STOCKS
Trump remained relentless on China over the weekend and yesterday and as such, global Equity markets remain unsure whether to try and break above the range resistances mentioned last week, or to give up the attempt.
The Shanghai (2919, -5.02, -0.17%) trades a wee bit lower than Friday’s close of 2924.11 and well below 2950, which we see as the upper end of a range of 2950-2850.
Although Dollar-Yen (106.35) continues to trade relatively higher, the Nikkei (20634, +14.29, +0.07%) trades only moderately strong but below the relevant range resistance is 20800.
The USA was closed yesterday. The Dow (26403.28) had seen a high of 26514.62 on Friday, just above range resistance at 26500, but was unable to sustain the gains and fell back a bit. We have to see how the market behaves today.
In contrast to the other indices, yesterday the DAX (11967.50, +16.50) seems to have managed to rise past 11870, which we had reckoned to be range resistance. It looks like it has a Bull SHS, which can test 12100-200. Long-term Resistance seen at 12400.
Coming to India, the Nifty (11023.25) has important range resistance at 11100-200. It is reported to be trading lower near 10942 in Singapore today, presumably on the bad GDP data released on Friday. We will have to watch Support at 10800 today to see if it holds/ breaks. The Sensex 37332.79 may have Support at 37000-36750. But, it has to rise past 37750 at least to become bullish.
COMMODITIES
Commodities look broadly ranged. Gold and silver consolidates within their overall uptrend. Oil looks weak to dip in the near-term within its sideways range. Copper can consolidate sideways before we see a fresh fall.
Gold (1525) is managing to hold above the key support at 1519 mentioned earlier. While above this support, a rise to 1540-1550 is possible again. But a break below 1519 can take it initially to 1513 and then towards 1490.
Silver (18.39) looks mixed and is consolidating sideways between its support at 18 and resistance at 18.7. We will have to wait for a breakout of this range to get a clear cue on the next direction of move.
Copper (2.52) has come-off sharply after testing 2.60 and can dip to 2.50 in the near term. It can consolidate between 2.50 and 2.60 for some time with the broader bias being bearish to break 2.50 and fall to 2.35 over the medium term.
Brent (58.60) has come-off sharply from last week’s high of 61.20 and is hovering above 58. The 57.50-61.50 sideways range is intact and Brent can continue to consolidate within this range for some time. We expect it to break the range below 57.50 and fall to 56 and 54 in the short term.
WTI (54.81) faced strong resistance at 57 last week and has come-off sharply. The near-term view is negative for it to test 53 on the downside while it remains below 55.40.
FOREX
Dollar remains strong and has room to strengthen further in the coming days. Euro is coming near a crucial support which has to hold in order to prevent further fall. Aussie, Pound and Euro-Yen remains weak and are vulnerable to extend their downtrend in the coming days. Dollar-Yen can move up within its broad sideways range to test a key resistance. USDCNY has risen past a crucial resistance and can move further higher. USDINR can see a bounce on the back of dollar strength which could delay our preferred fall to 71.26.
Dollar Index (99.21) has surged breaking above 99 and looks strong. It has room to test 99.55-99.60 after which an corrective dip is possible before we see a test of 100-100.5 on the upside.
Euro (1.0945) is coming closer to a crucial support level of 1.0920-1.09 which will need a close watch. A bounce from there can ease the downside pressure and take the Euro higher to 1.0960-1.0975 in the coming sessions. A break below 1.09 can drag it to 1.0835-1.08.
Dollar-Yen (106.30) is holding above 106 and can move up to test its crucial resistance level of 106.7 which has to be broken for it to see a fresh rally. Broadly the pair has been range bound between 104.5 and 107 over the last one month.
As expected, EUR-JPY (116.30) cross has declined breaking below 117. Though there is support at 116, the bigger picture is weak for the cross to break 116 and fall to 114 in the short term.
Aussie (0.6704) has inched lower towards 0.6700 in line with our expectation. As being reiterated here, the pair looks weak to break 0.67 and fall even to 0.6635 in the coming weeks. Resistances are poised at 0.6715 and 0.6725.
As expected, Pound (1.2052) has tumbled breaking below 1.21. The outlook remains bearish. The pair can break 1.20 and fall further towards 1.1930 in the coming days.
USDCNY (7.1828) has risen above the crucial resistance level of 7.17 and can move further higher towards 7.20-7.2050 in the near term.
USDINR (71.4050) might come under pressure on the back of the broader dollar strength which could delay the expected fall to 71.26 mentioned on Friday. 71.69 is a key resistance which if broken can take the pair higher to 71.85 and even higher levels.
INTEREST RATES
US yields have been inching higher over the last few days. However, key resistances which are ahead can cap the upside and keep the broader downtrend intact. German yields continue to remain bearish and are moving down in line with our expectation. The 10Yr GoI is mixed.
The US 2Yr (1.52%) remains stable while the 5Yr (1.41%) 10Yr (1.53%) and the 30Yr (2%) have been moving higher over the last few days. The 10Yr has inched slightly above the 2Yr and need to see if it can sustain it and ease the fear of recession. The 10Yr has immediate resistance at 1.56% which has to be broken to see further rise to 1.60%-1.62%. A pull-back from 1.56% can drag it back to 1.45%.
The German yields, 2Yr (-0.94%) and 5Yr (-0.94%) have declined sharply by 6bps while the 10Yr (-0.71%) was down 2bps. The 30Yr (-0.17%) on the other hand continue to move up and can test -0.14% on the upside. The yields on the near-end continue to remain negative. The 5Yr is heading towards -1% in line with expectation. The 10Yr remains bearish to test -0.80% and even 0.90% on the downside.
The 10Yr GoI (6.5619) is holding above 6.55% and looks mixed. It needs to breach 6.61% decisively which can take it up to 6.65% again. A break below 6.55% on the other hand can drag it to 6.50% and even 6.45% again.
