STOCKS
The US jobs data on Friday has given some breather for the Dow. It will have to be seen whether the US Federal Reserve provides additional trigger on Wednesday for the Dow to hold higher and move up further. DAX seems to lack strength and looks vulnerable for a fall. Nikkeo can consolidate sideways. Shanghai has room to move higher while it sustains above 2900. Sensex and Nifty are looking weak after Friday’s fall and can fall in the coming days.
Dow (28015.06, +337.27, +1.22%) can move-back higher to 28250 while it sustains above 27900. After Friday’s move above 27920, the chances of seeing a fall to 27500-27300 that we have been mentioning last week has been reduced now.
DAX (13166.58, +111.78, +0.86%) is managing to sustain above 13000. However the index is not showing strength and still looks vulnerable for a fall to 12800-12700. Only a strong rise past 13300 will negate the chances of the above mentioned fall.
Nikkei (23420.97, +66.57, +0.29%) is moving higher within our expected 23000-23600 range. The index can continue to consolidate in this range for some time. Eventually we expect Nikkei to break this range above 23600 and rise to 24000 levels.
Shanghai (2913.26, +1.25, +0.04%) has moved above 2910 and it has to be seen if it sustains higher or not. While above the 2910-2900 support zone, the outlook is bullish to see a rise to 2970-2980 in the coming days.
Nifty (11921.50, -96.90, -0.81%) has declined well below 12000 on Friday. Immediate support is at 11885 which need to hold in order to avoid a further fall to 11800-11700. A bounce from 11885 can take the Nifty higher to 12000-12050 in the near-term.
Sensex (40445.15, -334.44, -0.82%) on the other hand can test 40250-40100 while it remains below its resistances at 40585 and 40750.
COMMODITIES
The OPEC members had initially agreed for an additional cut of 5,00,000bpd for the first quarter of 2020. But after the Friday meet with Russia, Saudi Arabia stated that the total production cut of 2.1mbpd would be implemented. The group expects a demand slowdown in the first half of 2020.
Crude prices have inched up after the OPEC meeting but could test near term resistances above current levels. Precious metals trade lower as Dollar strengthened after a strong US employment report on Friday. Trump’s comments that the talks of trade deal with China were “moving right along” have helped Copper prices to surge even though the Chinese officials insisted on cancellation of tariffs from both sides simultaneously.
Brent (64.24) and WTI (59.00) have moved up towards immediate resistance levels and could face rejection from 65.0-65.5 and 60-61 levels respectively. Only a sustained break above current levels, if seen would turn the near term view bullish for Brent and Nymex WTI.
Gold (1463.60) has scope to fall towards 1440 in the near term which could act as decent support. Silver (16.58) could test 16.25 before bouncing back towards 17 in the near term. Gold and Silver looks bearish while the US Dollar continues to trade higher.
Copper (2.7350) shot up sharply on Friday after the comments from Trump that the talks of US-China phase-one deal were moving right along. The metal has closed exactly at crucial resistance on the charts and while that holds, we may expect a dip from here. Only a sustained break above 2.75 would indicate bullishness for the metal in the near term.
FOREX
Dollar Index (97.71) has risen back after a brief period of trade below 97.50. However, while above 97.25/00, the bounce could take the index higher towards 98.50 again. The stronger employment data released on Friday has helped the index to move up.
Euro (1.1054) could head back towards 1.10 in the near term. While below 1.1110, Euro looks bearish.
Dollar-Yen (108.60) is stuck in the 108-109 region and could continue to trade sideways for now. Note that 110 is a crucial long term resistance and while the pair trades below 110, we expect an eventual fall below 108 in the medium term.
EUR-JPY (120.05) fell sharply as 121 held well as resistance in line with our expectations. The pair is now likely to test 119.50 in the near term.
Pound (1.3143) has resistance at 1.32 and 1.34 respectively and could face rejection from either of these levels in the near term which could push the Pound back towards 1.28.
Aussie (0.6831) has been trading sideways below resistance near 0.6876 and while that holds, we may expect a fall in Aussie in the near term towards 0.6750.
USDCNY (7.0347) has dipped a bit but while above 7.02, we may expect a rise again towards 7.06.
Dollar-Rupee (71.20) closed near our expected support at 71.20 on Friday and if that holds, we may expect a bounce today towards 71.40. Else a further fall from here could take it down towards 71 which is a crucial support on the longer term charts.
INTEREST RATES
The strong US job numbers have taken the Treasury yields higher. The US non-farm payroll rose by 266K as against the market expectation for a rise of 186K. The Treasury yields have room on the upside to move further higher. The German Yields are bullish at the far-end (10Yr and 30Yr) while those at the near-end (2Yr and 5Yr) could be range bound. The 10Yr GoI is retaining its momentum and is bullish to see further rise. The US Federal Reserve meeting on Wednesday and the ECB meeting on Thursday are key events to watch this week.
The US 2Yr (1.62%), 5Yr (1.67%), 10Yr (1.84%) and 30Yr (2.28%) Treasury yields have moved further up across tenors thereby reducing the chances of a further fall that we have been mentioning last week. The 10Yr can target 1.95% and 2% in the coming days on a strong break above 1.85%. Support for it is at 1.72%. The 30Yr on the other hand has a crucial resistance in the 2.35%-2.37% region which will need a close watch. A strong break above 2.37% will be bullish to target 2.47%-2.50% thereafter.
The German 2Yr (-0.64%) dipped while the 5Yr (-0.55%) and 10Yr (-0.29%) remained stable. The 30Yr (0.23%) on the other hand continues to move up and has risen above the key level of 0.22%. While above 0.22%, the 30Yr can move further higher to 0.35% in the coming days. The 10Yr has support in the -0.35% and -0.33% region and the outlook is bullish while above this support zone. The 10Yr can rise to -0.20% and -0.10%.
The Indian 10Yr GoI (6.6658%) has surged further on Friday breaking above the next resistance level of 6.62%. The level of 6.62% will now act as a good support and the 10Yr GoI has room on the upside to test 6.70% and 6.80% in the coming days.
