STOCKS
Equities seem to lack momentum. Dow is struggling to get strong follow-through buyers above 27000. DAX and Nikkei look vulnerable for a corrective fall. Shanghai continues to trade weak. Sensex and Nifty remains higher but seem to lack fresh momentum which leaves the possibility of seeing an intermediate dip before moving further higher.
Dow (27046.23, -140.46, -0.52%) seems to lack strong follow-through buying above 27000. The broader picture remains bullish to test 27250 and 27600. But a dip to 26700 first cannot be ruled out before we see the above mentioned rise.
DAX (12866.79, -43.44, -0.34%) remains below 13000 and look vulnerable for a corrective fall to 12800-12700 in the near-term.
Nikkei (22830.60, -96.44, -0.42%) remains below 23000. As mentioned yesterday, a corrective fall to 22700-22600 can be seen while the index remains below 23000.
Shanghai (2931.54, +2.48, +0.08%) continues to trade weak. It can test 2900 while it remains below 2950. Whether 2900 holds or not will be crucial in deciding the next move.
Nifty (11877.45, +33.35, +0.28%) seems to be losing and lacking fresh momentum as it heads towards 12000. Need to watch the price action in the coming days to see if it can reverse lower from the 12000-12100 region before moving further higher.
Sensex (40129.05, +77.18, +0.19%) surged to a high of 40392.22, but has come-off from there. It has to be seen if it can manages to sustain above 40000 or not. There are chances for it to 39750 on the downside first before we see further rally. We will have to wait and watch the price action in the coming sessions.
COMMODITIES
Commodities are mixed. Precious metals gain on continued Dollar weakness. Crude prices trade low and could be bearish for the near term. Copper may fall a bit towards support levels.
Gold (1512.70) has risen probably as safe haven as Dollar continues to trade weak after US PCE data came out weak. Immediate target is 1520 on the upside.
Silver (18.06) has moved up as expected and has scope of testing 18.50-18.75 in the near term.
Copper (2.6465) is also trading below 2.65 after coming off from 2.70 itself. Near term supports are visible near 2.6250 and lower at 2.58.
Brent (59.72) has fallen below our mentioned support at 60 and while it trades lower, price is likely to fall further towards 58-56 in the near term.
WTI (54.38) on the other hand is heading towards our mentioned support at 54 which if breaks on the downside could drag it further towards 53.
FOREX
Dollar continues to weaken and looks bearish for the near term. Euro may be capped at 1.1180-1.12. Falling Dollar and rising Gold could keep Dollar Yen down. EUR-JPY looks bearish in the medium term coming off from crucial resistance at 121.50. Protests in the host location Chile resulted in rescheduling of the US-China meet. President Trump would soon announce the new location for their meet. Chinese Yuan weakened slightly and could trade sideways for the day.
Dollar Index (97.21) has fallen in line with our expectation and could fall further towards 97 and 96.89 respectively from where a bounce is expected. Near term looks bearish.
Euro (1.1165) is almost stable and could rise towards 1.11795, the high seen on 21st Oct. Above that the rise could extend to 1.12. We prefer to see a dip from there instead of Euro moving higher above 1.12. Watch price action near 1.1180 and 1.12 (if tested)
Dollar-Yen (108.05) is trading above immediate support at 108 and while that holds, we may see a rise back towards 108.50-109 in the near term. However, the long term charts show possibility of a fall towards 107.50-107 in the medium term. Watch price action near 108 just now to decide on further direction on Dollar Yen. Also note that while Gold continues to rise, Dollar Yen could fall.
EUR-JPY (120.64) has fallen sharply instead of attempting to rise above 121.50. Immediate support is visible near 120.5 but our preference would be for a fall towards 120-119.5 in the near term.
Pound (1.2963) is trading higher too and could test previous high of 1.30125 seen on 21st Oct. If Pound manages to fall back from 1.30, we may see sideways trade between 1.30-1.28 for some more time.
Aussie (0.6907) has fallen after testing 0.69297 yesterday. While that holds, Aussie is bearish for the medium term with a possible target of 0.6870-0.6830.
The USDCNY (7.0412) has risen instead of sustaining the fall towards 7. We could see broad trade in the 7.0-7.10 region for the near term. A sustained break below 7 is needed to turn bearish on USDCNY.
Dollar-Rupee (70.93) has risen sharply yesterday from just above support at 70.70 and while that holds, there could be scope for Dollar-Rupee to test 71.06/08 on the upside. Near term trade is likely between 71.08 and 70.70. Potential break above 71.08 could take it higher towards 71.25.
INTEREST RATES
The US Treasury yields have come-off sharply after news reports stated that China doubts over striking a long-term deal with the US. The treasury yields now have room to dip further. The German Yields have also dipped and have key supports coming up which needs to hold in order to avoid further fall. The 10Yr (07.26 GS 2029) GoI can dip to test its key support and then reverse higher again.
The US 2Yr (1.53), 5Yr (1.53%), 10Yr (1.70%) and 30Yr (2.18%) Treasury yields have declined sharply across tenor. The 10Yr and 30Yr had come-off below their key intermediate support levels of 1.75% and 2.25% respectively and have negated our earlier bullish view. As mentioned yesterday this fall can now drag the 30Yr to 2.10%-2.05% and the 10Yr to 1.60%-1.55% in the coming days.
The German 2Yr (-0.68%) and 5Yr (-0.63%) were down 5bps each while the 10Yr (-0.41%) and the 30Yr (0.10%) fell by 6 bps and 3 bps respectively. 0.075% on the 40Yr and -0.45% on the 10Yr are the key supports to watch. A strong break below these supports can trigger a corrective fall to -0.05% on the 30Yr and -0.50% on the 10Yr in the coming days.
The 10Yr (07.26 GS 2029) GOI (6.6478%) has dipped and is moving down towards 6.60% in line with our expectation. The level of 6.60% is a strong support which we expect to hold and produce a bounce towards 6.70% and 6.75% again.
The 10Yr (06.45 GS 2029) GOI has closed lower at 6.4516% yesterday as compared to 6.4948% on Wednesday.
