in the coming weeks.
As expected WTI (61.78) and Brent (70.55) fell to 61 and 69.80 respectively and has bounced from there. A corrective rally is possible in the coming sessions before the downtrend resumes. While above 70.20 Brent can move up to 71.30-71.50. WTI can test 62.30-62.50 while it remains above 61.30.
FOREX
US NFP and unemployment data would be important to watch. A stronger data would boost further strength in the US Dollar. Dollar Index looks bullish towards 99 while Euro could come down to 1.11. Aussie may break below 0.70.
Dollar Index (97.8) has risen slightly and is headed towards immediate resistance at 98. It would be important to see if the index manages to break above 98 to test upper resistance near 99. While above support at 97.15/25, there is room for testing 99.
Euro (1.1173) trades below 1.1200 again and may slowly gravitate down to 1.1100. Further downside to 1.10 also possible, but could be a long-drawn move of attrition.
Importantly, in line with our theme since the beginning of the year, the weakness in Euro-Dollar is getting reflected in weakness in Euro-Rupee (77.58), which allows Dollar-Rupee (69.37) to trade weak, even in the face of Euro weakness.
For now, Euro-Rupee can dip further to super-crucial Support at 77.00. Need to be careful to see what happens, how the market behaves, at 77.
The Euro-Yen (124.54) has important long term support near 123.80-124.00 and while that holds, medium term looks bullish. However, we could see some sessions of sideways consolidation within 124-125 before a sharp bounce is seen.
Dollar Yen (111.42) is stable and continues to remain trapped within 112.50-111.00 region. Sideways range trade may continue for some more sessions before we see a clear break on either side. We would wait for price confirmation to get clarity on further direction the pair would take.
Aussie (0.6995) seems to be breaking below the 0.70 support. Contrary to our expectation of a rise towards 0.71-0.7150, the currency could possibly fall towards 0.6950-0.6900 if a decisive break below 0.70 is seen just now.
USDCNY (6.7336) has some room on the upside towards 6.75/76 levels from where a fall back to 6.72/70 is possible. In the medium term Yuan could strengthen again towards 6.70.
Dollar-Rupee (69.37) has turned bearish after a decisive break below 69.50 was seen yesterday. This happened contrary to our expectation of a bounce towards 69.75/70.00. While below 69.50, lower level of 69 comes into the picture and could be tested in the near term. Upside could be capped in the 69.50/60 region just now.
INTEREST RATES
The US Yields have all risen contrary to our expectation of a fall from here. The 2Yr (2.34%), 5Yr (2.35%), 10YR (2.54%) and 30YR (2.93%) are all trading slightly higher today but look bearish in the medium term. Resistances above current levels continue to hold and could eventually push yields lower in the coming week.
The German yields seem to be breaking above immediate resistance levels. The 30YR (0.677%) and 10Yr (0.032%) have moved up, breaking above immediate resistance and could rise for a few more sessions towards 0.7% and 0.05% in the near term.
The UK Gilts are also trading along important near term resistances and could fall in the coming week. The 5Yr, 10YR and 20Yr yields are currently trading near 0.87%, 1.19% and 1.63% respectively.
