STOCKS
There is a possibility that a number of global indices may go into range trade mode for the rest of the month, ahead of the start of new US tariffs on China on 1st September. As mentioned yesterday, we are in “No Man’s Land”.
For instance, the Dow (25962.44, -0.66%) was unable to sustain Monday’s rise and dipped back yesterday. Overall, it seems like the market is getting into a knot in the 25500-26500 region.
A similar picture is seen on the Nifty and Sensex in India and on the Nikkei in Japan. In particular, decent chances of seeing a dip to 10920-10900 on the Nifty (11017, -0.33%), perhaps to be followed by range trade within 10870-11080 for a few days. The 21-day MA Resistance at 37441 on the Sensex (37328.01, -0.20%) held well yesterday and as such there can be a danger of a fall to 36500. At the same time, there is Support seen at 37000 on the 13-day Candles. So, it’s a wait and watch just now.
The Nikkei (20603, -0.38%) also shows signs of getting into a range trade between 20200-20800 for some days. In the bigger picture, a rise past 21000 (if seen), will be bullish.
The picture is different for China, however. The mentioned Resistance at 2905 on the Shanghai (2875.44, -0.15%) is holding well and while so, there can be a dange of a fall towards 2700 over the medium term.
Over in Europe, the DAX (11651.18, -0.55%) was unable to move higher yesterday and dipped instead. Intra-day Support seen near 11590-11550 today within a range of 11500-800.
COMMODITIES
Gold and silver have moved back higher but has to surpass a key resistance to sustain this bounce-back move and avoid further fall. Copper has dipped and remains bearish for further fall. Oil is coming near a key resistance which is likely to hold and drag the price lower.
Gold (1504) has bounced above 1500. However it has to breach the 1507-1510 resistance zone in order to negate the corrective completely the fall to 1480-1473 mentioned yesterday. In such a scenario, a rise to 1520-1528 is possible.
The support at 16.8 on Silver (17.12) has held very well. But a strong rise past 17.2 is needed move further higher towards 17.4. While below 17.2 a fall to 16.8 can be seen again in which case silver will remain vulnerable to break 16.8 and fall to 16.7-16.6
Copper (2.58) has dipped below 2.60. The bearish view is intact to test 2.55 in the near term. An eventual break below 2.55 will then drag copper further lower to 2.50 in the short term.
Brent (60.18) seems to lose momentum as it approaches the 60.50-60.75 resistance region. We expect this resistance zone to hold and Brent can fall back to 59-58 again in the near term. In case if it manages to breach 60.75 decisively, the fall to 59-58 will get negated and a further rise to 61.7 and 62 can be seen.
WTI (56.28) has resistance at 56.5 which has to be broken to see further rise to 57.50. While 56.5 hold, a fall to 55-54 is possible.
FOREX
Dollar has come-off and can dip further in the coming sessions. Euro has risen above its resistance and can rise further if it sustains higher. Dollar-Yen, Euro-Yen and the Aussie remains mixed and can remain range bound. Pound is coming closer to a key resistance. USDCNY has come-off and can dip further. USDINR is has key resistances ahead which might halt the current upmove.
The resistance at 98.5 on the Dollar Index (98.16) mentioned yesterday seems to be holding well. A dip to 97.90-97.80 looks likely in the near term while the index remains below the 98.25-98.30 resistance zone.
Euro (1.1100) is getting support near 1.1065 and has risen above the 1.1095 resistance which we had expected to cap the upside. The expected fall to 1.1030 seems to be not happening. If the Euro manages to sustain above 1.1095, a rise to 1.1125-1.1140 is possible in the coming sessions.
Contrary to our expectation for a rise, the Dollar-Yen (106.45) fell to 106.15 yesterday. However, it has bounce from there. The pair is trading mixed between 106.15 and 106.7 over the last couple of days. We expect it to trade in a narrow 106-107 range for some time within its broader 105-107 range. The expected rally breaking above 107 might not happen immediately and could get delayed.
EUR-JPY (118.16) looks mixed and can remain range bound between 117.5 and 118.5 in the near term. Within this range we expect it to rise to 118.5 and we see higher chances for it to break 118.5 and move further higher to 119.
Aussie (0.6778) retains its 0.6735-0.6835 sideways range and remains stable within it. As mentioned yesterday, breakout on either side of this range will determine the next move. We prefer to see an upside break above 0.6835 and a rise to 0.69-0.70 in the short term.
Pound (1.2171) has bounced sharply from its low of 1.2064 and is coming closer to the key resistance level of 1.22. It has to be seen if it can breach 1.22 and extend the corrective rally to 1.2250-1.2300.
USDCNY (7.0635) has come-off below 7.06. The resistance at 7.0685 seems to be holding well and has reduced the chances of an expected to 7.08-7.09 for now. While below 7.06, a fall to 7.045-7.04 is possible in the coming days.
USDINR (71.7075) surged towards 71.80 as expected. It has key resistances at 71.88 and 71.93 which might cap the upside and trigger a corrective fall 71.50. However, given the current volatility being seen over the last few days, we remain cautious as a strong break above 71.93 will pave way for further rise.
INTEREST RATES
The US Treasury yields have reversed lower again thereby indicating the resumption of the broader downtrend. The yields can decline further ahead of the US Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Market will be keen to hear from Powell on the central bank’s policy plans. The German yields have dipped further and keeps the broader bearish view intact. The 10Yr GoI can consolidate in a sideways range before moving higher again.
The US 5Yr (1.44%), 10Yr (1.56%) and 30Yr (2.05%) were down 3 bps, 4 bps and 6 bps respectively while the 2Yr (1.52%) remained stable. The resistance at 1.48% on the 5Yr has held well and the yield has reversed lower as expected. It has room to test 1.3% on the downside in the short-term. The 30Yr can break 2% and fall to 1.8% in the short term.
The German 2Yr (-0.92%) and 30Yr (-0.18%) yields were down 3 bps points each while the 5Yr (-0.91%) and 10Yr (-0.69%) were down 4bps and 5 bps respectively. The broader bearish view is intact and the 10Yr yield can target -0.83% on the downside.
The 10Yr GoI (6.5857%) can remain range bound between 6.52% and 6.65% for some time. Within this range, it can dip to 6.52% in the near term and then can bounce back towards 6.65% again.
