STOCKS
Dow has surged and keeps our bullish view intact.DAX remains weak in the near-term but the supports near current level can limit the downside and trigger a reversal. Nikkei and Shanghai can consolidate sideways before moving further higher. Sensex and Nifty consolidate in the near term before we see a fresh fall.
Dow (27088.08, +227.88, +0.85%) surged breaking above 27000 and keeps our bullish view intact to test 27200 and 27500 on the upside.
DAX (12332.12, -41.29, -0.33%) fell further and is heading towards the 12300-12250 support zone as expected. We expect the DAX to reverse higher from this support zone and resume its overall uptrend targeting 12800-13000 over the medium term.
Nikkei (21653.13, +9.60, +0.04%) remains higher above 21500 and is inching higher towards 21700-21750 as expected. A strong break above 21750 will pave way for 22000 and 22250. But while 21750 holds, a sideways range move between 21500 and 21750 can be seen for some more time.
Shanghai (2919.28, +1.51, +0.05%) as expected is consolidation in a narrow range between 2900-2950. The bias is bullish for it to break 2950 and rise to 3000 in the coming days.
Contrary to our expectation for a fall Sensex (38823.11, +266.07, +0.69%) and Nifty (11582.90, +84, 0.73%) have risen yesterday. However the price action indicates lack of strength in the upmove which leaves the broader view negative. Sensex and Nifty can consolidate for some time in the range of 38400-39100 and 11450-11650 respectively. Thereafter they can fall to 38100-38000 (Sensex) and 11400-11350 (Nifty) in the coming weeks.
COMMODITIES
Weak dollar continues to keep the commodity prices higher. Commodities like gold, silver and copper can consolidate in the near term before moving further higher. Oil on the other hand looks positive in the near term and can inch higher.
Gold (1408) has come-off sharply from 1427. As mentioned yesterday gold can consolidate between 1380 and 1440 for some time. A strong break above 1440 is needed to trigger a fresh rally going forward.
Silver (15.15) is getting support near 15.10 and can rise to 15.40-15.50 as mentioned yesterday. A break above 15.50 take it further higher to 15.70. But a pull-back from 15.50 can take it down to 15-14.90 and keep it range bound between 14.90 and 15.50 for some time.
Copper (2.69) remained higher and stable. As mentioned yesterday, while above 2.65 a sideways consolidation between 2.65 and 2.70 is possible in the near-term with the bias being bullish to break the range on the upside and rise to 2.73-2.75.
Brent (66.93) tested 67.7 as expected and has come-off from there. However, the support at 66.40 is holding well and keeps the near-term outlook positive to test 68-68.25 on the upside.
Nymex WTI (60.59) can rise to 62 in the near-term while it remains above 59.50. As mentioned yesterday, a strong break above 61 will trigger this rise.
FOREX
Dollar continues to remain weak as the rate cut expectations continue to weigh on the greenback. The Euro, Aussie, Yen and Pound looks strong in the near-term for further rise. Dollar-Rupee can trade between 68.25 and 68.50 with the broader bias being negative to test 68 on the downside eventually.
Dollar Index (96.95) seems to be lacking strength and looks vulnerable to break its support at 96.75 and fall to 96.5 and 69.25 in the coming sessions.
Dollar-Yen (108.35) has bounced sharply but the resistance at 108.5 is holding well as expected. This keeps our bearish view intact for a fall to 107 in the coming days. A decisive break below 108 will trigger this fall.
Euro-Yen (122.07) has bounced negating the dip to 121.3-121 expected yesterday. The cross remains mixed within its broad 121-123.5 and has equal chances of moving towards either end of the range from current levels.
The pull-back from 0.6980 on the Aussie (0.6989) that was expected yesterday seems to be not happening. Aussie looks bullish in the near-term to test 0.7025 on the upside.
Pound (1.2539) sustains above 1.2500 and can rise to 1.2600 as mentioned yesterday. Thereafter the broader downtrend is likely to resume
USDCNY (6.87) fell to 68.30 breaking below 68.50 as expected yesterday. It can remain range bound between 68.25-68.50 in the near term. The upside can extend to 68.60-68.75 in case of a break above 68.50. However, the broader view remains bearish to test 68 on the downside eventually.
INTEREST RATES
The US Treasury yields were mixed yesterday. Pick up in the US inflation saw the far-end yields moving higher while the near-end failed to cheer the data. The US Core-CPI rose 2.13% (YoY) for the month of June from 2% in the previous month. The Federal Reserve Chairman on Wednesday in his testimony had said that inflation is likely to remain weak that could pave way for a more accommodative policy. So the inflation picking up in June could be short-lived which will keep the possibilities high of a rate cut coming from the Fed in the near future.
The US 10Yr (2.13%) and 30Yr (2.65%) jumped 3bps and 6bps respectively following the inflation data while the 2Yr (1.86%) and 5Yr (1.89%) fell 7bps and 2bps respectively. The dip in the yields which we were expecting yesterday seems to be not happening. The 30Yr looks may rise further to 2.70% and 2.75% while it remains above 2.60%. The 10Yr on the other hand has room to test 2.20% or even higher levels.
The German yields fell in the near-end while the far-end continues to move higher as expected. The 2Yr (-0.74%) and 5Yr (-0.58%) were down 2bps and 1bps respectively while the 10Yr (-0.23%) and 30Yr (0.36%) were up 6bps and 3bps respectively. The 30Yr has resistance near current levels and can come dip to 0.30% and 0.28%. The 10Yr however has little room on the upside to test -0.20% and -0.18%.
The 10Yr GoI (6.4926%) has dipped further as expected and is hovering above a crucial support level of 6.48%. A break below 6.48% can take the 10Yr GoI further lower to 6.35% in the near-term.
