STOCKS
Asians are trading lower. Market seems to be in wait and watch mode to see the key US jobs data release today evening. A weak job numbers will strengthen the case of a rate cut from the Fed and will trigger a sharp rise in the equities. Market expects the US to add 164K jobs on the nonfarm payroll while we forecast for an increase of 178K. But broadly we retain our bullish view on the equities and any dip after the US jobs data could be short-lived. On the domestic front, the Union Budget today will drive the markets.
Dc The US markets were closed yesterday. Weak jobs data today will aid the Dow (26966) breach 27000 and rally to 27200 and 27500 in the coming days. Inability to break 27000 today can trigger a corrective dip to 26700-26650 first and could delay our preferred rally to 27200-27500.
DAX (12629.90, +13.66, +0.11%) has inched slightly higher. The view remain bullish for the index to move up to 12800 and 13000 in the coming weeks. Support is at 12450.
Nikkei (21670.73, -31.72, -0.15%) continues to hover near its resistance at 21750 and keeps the near-term outlook mixed. A strong break above 21750 is needed for it to gain momentum and move up to 22250. While below 21750, a test of 21500 and 21350 on the downside cannot be ruled out.
Contrary to our expectation, Shanghai (2996.28, -8.97, -0.30%) has dipped below 3000. A test of 2980-2970 is possible while it remain below 3000. However, the broader picture is bullish with strong support around 2950 which can limit the downside if Shanghai extends its fall below 2970 in the coming days.
Sensex (39908.06, +68.81, +0.17%) and Nifty (11946.75, +30.00, +0.25%) remained stable yesterday above their respective support levels of 39750 and 11900 and has closed slightly higher. The outlook is bullish to see a rise to 40000-40500 on the Sensex and 12000-1215 0 on the Nifty. But as mentioned yesterday, the Indian indices need some trigger to gain momentum and move up sharply. We hope that the Union Budget today would give the needed push for them.
COMMODITIES
Overall commodities are stable and could see some sideways consolidation within a broad range that could at least last for the next 3-4 sessions.
Brent (63.25) is stable while Nymex WTI (56.69) has come off slightly. On the downside there is scope for testing 60 and 54 respectively before a bounce from there is seen.
Gold (1421.70) has immediate support near 1410 and while that holds, we could see trade within 1410-1450 region in the near term.
Silver (15.31) is also likely to consolidate sideways in the 15.15-15.60 region in the near term before breaking on either side. Preference is for a fall in the medium term as 15.60 is a decent resistance coming from Jun’18 levels.
Copper (2.6745) is trading above support at 2.60. There is scope of a rise towards 2.76-2.78 in the near term.
FOREX
Dollar Index (96.77) is likely to be capped at 97.10-97.00 (revised from 97.25 mentioned yesterday) in the very near term from where a fall towards 96.40 or lower could be seen.
Euro (1.1280) has support near 1.1250 which is likely to hold in the near term producing a bounce back towards 1.13 or higher in the coming week.
Dollar-Yen (107.86) has come off sharply from 108.50 and while that holds, Dollar-Yen could have scope to fall towards 107 or even to 106.50 in the near term. View is bearish below 108.50.
Euro-Yen (121.65) is also stuck in the sideways range of 123.50-121.0 and could continue to move up again to 123.50 while support near 121 holds. The currency pair looks bullish in the near to medium term.
Aussie (0.7025) has resistance at 0.71 from where a fall looks likely back towards current levels. Near term is bullish for Aussie towards 0.71.
Pound (1.2582) is falling towards crucial levels of 1.25 which could turn out to be an important reversal level. We would watch closely price action near 1.25 as a bounce from there could take it back towards 1.27-1.28 in the medium term.
USDCNY (6.8749) could test 6.84/83 while immediate resistance near 6.90 holds. The currency could remain within 6.90-6.83 for the medium term.
USDINR (68.5050) has immediate support near 68.35/40 which may produce a near term bounce towards 68.80. A break below 68.35 could accelerate a fall towards 68 in the near term. Overall view is bearish for Dollar-Rupee. We would watch price action near 68.35 today.
INTEREST RATES
The US markets were closed yesterday on account of a public holiday. The non-farm payroll and the unemployment data release today will be a key event to watch. Weak job numbers will increase the hopes in the market for a rate cut from the Fed this month itself. This in turn can drag the Treasury yields further lower from current levels. The 2Yr, 5Yr, 10Yr and 30Yr yields are currently at 1.75%, 1.72%, 1.94% and 2.46% respectively. The 30Yr can test 2.43%. The 10Yr has support near current levels at 1.93% from where a bounce to 2% is possible before targeting 1.85% on the downside. The broader view continues to remain bearish and we expect the yields to fall further in the coming days.
The German yields continues to remain under pressure. Hopes for a rate cut and more stimulus from the ECB are weighing on the yields. The 2Yr (-0.77%), 10Yr (-0.40%) and 30Yr (0.19%) yields have dipped further yesterday. Though the 5Yr (-0.66%) has inched slightly higher, it has key resistance near current levels and can reverse lower targeting -0.73% on the downside in the coming days. The 10Yr can dip to -0.42%.
The 10Yr GOI (6.8891%) has dipped below 6.90%. The bearish view remains intact. Next support is at 6.83% which can be tested in the near-term. A bounce from there can take it to 6.90% and 6.95%. The broader bearish view is intact and an eventual break below 6.83% will take the 10Yr GOI to 6.80% and 6.75% in the coming days.
