STOCKS
Asian indices are trading in the red. Nikkei has declined sharply and is closer to a very crucial support which needs to hold in order to avoid further fall. Dow and DAX sustain higher but have to breach a key resistance which ahead for both of them to turn bullish. Inability to breach their respective resistances can keep the indices pressured on the downside. Similarly, Sensex and Nifty, though are holding above their crucial supports, have to break above their near-term resistances to negate the chances of any further fall.
Dow (28734.45, +11.60, +0.04%) coming-off from the high of 28944 yesterday indicates the presence of sellers at higher levels. As mentioned yesterday, a strong rise past 29000 is very much needed to bring back the bullishness and also to negate the chances of seeing a sharp fall to 28000-27750.
Similarly, DAX (13345, +21.31, +0.16%) also seems to lack strength to breach 13400 which is needed to take it further higher to 13600 levels again. While below 13400 the index is vulnerable to see a fall to 12980.
Nikkei (23028.19, -351.21, -1.50%) has reversed sharply lower today and is near the crucial support level of 23000. The index has to sustain above this support to retain the 23000-24100 range. A strong break below 23000 will be bearish to see 22000-21500 on the downside.
Shanghai (2976.53) is closed for the Chinese New Year holidays and will reopen tomorrow (31-Jan-2020).
Sensex (41198.66, +231.80, +0.57%) and Nifty (12129.50, +73.70, +0.61%) are managing to hold above their crucial support levels of 40670 and 11980 respectively. It will have to be seen if they can manages to surpass 41400-41500 (Sensex) and 12200 (Nifty) which will ease the downside pressure and will reduce the chances of seeing a fall again ahead of the Union Budget on Saturday (01-Feb-2020). We will have to wait and watch.
Please note that the Indian stock exchanges (BSE and NSE) are open for trading on Saturday (01-Feb-2020) on account of the Union Budget.
COMMODITIES
Gold and Silver have risen back after the FOMC meeting yesterday where the rates were kept unchanged. Crude prices have dipped a bit. Copper has been the worst losing steadily each session but could soon test support below current levels from where a recovery looks likely. With the Chinese markets opening tomorrow after the week-long holiday, we may expect some volatility in Copper prices over the next couple of sessions.
Gold (1584.30) took support from 1560 and again rose back to 1580 levels. Maximum upside is expected to be limited to 1600 whereas intermediate supports are seen at 1560, 1540 and 1520 respectively. A sharp rejection from 1590-1600 is now needed to push Gold back to lower levels. Failure to sustain trade below 1560 could make the bulls come back in the medium to long term.
Silver (17.60) has risen back above 17.50. As mentioned yesterday, a fall below 17.50, if seen and sustains could drag the price towards 16.50-16.00 in the longer run. Else, if prices trades above 17.50, we may expect another leg of a rise towards 18.50.
Brent (59.50) is holding above weekly support at 58.50 and while that holds, we may expect a slow and steady rise towards 64 in the near term. But before that we may expect a few sessions of trade in the 58.50-61 region. Only a break below 58.50 would turn bearish for the medium term but that is less likely for now. Watch price action for a bounce from 58.50.
Nymex WTI (53.06) unlike Brent had broken below trend support to test lower levels of 52. While the earlier support turned resistance holds near 54.00-54.50 region, it would be important to see if WTI manages to pull back above 54.50 in the near term.
Copper (2.5525) has fallen as expected and could get some support near 2.50 as the price is expected to slide some more in the near term. We may not look for a further fall below 2.50 in the near term.
FOREX
Dollar Index (98.03) is stable near levels seen yesterday after the FOMC policy meet that kept rates unchanged. A rise towards 98.25/35 looks likely in the near term.
Euro (1.1011) is trading above important levels of 1.10 and could likely drop below 1.10 in the near term as US Dollar strengthens in the near term. A fall targeting 1.09 looks likely in the near to medium term. Watch price action near 1.10.
Dollar-Yen (108.90) could trade in the 108.70-109.50 region for sometime but has room for a fall towards 108 in the medium term. A sharp rise in Dollar Index, if seen could pull USDJPY higher from current levels else we may see a test of 108 soon on the Yen.
EURJPY (119.90) looks bearish for the near term while below 120 as it has clearly broken below the weekly trend support. While upside is likely to be limited to 121, the EURJPY is likely to fall towards 119-117 in the medium term. View is bearish while below 120
Pound (1.3017) is stable near levels seen yesterday without any major movement. A break below immediate support at 1.30, if seen would turn bearish for Pound towards 1.28 in the medium term. Continue to watch price action near 1.30.
Aussie (0.6734) has been falling as expected and is bearish towards 0.67-0.6650 before bouncing back from there.
Dollar-Rupee (71.25) closed slightly higher after trading near 71.20 through the session yesterday. A bounce towards 71.35/40 looks likely in the near term. But at the same time there could be chances of re-testing 71.00/10 within the next 1-2 weeks.
INTEREST RATES
The US Treasury Yields have come-off sharply after the US Federal Reserve had raised concerns over the spread of coronavirus. The Central Bank had left the interest rates unchanged as widely expected. The US Treasury yields remain bearish and can fall further. The German yields are closer to their key supports. Inability to bounce from current levels can drag them further lower in the coming days. The 10Yr GoI has failed to breach 6.60% and keeps the chances alive of testing 6.52%-6.51% on the downside.
The US 2Yr (1.41%), 5Yr (1.40%), 10Yr (1.58%) and 30Yr (2.04%) Treasury yields have failed to sustain the bounce witnessed on Tuesday and have come-off sharply again. This keeps our broader bearish view intact. The 10Yr can fall to 1.53%-1.50% and the 30Yr can test 2%-1.9% on the downside in the coming days.
The German 2Yr (-0.65%), 5Yr (-0.60%), 10Yr (-0.38%) and 30Yr (0.13%) have dipped across tenors. . Th e 30Yr is at a key support and need to be seen if it can reverse higher or not. Inability to bounce from here can drag it to 0.08%-0.07% and even 0% in the near-term. The 10Yr on the other hand has to sustain above -0.40% in order to avoid a further fall to -050%.
The 10Yr GOI (6.5725%) has failed to breach 6.60% and has come-off sharply after testing this key hurdle. While below 6.60% the 10rYr GoI is still vulnerable to test 6.52%-6.51% on the downside.
