STOCKS
Equities get a breather as there is no further developments/surprises on the US-China trade war front. While this scenraio continues we might see some more short-covering rally in the global equities in the coming days. However, we remains cautious as the broader picture is negative and a fresh fall after a few sessions cannot be ruled out.
Dow (25532.05, +207.06, +0.82%) can test 25800-26000 in the near term after which a pull-back to 25250-25000 is possible. While below 26000 the outlook will continue to remain bearish.
The support at 11800 seems to be holding well on the DAX (11991.62, +114.97, +0.97%) as of now. It will have to be seen if it can rise past 11200 from here which will turn the outlook bullish. For now a rise to 12150 looks likely.
Nikkei (21104.17, +36.94, +0.18%) can test 21450-21500 while it sustains above 21000.
Shanghai (2915.73, +32.13, +1.11%) continues to consolidate between 2850 and 2950. We have to wait for it to break on either side of this range to get a cue on whether it is going up to 3000 or falling to 2800.
Sensex (37318.53, +227.71, +0.61%) is holding above 37000 and Nifty (11222.05, 73.85, 0.66%) above 11100. While these supports hold, a corrective rally to 38000 on the Sensex and 11350-11400 on the Nifty can be seen in the near term.
COMMODITIES
Recovery in equities has capped the upside in Gold for now. But a further rise in gold in the near term is still possible before we see a fresh fall. Silver can remain range bound. Copper is bearish. Brent has inched higher within its sideways consolidation after the attack on a pumping station in Saudi Arabia.
Gold (1297.3) has failed to see strong follow-through buying above 1300. However, while above its support at 1290, a rise to 1310 and 1320 is still possible in the near term.
Silver (14.8) is stuck around 14.8 and looks unclear at the moment. Within its broad 14.6-15.0 sideways range, Silver has equal chances for either a rise to 15 or a fall to 14.6 from current levels.
Copper (2.73) is struggling to bounce. As mentioned yesterday, the resistance at 2.75 can cap the upside and keep the downtrend intact for a test of 2.70-2.68.
WTI (61.72) continues to oscillate around 62. Whether this is a consolidation before a fresh rise to 64-66 or fall to 60-58 remains unclear at the moment. The US inventory data release today migth give some trigger to set the direction of move from here.
Brent (71) is holding above 69 and has high chances for a rise to 73-74 in the near term.
FOREX
Hope of some talks between China and US brings some relief to the markets. Dollar trades strong and looks bullish for the near term.
USDCNY (6.8727) is trading stable. It would now be important to see if the pair breaks above interim resistance at 6.90/91 or faces stiff rejection from there and falls back towards 6.85 or lower from 6.90/91 itself. While no fresh uncertainties emerge, we may expect 6.90/91 to hold on the first testing.
Dollar Index (97.53) is trading near the 97 support and the 3-day and weekly charts suggest a possibility of a sharp rise in the near to medium term. The bullish sentiment towards 98-99 remains intact while the index remains above 97.
Euro (1.1204) has fallen from levels seen yesterday and while the currency moves below 1.12, it could attempt a fall towards 1.11 in the coming sessions.
Euro-Yen (122.88) has again come off contrary to our expectation of a rise back towards 123.30/50. While below 123, there is scope for re-testing support near 122.
Dollar Yen (109.65) is trying to rise a bit and could be fairly trading above 109.00/50 in the near term. A break above 110 would take it higher towards 111 at a faster pace.
Dollar Rupee (70.4450) came down from our earlier mentioned 70.60 contrary to our expectation of a possible rise towards 70.80/90. While we do not negate this upside possibility just now, near term could see another attempt towards 70.60. Note that the Saudi Arabia oil attacks yesterday has pulled up Brent Crude to 71.08 and this could possibly take Dollar Rupee higher in today’s session. We would keep an eye on price movement if it re-tests 70.60.
Aussie (0.6931) has dipped a bit and while below 0.6950, it could test 0.69.
INTEREST RATES
The US yields have fallen and looks weak for the near term. The 30Yr (2.85%), 10Yr (2.41%) and 5Yr (2.19%) have fallen by 1bps and as mentioned yesterday, could continue to move down towards 2.80% (30Yr), 2.40% (10YR) and 2.17% (5Yr) respectively before bouncing back from there.
The US-JGB 10Yr (2.46%) is down by 1bps and has enough scope to fall towards 2.45/40% in the near to medium term. View remains bearish.
The Indian 10Yr GOI (7.4560%) came down sharply to test crucial support near 7.4090% yesterday and while that holds, the yield could now move up towards 7.50/55% in the coming sessions.
