STOCKS
Equities broadly remain positive. While the Dow may see an intermediate dip before a fresh rise, DAX and Nikkei continue to look strong. Shanghai may test a crucial support which needs to hold to keep the outlook positive. Sensex and Nifty are bullish.
Dow (26827.64, +57.44, +0.21%) has struggled to rise past 27000 decisively all through last week. Though the broader picture is positive, while below 27000, a dip to 26500 is possible before we see a fresh rise to 27250 and 27500.
DAX (12747.96, +114.36, +0.91%) has risen above 12700, the level which was restricting the upside last week. . The bullish outlook is intact to test 13000-13200 in the coming days. Support is at 12500.
Nikkei 22548.90, +56.22, +0.25%) is stuck in between 22400 and 22650 over the last few days. The broader view remains positive. A strong rise past 22650 will see the uptrend resuming towards 22700 and 23000.
Shanghai (2938.61, -1.01, -0.03%) remains lower after the sharp fall on Friday. It is likely to test 2900 which is a crucial support to watch. Shanghai has to hold above 2900 in order to keep the possibilities alive of seeing 3050 on the upside that we have been expecting.
Nifty (11661.85, +75.50, +0.65%) has risen above 11600 and is bullish. It can target 12000 in the coming weeks while it sustains above 11600. Intermediate resistance is at 11700 a break above which can accelerate the rally.
Sensex (39298.38, +246.32, +0.63%) on the other hand can revisit 40000 levels while it sustains above 39200. Intermediate resistance for the Sensex is at 39550.
COMMODITIES
Commodities except Copper are trading below immediate resistance levels and while that hold, we could see a dip in the near term. Watch resistance near 2.65 on Copper, a break on the upside could be bullish.
Brent (58.93) and WTI (53.49) have dipped slightly from yesterday’s high and could remain in a sideways range for the near term. Brent could trade in the 58-60 region while WTI could remain in the 55.0-52.50 zone for the near term.
Gold (1487.10) and Silver (17.55) are trading below resistance levels. Gold has immediate resistance at 1500 which if holds, could push price towards 1460 in the near term. Silver also needs to hold below 18 to come off towards 17.0-16.5 in the near term.
Copper (2.6425) tested 2.6565 yesterday, breaking above our mentioned resistance at 2.65. Although the metal is trading lower today, it would be important to see if price comes off from current levels or re-attempt a test of 2.65+ levels in the near term. A rise past 2.65, if seen could take the price higher towards 2.70.
FOREX
Postponement of Brexit deal between the EU and UK to January has helped Pound to gain back from the earlier dip seen on Friday. Dollar Index looks bullish while above 97. Aussie, Pound , Euro, Euro-Yen and Dollar-Rupee looks bearish just now. Dollar-Yen and Yuan could trade sideways.
Pound (1.2982) tested 1.3012 yesterday. We continue to see 1.31 as immediate resistance as seen on the weekly line chart and the currency is expected to come off come off towards 1.28 in the near term. A rise above 1.31 if seen and sustained could force us to consider a possible rise towards 1.33/34; but we would wait for confirmation on a break above 1.31. Preference is for a fall from here towards 1.28.
Dollar Index (97.30) has broken below our expected 97.50 but may not fall below 97 just now. Note that 97 is a medium term support on the weekly candles and could push the index towards 98 or hgher again in the upcoming sessions.
Euro (1.1150) tested 1.1172 yesterday; levels just below resistance and could fall back towards 1.11 or even lower in the near term. View is bearish while below 1.12.
Dollar-Yen (108.64) is holding below 109 and could spend a couple of sessions in the 109-108 region. In the longer term charts there is scope of a rise towards 110 but before that we could see a decent dip towards 108 or slightly lower.
EUR-JPY (121.14) would be bearish if resistance holds just now near 121.50. A fall towards 120-119 could be on the cards in the upcoming sessions this week or the next.
Aussie (0.6871) has resistance at 0.69 and while that holds, we could see a fall towards 0.68 again. Only if 0.69 breaks we may look for a test of higher resistance at 0.70. Watch price action near 0.69.
The USDCNY (7.0774) could trade in the broad 7.10-7.04 region just now. Support at 7.04 looks likely to hold in the near term.
Dollar-Rupee (71.15) is likely to come down to test 70.90-71.00 today while below 71.25. View is berish just now.
INTEREST RATES
Increasing risk appetite in the market keeps the bonds under pressure. As a result, the yields have been moving higher. The US Treasury yields have broken their key resistances and has room to move further higher. The German yields keep our bullish view intact. The 10Yr GoI remains mixed and can be range bound in the near term.
The US 2Yr (1.62%), 5Yr (1.61%), 10Yr (1.80%) and 30Yr (2.29%) Treasury yields have risen across tenors. The 10Yr and 30Yr have breached their respective resistance levels of 1.78% and 2.25%. If they manage to sustain higher, a further rise to 2.40%-2.45% (30Yr) and 1.87%-1.90% (10Yr) is possible in the near term.
The German 2Yr (-0.68%), 5Yr (-0.61%), 10Yr (-0.35%) and 30Yr (0.20%) yields have been inching higher in line with our expectation and keeps the bullish view intact. The 10Yr has come closer to our target of -0.33% and can even test -0.30% in the near term. The 30Yr can extend its current upmove to 0.30% on a break above 0.20%.
The 10Yr (07.26 GS 2029) GOI (6.6991%) is stuck around 6.70% and looks mixed in the near term The yield can remain range bound between 6.65% and 6.75% for some time. A breakout of this range will decide the direction of the next move.
The 10Yr (06.45 GS 2029) GoI has closed on Friday at 6.5185%.
