STOCKS
Equities look mixed and might need some fresh triggers to see a fresh rise from current levels. Dow and DAX seem to lack momentum and are vulnerable for a fall while they stay below their near-term resistances. Nikkei can trade sideways. Shanghai is at a crucial juncture and needs a close watch to see if it can turn bullish for a strong rise next week. Sensex and Nifty are mixed and can trade sideways.
Dow (27677.79, +28.01, +0.10%) managed to hold higher but seems to lack strength. As mentioned yesterday a strong rise past 27920 will be required to turn the outlook positive and to avoid a fall to 27500-27300 again.
DAX (13054.80, -85.77, -0.65%) has failed to hold on to the bounce-back move witnessed on Wednesday. This keeps the possibilities alive of the index falling to 12800-12700.
Nikkei (23369.44, +69.35, +0.30%) has moved further higher. As mentioned yesterday, we might see a sideways consolidation between 23000 and 23600 for sometime before the overall uptrend resumes targeting 24000.
Shanghai (2901.98, +2.51, +0.09%) is trading at crucial level of 2900. A strong break and a close above 2910 today will be bullish to see a rise to 2975-2980 in the coming weeks. We will have to wait and watch.
Nifty (12018.40, -24.80, -0.21%) and Sensex (40779.59, -70.70, -0.17%) look mixed in the near-term. They could trade in the range of 11900-12100 (Nifty) and 40500-41000 (Sensex). We will have to wait and watch the movement for the next few sessions to get a clear view.
COMMODITIES
OPEC and allies have agreed to output cuts to support crude prices. Today the OPEC is scheduled to meet Russia and other producers (OPEC+ countries). While Saudi Arabia and Russia has recommended the OPEC+ group to deepen existing supply curbs of 1.2mln bpd by another 500,000bpd. Comments after today’s meeting would be important to understand the measures that could be seen to balance the supply in 2020 with US, Brazil, Canada and Norway expected to pump in more oil in the upcoming quarters.
Crude prices trade higher today and may continue to remain above 63 for the day. Brent (63.26) and WTI (58.35) could test 64-65 and 59-60 on the upside if any unfavorable comments come up after the OPEC+ meeting today. We would wait and watch near term resistances above current levels.
Gold (1480.90)3-day line charts show 21-MA above current levels which if holds, could push prices down in the near term. While below 1500, we may expect a re-test of 1460 and a gradual fall towards 1440.
Silver (17.01) has important near term resistance at 17.5 which if holds could push prices towards 16.5. Overall Silver has been in a contraction phase since Sep’19 and could continue for some more time before a sharp break out on either side of the 17.5-16.00 region.
Copper (2.6675) has risen, bouncing well from 2.6250. While the rise sustains, there is enough room on the upside towards 2.7250-2.7500 in the medium term.
FOREX
The US Dollar continues to trade weak today and could fall for another couple of sessions before bouncing back from there. Euro and EUR-JPY looks bearish while Pound and Rupee trades strong.
Dollar Index (97.37) has fallen below 97.50 and could now test 97-96.80 before bouncing higher from there. The index is weak against major currencies across the globe.
Euro (1.1107) has resistance just above current levels and could soon come off in the near term towards 1.10.
Dollar-Yen (108.68) has to see a sustained break above 109 to move higher towards 110 in the coming sessions. On the contrary if a fall from 109 is seen just now, we may have to look for some bearishness in the currency pair for now. Preference would be for some sideways range trade between 110 and 108 before seeing any sharp movement on either side in the longer run.
EUR-JPY (120.71) is trading below important resistance at 121 and while that holds, we may expect a fall back towards 120.50-120.00 in the near term. View is bearish while below 121.
Pound (1.3159) has moved up sharply and may rise towards 1.32 and 1.34 in the medium term. View is bullish while Pound remains above 1.31.
Aussie (0.6839) is trading sideways below 0.6875 and while that holds, we cannot negate a fall towards 0.68 or lower.
USDCNY (7.0479) is trading lower today but note immediate support at 7.04 which if holds, could re-initiate a rise towards 7.08 again in the near term. A fall below 7.04 is needed for the currency pair to fall further towards 7.02/7.00 levels in the near term.
Dollar-Rupee (71.29) came down after the RBI kept repo rate intact at 5.15%, contrary to market expectation of seeing a rate cut. Rupee has strengthened to 71.28/29 levels yesterday. USDINR could test support levels of 71.25/20 below current levels before moving higher towards 71.50 again. We may expect Rupee to remain strong today.
INTEREST RATES
The near-term supports on the US Treasury yields are holding well now. The Treasury yields have room to move higher while these supports hold. The German yields continue to look bullish. The 10Yr GoI has surged after the Reserve Bank of India surprised the markets by keeping the rates unchanged. Market was expecting a 25 bps rate cut. The 10Yr GoI has an immediate resistance ahead which can hold and drag it lower in the near-term.
The US 2Yr (1.59%), 5Yr (1.62%), 10Yr (1.80%) and 30Yr (2.25%) Treasury yields have bounced across tenors. The 2.18%-2.16% support zone seems to be holding well on the 30Yr which is reducing the chances of seeing a fall to 2.05%-2% that we had mentioned yesterday. While above 2.16%, a rise to 2.35% looks likely in the short-term. The 10Yr on the other hand has to rise past 1.85% to negate the chances seeing a fall to 1.65%. Such a break will pave way for a rise to 2%.
The German 2Yr (-0.64%), 5Yr (-0.56%), 10Yr (-0.30%) and 30Yr (0.21%) have inched higher. As mentioned yesterday the broader picture continues to remain positive. The 10Yr is sustaining well above its support at -0.40% and is bullish to test -0.1%. The 30Yr is moving higher to breach 0.22% which can boost its momentum to target 0.35%.
The 10Yr GoI (6.6135%) surged after the RBI’s policy decision yesterday. A key resistance is at 6.62% which can hold on its first test and drag the yield lower to 6.55% in the near-term.
