STOCKS
Equities broadly remain strong though an intermediate correction looks likely in some indices. Dow has a crucial resistance ahead which will need a close watch. Similarly, Nikkei has an intermediate resistance ahead. DAX and Shanghai are bullish. Sensex and Nifty seems to lack strength and looks vulnerable for a near-term dip before moving higher.
Dow (27492.63, +30.52, +0.11%) continues to move higher and is coming closer to the crucial resistance level of 27600. The price action in the coming days will need a close watch to get a cue on whether the Dow is going to go up to 28000 or fall-back to 27000.
DAX (13148.50, +12.22, +0.09%) sustains higher and keeps the bullish view intact. As mentioned yesterday, a strong rise past 13200 will pave way for 13400-13500. Support is in the 13000-12950 region.
Nikkei (23270.51, +18.52, +0.08%) sustains higher and keeps the bullish view intact. An intermediate resistance is in the 23400-23500 region from where a corrective fall is possible before the index moves up to our preferred target level of 24000-24200.
Shanghai (2993.27, +1.70, +0.06%) has risen past 2980 and is gaining momentum. The near-term outlook is bullish to test 3050 on the upside. Support is in the 2980-2975 region.
Nifty (11917.20, -24.10, -0.20%) and Sensex (40248.23, -53.73, -0.13%)seems to be lacking strength and are facing resistance at 12000 and 40500 respectively. While below these resistances there is a possibility of seeing an intermediate dip to 11800 on the Nifty and 40000-39750 on the Sensex before their overall uptrend resumes.
COMMODITIES
Commodities are trading lower today. Gold and Silver looks bearish for the near term. Copper may rise towards resistance. Crude oil prices could have some room on the upside and could rise in the near term.
Gold (1488.00) and Silver (17.56) have come down sharply. Gold is likely to re-test the psychological level of 1480 while Silver has broken below the support at 18. Silver could come down towards 17 while it would be crucial to watch if Gold falls below 1480 in the next few sessions.
Copper (2.6950) is holding above immediate trend support at 2.66 and while that holds, the price is likely to move up towards near term resistance at 2.7250.
Crude prices have moved up. Brent (62.62) and WTI (56.93) have both risen from levels seen yesterday. If Brent breaks above 63, it could head towards 65 while WTI could move up towards 59-60 if it breaks above immediate resistance as seen on the 3-day candle chart.
FOREX
Dollar Index (97.89) tested 98 in line with our expectations and is trading slightly lower from there. If 98 hold as a decent resistance just now, we could see Dollar Index resume its fall targeting 97.50.
Euro (1.1077) has come down in line with our expectation. While Dollar Index holds below 98, Euro could have some scope of re-testing 1.1120/25 on the upside.
Dollar-Yen (109.04) has risen too in line with our expectations. If Nikkei breaks above immediate trend resistance (refer to equity section above) we could see Dollar Yen rise towards 109.50 in the near term. At the same time it would be important to see if Dollar Index manages to trade above 97.50 as a sharp fall in the index could limit the upside for Dollar Yen just above current levels.
EUR-JPY (120.80) continues to hold within 120.5-121.5 region and needs to break on either side to decide on further direction.
Pound (1.2885) is almost stable. A possible test of 1.28-1.26 looks likely while below 1.30
Aussie (0.6898) is stuck within 0.6874-0.6928 region and is likely to trade sideways for a few sessions with possibility to re-attempt a test of upper resistance.
The USDCNY (6.9948) has fallen sharply on hopes of US-China agreement. While below 7, USDCNY could target 6.94 in the near term.
Dollar-Rupee (70.70) may trade lower today with possibility of testing 70.50/55 on the downside. Upside could be limited to 70.90-71 as a cluster of resistances are seen within this region. Also note interim resistances near 70.80/84 which could possibly push Dollar Rupee to trade lower today.
INTEREST RATES
Strong equities continue to weigh on the bond market. The US Treasury yields have risen and have room to move further higher in the near term. The German yields (near-end) remains range-bound while those at the far-end continues to move higher and keep the bullish view intact. The 10Yr GoI is gaining strength and can move up in the near term.
The US 2Yr (1.61), 5Yr (1.65%), 10Yr (1.84%) and 30Yr (2.33%) Treasury yields have risen further. The 10Yr has risen above the key resistance at 1.82%. A further rise to 1.90% and 2% is possible in the near-term while it sustains above 1.82%. The 30Yr on the other hand has risen above 2.32% and could be heading up towards 2.40%-2.42% in line with our expectation.
The German 2Yr (-0.65%) and 5Yr (-0.58%) yields remains stable and range bound while those at the far-end, the 10Yr (-0.31%) and 30Yr (0.22%) continues to move up. The 30Yr is moving up in line with our expectation towards 0.28% – a key resistance level to watch. The 10Yr has broken above -0.45% and can move up towards -0.22% and -0.20% if it manages to sustain higher.
The 10Yr (07.26.GS 2029) GOI (6.7177%) has risen above 6.70%. The near-term outlook is bullish. The yield can move further higher towards 6.75% in the near-term while it sustains above 6.70%.
10Yr (06.45.GS 2029) GOI (6.5183%) has surged breaking above the key resistance level of 6.48%. While above 6.48%, there is room on the upside for the yield to move further higher towards 6.54% and 6.56% in the coming sessions.
