STOCKS
The rally in the Dow is gaining momentum and is retaining our bullish view intact. DAX is heading towards a key support and can reverse higher again. Shanghai continues to trade sideways and the bias remains bullish to see an upside break of this range. India’s Sensex and Nifty can consolidate before falling further.
As expected Dow (27332.03, +243.95, +0.90%) has surged breaking above 27000 and is heading towards 27500 in line with our expectation. A pull-back to 27200-27000 is possible before the current rally extends targeting 28000.
DAX (12323.32, -8.8, -0.07%) remains subdued and is inching lower to test the 12300-12250 support zone. We expect the DAX to bounce from this support zone and resume its overall uptrend targeting 12800-13000 over the medium term.
Nikkei (21685.90) is closed today on account of a public holiday.
Shanghai (2925.50, -5.05, -0.17%) continues to consolidate between 2900 and 2950 as expected. We retain our bullish view and expect the index to breach 2950 and rally to 3000 in the coming days.
Sensex (38736.23, -86.88, -0.22%) and Nifty (11552.50, -30.40, -0.26%) struggles to gain momentum. The broader bias is bearish. However, the indices can consolidate sideways in the range of 38400-39100 (Sensex) and 11450-11650 (Nifty) before targeting 38100-38000 (Sensex) and 11400-11350 (Nifty) on the downside.
COMMODITIES
Commodities like gold, silver and copper are consolidating. The recent upmove in oil seems to be losing steam and pull-back looks possible in the coming days.
Gold (1408) sustains above 1400 and remains mixed in the near term. As we mentioned earlier, gold can consolidate in a broad range of 1380 and 1440 for some time before we see a fresh rally towards 1460 and higher levels.
Silver (15.17) on the other hand can trade between 14.90 and 15.50.
Copper (2.70) can consolidate between 2.60 and 2.75. Within this range, the near-term view remains bullish to test 2.73-2.75 on the upside.
Brent (66.48) is struggling to rise past 67 decisively. While below 67, a fall to 65 and 64.5 is possible in the coming days. The possibility of a rise to 68 that we were expecting last week seems to be reducing now.
Nymex WTI (59.90) can dip to 59 in the coming sessions. A strong rise past 61 is needed to bring back the bullish view of testing 62 on the upside which we were expecting last week.
FOREX
Dollar can see an intermediate bounce but could be short-lived and the weakness is likely to come back again. The majors like the Euro, Aussie, Yen and Pound continue to remain bullish in the near term. Dollar-Rupee has risen above the key resistance level of 68.60 and can test 68.80 on the upside.
Dollar Index (96.85) can find support at 96.70 and see an intermediate bounce to 98. But the upside is likely to be capped at 97 and the index can reverse lower again targeting 96.50 and 96.25 on the downside.
Euro (1.1266) has been oscillating around 1.1250. The bias on the chart is bullish to test 1.1300 and 1.325. As mentioned earlier, a break above 1.1285 will trigger this rise.
Dollar-Yen (107.95) has bounced but has strong resistances at 108.25 and 108.50 which can restrict the upside and keep the pair pressured on the downside to test 107.5 and 107 on the downside in the coming days.
Euro-Yen (121.69) remains mixed within its 121-123.5 sideways range and can fall to the lower end of this range if it breaks below 121.5.
Aussie (0.7026) has risen towards 0.7025 as expected and remains bullish to test 0.7060 on the upside.
Pound (1.2550) has moved further higher and is heading towards 1.2600 as expected. We expect the current corrective fall to halt in the 1.2600-1.2625 region and the broader downtrend can resume thereafter.
USDCNY (6.8771) has resistance at 6.88 which can cap the upside and drag the pair lower to 6.86 again. As we have been mentioning, while below 6.88, the outlook is bearish to test 6.84-6.83 on the downside in the coming days.
Dollar-Rupee (68.6850) can test 68.80 on the upside from where a pull-back to 68.50 is possible. But a break above 68.80, if seen immediately will pave way for 69 and even 69.25.
INTEREST RATES
The US Treasury yields have risen across tenors as it is getting support from the inflation numbers released last week. The German yields are trading mixed. The yields at the near-end remains subdued while the far-end are moving higher. The Indian 10Yr GoI lacks momentum and looks vulnerable for further fall.
The US Treasury yields have risen sharply across tenors on Friday. Following the rise in Core-CPI numbers on Thursday, the Core-PPI numbers released on Friday provided additional support for the yields. The Core-PPI increased 0.34% (MoM) in June from 0.17% a month ago while the YoY dipped slightly to 2.25% from 2.26% over the same period.
The US 2Yr (1.85%) and 5Yr (1.87%) Treasury yields were up 4bps and 5bps respectively while the 10Yr (2.12%) and 30Yr (2.65%) were up 7bps each. The Treasury yields can rise further in the near term. The 10Yr can test 2.20% and 2.25% while the 30Yr can test 2.70%-2.75% on the upside in the coming weeks.
The German yields continue to trade mixed. The yields continue to dip in the near-end while on those at the far end are moving higher. The 2Yr (-0.75%) and 5Yr (-0.58%) have dipped slightly while the 10Yr (-0.21%) and 30Yr (0.38%) have moved up. The yields at the far end can move further higher in the coming days. The 10Yr can test -0.15% and -0.13% while the 30Yr has room to surge towards 0.50% in the coming weeks.
The 10Yr GOI (6.4880%) seems to lack momentum to bounce-back above 6.50% decisively. This leaves the broader picture negative. Resistance is at 6.54% and while below it the 10Yr GOI can test 6.35% on the downside in the coming days.
