STOCKS
Global equities are managing to sustain higher but lack momentum for seeing a strong rally. A fresh trigger is needed to take the indices decisively higher. Dow can remain stuck in a narrow range before move higher eventually. DAX is at a crucial resistance which needs to be broken to move further higher. Nikkei looks mixed within its broad range. Shanghai can see a corrective fall before resuming its uptrend. Sensex and Nifty have bounced-back yesterday and need to see if they can sustain their gains today which is needed to reduce the chances of seeing a further fall.
Dow (29348.03, +115.84, +0.40%) has bounced yesterday but looks mixed in the near-term. 29000-29500 is the range that can be seen for sometime. While above 29000, the bias is bullish to see a break above 29500 and a rise to 29750-30000 in the short-term. Thereafter a sharp corrective fall is possible.
DAX (13789, +107.81, +0.79%) has risen back to towards the key resistance level of 13800. It will have to be seen if it can breach this hurdle or not. A strong rise past 13800 will open doors for 14000 and even higher levels. But while 13800 holds, a narrow consolidation between 13600 and 13800 can be seen for some time,
Nikkei (23607.74, +207.04, +0.88%) surged above the intermediate resistance levels of 23400 and 23600 that we had expected to hold on early trades today but has come-off from the high of 23806.56. . It will have to be seen if it can sustain above 23600 and also rise past 23800 to test 24000 levels again. A fall below 23600 can drag it to 23400-23200 again. We will have to wait and watch.
Shanghai (2977.61, +2.21, +0.07%) is struggling to breach the psychological level of 3000. While below 3000, a corrective dip to 2950 is possible in the near-term. However, the broader picture is bullish and the index is likely to break 3000 and rise to 3050 eventually in the coming days.
Contrary to our expectation, Sensex (41323, +428.62, +1.05%) has risen past 41100 yesterday. This has reduced the danger of seeing 40000 on the downside for now. While above 41000, a revisit of 41800 looks likely.
Nifty (12125.90, +133.40, +1.11%) has an immediate resistance at 12140 which will need a close watch today. A strong break above it can take the index higher to 12250 which in turn could bring back the possibilities of seeing 12400-12500 on the upside again. We will have to wait and watch.
COMMODITIES
Commodities trade strong. Gold sustains above 1600 and has room to move further higher. Silver is also bullish and can test a key resistance before seeing a corrective fall. WTI and Brent has risen past their near-term resistance and are bullish to move further higher. Copper remains mixed and range bound.
Gold (1608) sustains above 1600 and keeps our bullish view intact. Immediate resistance is at 1620 a break above which can see the rally extending to 1640.
Silver (18.33) has risen above our first target of 18.25. The bullish view is intact. A further rise to 18.50 and 18.70 looks likely now after which a corrective fall is possible.
Copper (2.62) remains stuck in a narrow range between 2.60 and 2.65. The near-term outlook is mixed. We may have to wait for a breakout of this range to get a cue on the next move.
Contrary to our expectation for a corrective fall from 58, Brent (59.67) has surged breaking above it. The short-term outlook is bullish. While above 56, Brent can now target 60 and 62.
Nymex WTI (54.02) on the other hand is trading just above 54 can rise to 56 and 58 while it sustains above 52.
FOREX
Dollar remains strong and has dragged the Euro and Yen lower sharply. The dollar index is coming closer to a crucial resistance which will need a close watch. While the Yen has room to weaken further, the Euro is coming closer to a crucial support from where it can reverse higher. Pound and Aussie remain weak and can fall further in the coming days. USDCNY can move up to test its key resistance. Dollar-Rupee is likely to move higher on the back of the dollar strength.
US Dollar Index (99.60) has risen towards 99.60 as expected and can test 100 – a crucial resistance to watch. We expect the Dollar index to reverse lower from 100.
Euro (1.08) is hovering around 1.08 and remains vulnerable to resume the fall. While below 1.0850 we remain bearish to see a test of 1.0750 on the downside after which a bounce-back move is possible.
Dollar-Yen (111.25) has surged further and indeed well beyond 110.6 mentioned yesterday. The outlook is bullish and the pair can test 112 – the next important resistance. While 112 holds, a corrective fall to 110 is possible.
EURJPY (120.19) has also moved-up on the back of the Yen weakness contrary to our expectation for a fall to 118-117. However, the Cross has important resistance in the 121-122 region which can cap the upside and drag it lower towards 118-117.
Aussie (0.6646) has declined below 0.6650. While this break sustains, the outlook is bearish to see a test of 0.6610-0.6600. Inability to bounce from 0.66 can drag the pair further lower to 0.65 by next week.
Pound (1.2917) has come-down and keeps our bearish bias intact. A break below 1.29 (most preferred) can take the pair lower to 1.2850 and 1.2800 in the near-term.
USDCNY (7.0052) is managing to sustain above 7.00. However a key resistance is at 7.03 (revised higher from 7.02 mentioned yesterday) which can cap the upside and drag the pair lower possibly below 7 again. A strong rise past 7.03 is needed to turn the outlook bullish completely.
USDINR (71.55) had closed above 71.50 on Tuesday (the Indian Forex markets were closed yesterday on account of a public holiday) and could move up to 71.65 and even 71.75-71.80 in the near-term on the back of the dollar strength. 71.40 will be an important intraday support to watch today.
INTEREST RATES
The US Treasury yields continue to trade lower and are likely to fall further in line with our expectations. The German yields have dipped below their key near-term support and are now bearish to see further dip in the coming days. The 10Yr GoI is struggling to rise past 6.40% and can remain pressured on the downside to fall further.
The US 2Yr (1.42%), 5Yr (1.41%), 10Yr (1.57%) and 30Yr (2.01%) Treasury yields remain lower. Our bearish view remains intact. We expect the 30Yr to test 1.95%-1.90% on the downside on a break below 2%. Resistance is at 2.05%. The 10Yr on the other hand has resistance at 1.65% and can fall to 1.50%-1.45% on a break below the immediate support level of 1.55%.
The German 2Yr (-0.66%), 5Yr (-0.63%), 10Yr (-0.42%) and 30Yr (0.09%) yields have dipped across tenors which is turning the outlook negative from mixed . The 10Yr can fall to -0.45% and -0.50% while it sustains below -0.40%. The 30Yr has dipped below 0.11% and can fall to 0.03% and 0% in the near-term.
The 10Yr GoI (6.3864%) has come-off from the high of 6.4131% on Tuesday. It can fall to 6.35% again while it sustains below 6.40%. The broader view remains bearish for it to test 6.30%-6.28% on the downside on a break below 6.35%.
