STOCKS
Equity markets seem to remain cautious ahead of the US-China trade talks this week. Dow and DAX look weak and have room to fall in the near term. Shanghai and Nikkei are hovering around a key support and are mixed in the near term. Sensex and Nifty are coming closer to their crucial supports which have to hold in order to avoid further fall.
The Dow (26164.04, -313.98, -1.19%) has failed to sustain above 26500 and is bearish to test 26000 and 25800 in the coming days. A strong rise past 26500 is needed to turn the outlook positive.
DAX (11970.20, -127.23, -1.05%) has come-off below 12000 again and keeps our bearish view intact to test 11800 and 11600.
Nikkei (21434.50, -153.28, -0.71%) oscillates around the key support level of 21500 and looks mixed in the near term. A strong break below 21250 will be bearish for it to test 21000 and even 20750 in the coming days. A strong rise past 21750 is needed to bring back the bullishness.
Shanghai (2918.96, +5.39, +0.18%) has support in the 2900-2885 region and resistance at 2935. A breakout on either side of 2885 or 2935 will decide whether the index will fall to 2850 or rise to 2970-3000 in the short term.
Sensex (37531.98, -141.33, -0.38%) and Nifty (11126.40, -48.35, -0.43%) are closer to their crucial support levels of 37500 and 11050. We expect the indices to bounce from their respective supports. We will be watching it carefully as a break below 37500 on Sensex and 11050 on Nifty will bring fresh bearishness to the indices.
COMMODITIES
Commodities continue to be under economic pressure. Gold looks bearish while Copper has limited room on the upside. China returns from its week long holiday and could aid some trade in commodities. Crude could trade sideways for the next 2-3 sessions.
Gold (1510.60) is holding the channel resistance on the daily candles and could re-test support near 1480 today. A break on the downside would be supportive of a fall towards 1460-1450 levels. Else some sideways consolidation is possible within 1480-1520 in the near term before Gold falls further.
Silver (17.79) is trading below resistance near 18 and while that holds, Silver could fall back towards 17 in the next 2-3 sessions.
Copper (2.5725) is trading higher as the metal saw some buying after traders in China returned after a week long holiday. Copper has scope towards 2.6250-2.65 on the upside which are two important resistances above current levels. Medium term could see rejection from either of the above mentioned resistances to drag the price down towards 2.5250-2.50.
Brent (58.08) is stable while WTI (52.45) has come down a bit. WTI has immediate resistance at 54 and crucial support at 51. While medium term could see a rise towards 56 as support at 51 is expected to hold well; there could be some sideways consolidation in the 54-51 region just now. Brent could dip towards 56 while below 60. Near term trade between 56 and 60 is possible for the rest of the sessions this week.
FOREX
Dollar Index (99.08) is holding above 98.50 and has seen a decent bounce. It would be important to see if it sustains above 99 and rises towards resistance near 99.60-99.75 again in the medium term. View is bullish above 98.50
Euro (1.0965) faces selling near 1.10 and is finding difficulty to break above 1.10 just now. Further rise in Dollar Index could make 1.10 stronger for Euro and drag the currency towards 1.09 in the near term.
Dollar-Yen (107.17) has immediate resistance at 107.50 and higher at 108. While the resistances hold, Dollar-Yen could see a fall towards 106.50 again in the near term. Possible trade within 106.50-108.00 looks likely.
The support in the 117.10-117 is holding well on the EUR-JPY (117.50) and the pair could rise towards 119 in the near term before falling off from there. While the currency pair rises, our earlier expected fall towards 116 could be delayed.
Aussie (0.6741) could test 0.6780 before falling from there. Broad range of 0.6650-0.68 region holds for Aussie.
Pound (1.2216) fell sharply on tension that looms Brexit as UK does not seem to be any closer to a Brexit deal. Note 1.22 is immediate support on the charts and if that holds, we may see a rise back towards 1.24 in the near term.
The USDCNY (7.1465) is stable above 7.10 and has scope to rise towards 7.17/18 before coming down form there in the medium term. As mentioned earlier, only a break below 7.10, we may look for bearishness in Dollar-Yuan.
Dollar-Rupee (71.03) has room to test 71.25 on the upside before falling towards 70.75. For today we may possibly see a fall towards 70.85/80 if 71.10/15 holds just now.
INTEREST RATES
Yields continue to trade subdued. The comment from the Fed Chairman that the central bank would expand its balance sheet seems to have not impacted the market as of now. The US Treasury yields, though can see some uptick in the near-term, remains broadly bearish. The German yields also keep the bearish view intact. The 10Yr GoI has a key resistance ahead and while it holds, the yield can fall in the coming days.
The US 2Yr (1.42%), 5Yr (1.36%), 10Yr (1.54%) and 30Yr (2.04%) are up 2 bps each . The support at 1.50% on the 10Yr mentioned on Monday is holding well. While above 1.50%, a corrective rise to 1.60%-1.63% is possible in the near-term before we see a break and fall below 1.50% targeting 1.45% on the downside. The 30Yr has resistance in the 2.10%-2.13% region and can dip to 1.95% in the near term.
The German 2Yr (-0.80%), 5Yr (-0.81%), 10Yr (-0.60%) and 30Yr (-0.08%) have dipped across tenors. The view remains bearish and as mentioned earlier, the 2Yr and 5Yr can test -0.90% while the 10Yr can fall to -0.68% and -0.73%. The 30Yr can consolidate before seeing a fresh fall.
The 10Yr GoI (6.6763%) seems to lack strength to breach 6.70%. While 6.70% continues to hold, a fall to 6.55%-6.53% is possible in the coming days. A strong rise past 6.70% will negate the bearish view and will then pave way for a rise to 6.80%.
