STOCKS
The relief rally in the global equities witnessed towards the end of last week seems to be losing momentum as the fear of the US-China trade war is continuing to weigh on the markets. As mentioned on Friday, the bias is still negative and the indices are likely to resume their broader downtrend going forward.
Dow (25897.71, -389.73, -1.48%) has failed to sustain the bounce witnessed towards the end of last week and has declined below 26000 again. The bearish outlook is intact for it to test 25500 and 25000-24950 in the short term.
DAX (11679.68, -14.12, -0.12%) has come-off below 11800 again. This has brought back the bearish view for the fall to 11350-11300 into the picture once again. A break below 11550 can accelerate the fall.
Nikkei (20426.61, -258.21, -1.25%) has come-off thereby reducing the chances of the rise to 21000. While below 21000, the outlook is bearish to test 20000-19900 on the downside in the coming days.
Shanghai (2800.42, -14.57, -0.52%) is not gaining strength to rise past 2800 decisively and looks mixed in the near term. Support is at 2770 which has to hold in order to keep the chances alive for seeing a rise to 2850 in the near term. A break below 2770 can bring renewed pressure and drag the index lower to 2730-2700.
Sensex (37581.91, +254.55, +0.68%) and Nifty (11109.65, +77.20, +0.70%) tested their resistances at 37800 and 11180 respectively as expected and has come-off from there on Friday. While these resistances hold, the Sensex can fall back to 37000-36500 and the Nifty can revisit 11000-10800 levels in the coming days.
COMMODITIES
Brent (58.45) and Nymex WTI (54.84) have both risen from respective supports near 55 and 51. WTI could test 56-57 on the upside while Brent may rise towards 60-61 in the near term. Crude prices loo bullish for the next 1-2 weeks.
Gold (1527.30) now faces support near 1500 which sees to be holding well. At the sae tie there is resistance o the longer ter charts near current levels. A break above 1530 could be bullish for Gold triggering a sharp rise towards 1586, the 61.8% retracement of the fall from 1920.70 (Sep’11) to 1060.20 (Dec’15). Upside is likely to be limited to 1586.
Silver (17.27) has risen from 16.8 which could act as the near term support just now. On the upside 17.30/35 could be a decent resistance that could keep the prices stable within 17.30-16.8.
Copper (2.5875) has dipped from levels above 2.60. Note that 2.65 could be a near term resistance and while that holds, we could see some sideways trade between 2.65-2.55 region. 2.55 is a crucial levels. A break or bounce fro here would decide the medium to long term direction for Copper.
FOREX
US-China tensions continue to weigh on the markets as major currency pairs could breach support/resistance levels.
Dollar Index (97.58) is stable near levels. Immediate support is seen near 97.21 which seem to be holding now. It would be important to see if the index manages to rise past 97.75-98.00 in the near term.
Euro (1.1193) saw some fluctuation yesterday but has been broadly trading within the 1.1150-1.1250 region. In case the Dollar Index falls below support near 97.21, it could trigger a rise in Euro towards 1.1250 and higher. For now we may see ranged trade for the next 1-2 sessions.
Dollar-Yen (105.47) has fallen below 105.5 and could test 105 on the downside before bouncing back from there. Failure to bounce from 105 would be indicative of bearishness for the medium term that could drag the currency pair lower. We would wait to see price action near 105.
Euro-Yen (118.06) is likely to see range trade within 116-120 for the near term. A break on either side of the mentioned range would indicate further direction for the longer run.
Aussie (0.6761) has immediate support near 0.6750 and while that holds we could see a rise in the near term towards 0.68/69. Very near term looks bullish.
Pound (1.2065) has immediate support at 1.20 which has some chances of breaking on the downside targeting 1.15 in the longer run. We would watch price action near 1.20.
USDCNY (7.0640) could rise towards 7.10 in the coming sessions and loos bullish on the charts.
USDINR (70.81) could see a break on the upside soon. The current sideways consolidation is likely to remain short lived within 70.40-70.90 with an eventual break above 71 to be expected soon. Note that the NDF rate trades near 71.26 and could be indicative of a weaker Rupee on the OTC market too.
INTEREST RATES
Fear of the US-China trade war getting further worse and worries about the global growth are continuing to keep the market highly risk averse. As a result the bond yields are getting beaten down badly. The US Treasury yields have resumed its fall as expected after a slight bounce of Friday. The outlook remains bearish and the Treasury yields have room to fall further. The German yields continue to move down and keeps the bearish view intact. The 10Yr GoI has inched higher as expected and can move further up to test a key resistance.
The US 2Yr (1.59%) Treasury yield was down 5bps while the 5Yr (1.49%), 10Yr (1.65%) and the 30Yr (2.14%) tumbled 9bps, 10bps and 12bps respectively. The 2Yr will have resistance now at 1.75% and can fall below 1.5% targeting 1.25% on the downside in the short term. Similarly the 10Yr can test 1.3% and the 30Yr can see 1.9% on the downside in the coming days.
The German yields fell across tenors. The 2Yr (-0.89%) and 30Yr (-0.10%) were down 3bps each while the 5Yr (-0.84%) and 10Yr (-0.59%) were down 2bps each. The outlook remains bearish. The 10Yr has resistance at -0.48% and can tumble to -0.83% in the coming weeks.
The 10Yr GoI (6.4932%) has risen breaking above 6.44% as expected. The near-term bullish view is intact. A test of 6.50% and 6.56% is possible in the coming sessions. The level of 6.56% is a crucial resistance which needs a close watch. A pull-back from there can continue to keep the 10Yr GoI in the sideways range of 6.25% and 6.56%.
