STOCKS
The rally in equities have taken a pause on doubts about the partial deal struck between the US and China last week. The news on China wanting for another round of talks before signing the first phase of deal has stalled the rally in the global equities. However, the broader picture still looks positive and need to be seen if the indices like the Dow, DAX and Shanghai can hold above their near-term supports.
Dow (26787.36, -29.23, -0.11%) remained lower but stable. The view remains the same. While above 26500, the outlook is bullish to see 27250-27300 and even 27500 on the upside. A strong break above 27000 can accelerate the rally.
The support at 12400 on DAX (12486.56, -25.09, -0.20%) mentioned yesterday is holding as of now. As mentioned yesterday 12400 has to hold in order to keep the bullish view alive of seeing 13000-13200 on the upside and negate the view of seeing 11800-11600 on the downside that we have been expecting all-through last week.
Nikkei (22171.15, +372.28, +1.71%) has risen past 22000. As mentioned earlier, this break above 22000 will pave way for a test of 22500-22700.
Shanghai (2993.97, -13.92, -0.46%) has come-off from its high of 3026.38 yesterday and dipped below 3000 today. There is some support in the 2980-2975 region which is likely to hold and take the index higher to 3050 in the near term.
Sensex (38214.47, +87.39, +0.23% failed to sustain the break above 38500. While below 38500, it can continue to remain range bound between 37500-38500 for some more time. A strong rise past 38500 is needed to boost the momentum and target 39000-39250 on the upside
Similarly, Nifty (11341.15, +36.10, +0.32%) has to rise past 11400 to turn bullish for a rise to 11600. While below 11400 it can remain range bound between 11100 and 11400.
COMMODITIES
Commodities have seen a decent dip yesterday and look bearish for the near term with scope of some more dip over the next couple of sessions. While Gold and Silver have some room on the downside, fall in Crude prices could be limited to 1-2 sessions before bouncing back. Copper looks bearish for the near term.
Brent (59.13) and WTI (53.38) have come off from 60.73 and 54.80, which are slightly below the resistances mentioned near 61.30 and 55. The dip is likely to be short lived for the next 2-3 sessions before the prices bounce. The current dip could be limited to 59 and 53 on the downside for Brent and Nymex WTI respectively.
Gold (1497.90) trades lower and has scope of falling towards 1460/50 in the near term while the price remains below 1500. Interim support at 1480 is holding for now but is likely to break on the downside.
Silver (17.72) is also trading below resistance at 18 and while that holds, there is room for a fall towards 17.0-16.5 in the coming sessions.
Copper (2.6290) has come off from 2.64, lower than the daily trend resistance mentioned at 2.65. Price looks bearish for the near term with possibility of a fall towards 2.55. Only on a sustained break above 2.65, we may have to look for a fresh upmove towards 2.70. We repeat from yesterday’s comment: preference is for a fall towards 2.55 while below 2.65.
FOREX
Dollar Index (98.44) is almost stable. There are a cluster of interim supports near 98.25-98.00 region and while that holds, Dollar Index could trade sideways for a few sessions in the 98-98.75 region before deciding on further directions. On the 3-day and weekly chart, the index looks bearish for the medium term with scope of falling towards 97.50-97.00. While the medium term view is bearish, we may look for sideways movement in the 98.00-97.75 region just now.
Euro (1.1029) is also stable just now and has scope of rising towards 1.11-1.1125 in the medium term. 1.1050 could act as an interim resistance just now and produce a slight rejection towards 1.10.
Dollar-Yen (108.31) was closed yesterday. The rise in Nikkei (refer to stocks section above) could help Dollar Yen rise a bit from current levels but resistance near 108.50 needs to be watched. Unless 108.50 breaks on the upside, we may continue to look for a rejection towards 108-107.75.
EUR-JPY (119.47) has immediate resistance at 120 and it is crucial to see if the currency pair holds below 120 or manages to break on the upside. Preference is for 120 to hold as a decent resistance producing a rejection towards 118.80.
Aussie (0.6773) is holding well below 0.68. A sustained rise above 0.6811 is needed to pull up Aussie towards 0.69; hence while below 0.68, Aussie could see some fall towards 0.6750 just now.
Pound (1.2614) has fallen from levels above 1.27 in the last couple of sessions where the market has shot up quite a bit on hopes of a deal cracking between the UK and the EU. While Pound is expected to remain volatile this week, we may expect trade below 1.2650 unless any outcome is derived upon.
The USDCNY (7.0713) would be important to watch if it continues to trade below 7.10 or moves higher towards 7.12. While below 7.10, there could be chances of some pull back towards 7.05/01 in the near term.
Dollar-Rupee (71.23) closed at very important level yesterday and it would be crucial to see if it sustains a rise above 71.25 today. A break on the upside would trigger a rise towards 71.30/50 in the near term. Preference would be a rejection from 71.25 taking the pair down to 71 or lower.
INTEREST RATES
The US Treasury yields have dipped slightly but key supports may limit the downside in the near-term. The German yields remain stable and can move higher. The 10Yr ((06.45 GS 2029) GoI can dip to test its support before bouncing higher again.
The US 2Yr (1.56%) was down 3 bps while the 5Yr (1.52%), 10Yr (1.69%) and 30Yr (2.16%) have dipped 4 bps each. The 10Yr and 30Yr have support at 1.64% and 2.14% – 2.10% respectively. While these supports hold, the near-term outlook is positive to test 1.75% (10Yr) and 2.25% (30Yr) in the near term. A further break above 1.75% will see the 10Yr moving further higher to 1.85%-1.87% and the 30% can rise to 2.30%-2.35 on a break above 2.25%.
The German 2Yr (-0.72%), 5Yr (-0.69%), 10Yr (-0.46%) and 30Yr (0.07%) remained stable at the near-end while those at the far-end dipped slightly. The near-term view remains positive. The 10Yr can test -0.33% on a break above -0.4%. The 30Yr can rise to 0.30% while it remains above 0.06%.
The 10Yr (07.26 GS 2029) GOI (6.6770%) failed to sustain above 6.70% and can test its support at 6.62% from where a bounce is possible again.
The Indian 10Yr (06.45 GS 2029) GoI has closed lower at 6.4841% yesterday as compared to 6.51%% on Friday.
