STOCKS
Equities remain mixed. Dow is stuck in a narrow range. DAX has moved up but has a very crucial resistance ahead which has to be broken to retain the upmove. Nikkei looks relatively bullish than others in the lot. Sensex and Nifty are likely to remain range bound.
The Dow (26916.83, +96.58, +0.36%) is stuck in between 26700 and 27100 and need to see a breakout on either side to give a cue on whether it is going down to 26500-26400 or moving up to 27500-27600.
DAX (12428.08, +47.14, +0.38%) has risen and is coming closer to a crucial resistance level of 12500 which needs to be broken to move further higher. A strong break above it can test 12650-12700 initially. A further break above 12700 may open doors for a test of 13000 going forward
Nikkei (21920.19, +164.35, +0.76%) has bounced-back and looks bullish to test 22500 on the upside. A break above 22000 can accelerate the rally. Strong support is around 21500.
Both Sensex (38667.33, -155.24, -0.40%) and Nifty (11474.45, -37.95, -0.33%) retains their respective range of 38500-39250 and 11400-11700. They can continue to trade within this range for the next few days.
The Chinese markets are closed from today for the rest of the week.
COMMODITIES
After breaking immediate support levels, almost all commodities look weak for the near term. Continued rise in the US Dollar is keeping commodities low. While this week could see lower trades for major commodities, we may expect a short corrective bounce by next week.
Gold (1474.50) has broken below the crucial support near 1480 (in line with our most preferred view) and while the price continues to move down, we may consider a test of 1450-1430 or even 1400 in the near term. View is bearish for the rest of the week.
Silver (17.00) has been falling in line with our expectation and unless an immediate bounce from current levels is seen, the price could continue to drop towards 16.50-16.00 from where a short corrective rise could be expected. Bears seem to be strong just now.
Copper (2.5570) has immediate resistance near 2.6250 and has broken below our mentioned support at 2.57. Near term looks bearish with a possible test of 2.53-2.50 from where a bounce could be expected.
Brent (59.72) has broken below 61 and could be headed towards 58, which is an important support as seen on the 3-day candles. View is bearish while below 63. A bounce from 58 is preferred in the medium term.
WTI (54.55) has broken below 55 as expected and could now head towards our lower target of 52.50 in the coming sessions. View is bearish just now.
FOREX
Dollar index is gaining strength and is heading towards a crucial resistance which can cap the upside and trigger a reversal. Euro looks weak to dip further and test 1.0840-1.0830. Dollar-Yen keeps the bullish view intact. Pound and Aussie remain bearish. USDCNY is moving higher to test 7.16 in line with our expectation. Dollar-Rupee can move further higher on the back of strong dollar.
Dollar Index (99.43) has risen past 99.30 and can now test 100-100.10. However, the region between 100-100.10 is a strong resistance which is expected to hold. A strong reversal from there may have the potential to drag the index lower to 98 and 97 going forward. We will have to watch it closely.
Euro (1.0895) has dipped below 1.09 and remains pressured on the downside. A test of 1.0840-1.0830 looks likely in the coming days while the pair remains below 1.0950. Thereafter a corrective rally to 1.0900-1.0930 is possible..
The support at 107.80 on the Dollar-Yen (107.18) mentioned yesterday has held very well and the pair has bounced from the low of 107.74. The bullish outlook is intact to test 108.50 and 109 on the upside.107.90 can be a good intraday support for today.
The EUR-JPY (117.82) is managing to hold above 117.50 and remains mixed between 117.50 and 118.50. We need to wait for a breakout on either side of 117.50 or 118.50 to get a clear cue on the trend.
Aussie (0.6748) remains stuck in between 0.6740 and 0.6780. We keep our bearish view intact on the pair to test 0.6720 and even 0.6700 in the coming days.
Pound (1.2280) failed to sustain the break above 1.23 witnessed yesterday and has come-off sharply from the high of 1.2346. The outlook remains bearish to test 1.22 in the near term. As mentioned yesterday, the possibility of revisiting even 1.20 on the downside cannot be ruled out in the coming days while Pound remains below 1.24.
USDCNY (7.1483) has risen past 7.14 and is heading towards 7.16 in line with our expectation. The upmove can extend upto 7.17 after which an intermediate dip to 7.14 is possible. From a medium-term perspective, the current upmove may have the potential to take the pair to 7.20 and even higher.
As expected, the Dollar-Rupee (70.8750) has reversed sharply after testing 70.34. It can move further higher to 71.09 and 71.16 today on the back of strong dollar. However, the fall in crude and gold prices may limit the upside going forward and is expected to drag the Dollar-Rupee lower again.
INTEREST RATES
The US Treasury yields remain lower and keep the bearish view intact. And so does the German yield which have dipped further and remains bearish to fall further. The 10Yr GoI can break 6.70% and fall to 6.64%-6.60% in the near term.
The US 2Yr (1.63%), 5Yr (1.56%), 10Yr (1.68%) and 30Yr (2.13%) remain subdued. We continue remain bearish on the yields. The 10Yr can fall to 1.57% and the 30Yr can test 2% on the downside in the short term.
The German yields 2Yr (-0.78%), 5Yr (-0.78%) and 10Yr (-0.58%) have dipped slightly while the 30Yr (-0.08%) has inched slightly higher by 3 bps. However, the broader picture remains bearish and the 30Yr can fall to -0.20% in the coming weeks. The 10Y on the other hand can test -0.68% on the downside.
The 10Yr GoI (6.7016%) has dipped yesterday and looks likely to break 6.70% and fall to 6.64%-6.60% in the coming days.
