STOCKS
Equities continue to trade strong as the fear of US-Iran conflict getting escalated has faded. There is room upside for the indices to move further higher. However, DOW has a crucial resistance ahead which can cap the upside an trigger a fall again. DAX has broken its range on the upside and has room to move up. Nikkei is bullish. Shanghai can consolidate below its crucial resistance before moving further higher. Sensex and Nifty can also move up in the near-term.
As expected, Dow (28956.90, +211.81, +0.74%) has moved up further and is heading towards 29000. As mentioned yesterday, we see strong resistance in the 29000-29050 region which is likely to cap the upside and trigger a corrective fall next week. We will be watching closely the price action around 29000-29050.
Similarly, DAX (13495.06, +174.88, +1.31%) has broken is 12950-13425 range on the upside. While above 13400, the index can test 13600 – the next important resistance on the upside. An intermediate dip to 13400 cannot be ruled out from 13600.
Nikkei (23815.99, +76.12, +0.32%) sustained well above 23500 and has moved higher. The bullish outlook is intact to test 24000 in the near-term. A strong close above 24000 will then open doors for a further rally to 25000-25100. The region between 23600-23500 will continue to serve as a good support now.
Shanghai (3091.28, -3.6, -0.12%) is hovering near its crucial 3100-3125 resistance region. As mentioned yesterday, the index can oscillate/consolidate between 3035 and 3125 for some time. While above 3035, our bias is bullish to see a break above 3125 and a rise to 3300-3400 and even higher levels over the medium-term.
Sensex (41452.35, +634.61, +1.55%) has risen back above 41400. An immediate resistance at 41600 a break above which can take it further higher to 41800 and even 42000 in the near-term. Support is now at 41207.
Nifty (12215.90, +190.55, +1.58%) on the other hand has to sustain above its support level of 12155 in order to move further higher to 12300 today. A break above 12300 will then pave way for 12350-12380.
COMMODITIES
Crude prices have dipped slightly and could be ranged for a few sessions now especially after the volatile sessions seen since the beginning of the month. Gold and Silver could head towards support levels in the next 3-4 sessions before a bounce is expected. Copper could be ranged for now before a sharp rally is seen.
Brent (65.18) is likely to trade below 68-67 in the near term with a possible test of 64 on the downside. Nymex WTI (59.38) could test immediate support at 58 but could see some range trade within 58-61 region for now.
Gold (1549) has fallen as expected and could see a test of support levels near 1520/40 from where a bounce is possible. Silver (17.89) has dipped as expected and could test 17.5 before bouncing back from there.
Copper (2.8015) is trading in a broad sideways range of 2.85-2.75 and is likely to hold within the mentioned levels for some more sessions before seeing a fresh rally above 2.85 in the medium term.
FOREX
Pound, Aussie, USDCNY and Euro could face support and bounce back in the near term while Dollar Index may come off from 97.50. USDJPY is headed towards previous highs and could be pushed back towards current levels or lower soon. Overall currencies are mixed for now and could see some ranged movement.
Dollar Index (97.42) has resistance on the daily candles near 97.50 and while that holds, the index is likely to dip back towards 96.75 or even lower in the medium term.
Euro (1.1106) has come down sharply but could get some support near 1.11-1.1098 just now from where a bounce looks likely. While 97.50 holds on Dollar Index we may expect a rise in Euro back towards 1.1150.
Dollar-Yen (109.52) has risen back well and could be headed towards previous high of 109.72 which is an important resistance. While 109.72 holds, we may expect a fall back towards 109.00 in the medium term. A sharp break above 109.72 is needed to rise towards 110-110.50. Watch price action near 109.72 in the near term.
EURJPY (121.66) has risen as expected and could be headed towards 122-122.50 in the near to medium term. View is bullish while above 120.15.
Pound (1.3067) has support at 1.30 and while that holds we may expect trade in the broad 1.33-1.30 region for the next 2-3 weeks. Overall unless 1.30 breaks lower, we may expect a rise or some sideways movement in the near term.
Aussie (0.6861) is holding above support at 0.6850 and while that holds it is likely to bounce higher towards 0.69. Overall trade in the 0.69-0.6850 region is likely to hold for some time.
USDCNY (6.9334) has bounced from trend support on the daily candles and while that holds, a rise to 6.96 is possible. Note that the currency pair may spend some time below 6.96 while supports are visible near 6.92 and 6.90 respectively.
Dollar-Rupee (71.22) has fallen sharply but it would be important to see if it closes above 71.25 today or sustains to trade lower. A close below 71.25 would bring in lower targets of 71.00-70.75 into the picture for next week.
INTEREST RATES
The US Treasury yields remain higher and can move up in line with our expectation in the coming days. The German yields sustain higher and keeps our bullish view intact. The 10Yr GoI can dip in the near-term and can trade sideways for some time before a fresh leg of upmove begins.
The US 2Yr (1.58%), 5Yr (1.66%), 10Yr (1.86%) and 30Yr (2.33%) Treasury yields sustains higher. We keep our near-term bullish view intact. The 30Yr can rise to test 2.38%-2.40% while it sustains above its 2.23%-2.20% support zone. Similarly, the 10Yr has support 1.75% and can move up to 1.95% in the coming days.
The German 2Yr (-0.60%), 5Yr (-0.50%), 10Yr (-0.18%) and 30Yr (0.32%) yields have move further up across tenors. The bullish outlook is intact. The 30Yr can target 0.40%-0.45% on the upside. The 10Yr on the other hand has moved above -0.20%. It can move further up to -0.10% while it sustains above -0.20%.
The 10Yr GoI (6.5285%) has dipped below 6.55% again and has room on the downside to test 6.50%-6.49% in the near-term. Broadly we expect the yield to remain in the range of 6.49% and 6.60% with the bias being bullish to break 6.60% and rise to 6.70% in the coming weeks.
