STOCKS
Dow and DAX remain weak and are looking vulnerable to fall further from current levels. Sensex and Nifty are also looking weak and can extend the fall on a break below their intermediate support levels. Nikkei looks mixed and continues to remain stuck in the narrow 23000-23500 range. Shanghai can dip in the near-term to test the lower end of the 3180-3450/70 range.
Dow (27288.18, +140.48, +0.52%) is managing to hold above 27000. However, it will have to be seen if it can get a strong bounce-back from here and rise past 28000. That looks difficult from the charts. As such, while below 28000, we remain bearish on the Dow to see a break below 27000 and a fall to 26000-25500 in the coming weeks.
DAX (12594.39, +51.95, +0.41%) remains lower and continues to look vulnerable to test 12000 on the downside. A break below 12400 can trigger this fall. 12800 will be an immediate support-turned-resistance level and 13000 is a slightly higher one. These resistances can cap the upside.
Nikkei (23222.94, −137.36, -0.59%) has dipped within its 23000-23500 narrow range. As we had been mentioning earlier, a breakout of this range will decide whether Nikkei will move up to 24000 or a fall to 22500. We reiterate that from the bigger picture 24000-24500 is a strong resistance zone that can cap the upside in case of an upside breakout above 23500 is seen.
Shanghai (3275.22, +0.92, +0.03%) continues to trade lower below 3300. As mentioned yesterday, a fall to 3200-3180 is possible while the index remains below 3300. Broadly the 3180-3450/70 range remains intact for now and the price action in the 3200-3180 will need a close watch to see if the index can continue to retain the range and bounce-back.
Nifty (11153.65, -96.90, -0.86%) has declined below 11200 – the crucial support mentioned yesterday. The near-term view is negative to test 11000 and even extend the fall towards 10800. A break below 11000 can accelerate the fall. The region between 11300 and 11400 will now act as a strong support-turned-resistance zone.
Sensex (37734.08, −300.06, -0.79%) has declined below the important near-term support level of 38000. Important supports are at 37500 and 37000 which can be tested and will need a close watch in the coming sessions. Sensex has to sustain above 37000 in order to avoid any further sharp fall.
COMMODITIES
Commodities trade lower and may remain under bearish pressure for a few more sessions. The break above 94 on Dollar Index has been seen after several attempts and could possibly take the index higher in the near term keeping the bearish pressure on commodities intact. Gold, Silver and Crude prices may fall towards respective supports while Copper sustains above its support at 3.00 which if holds could keep it ranged.
Brent (41.34) and Nymex WTI (39.41) have fallen a bit but while above respective supports near 39.32 and 36.43, we keep possibilities of a bounce back in the medium term. For now, we may allow for a test of these support levels in the next few sessions.
Gold (1903.50) is headed towards 1880 which is a near term trend support on the daily candles. A break or bounce thereafter would decide further movement.
Silver (24.22) has scope to test support at 23.
Copper (3.0460) is also trading slightly lower today but while above support at 3, we may expect ranged movement within 3.20-3.00 for the near term.
FOREX
Strong Dollar continues to keep bearish pressure intact on most currencies. Euro may head towards 1.1540-1.1480 while EURJPY may test 122. Pound and Aussie could fall towards 1.26 and 0.70 respectively while Weakness in Yuan and Euro together could lead to a weaker Rupee today possibly targeting 73.60/80.
Euro (1.1678) has fallen sharply below 1.17 as Dollar Index (94.15) has risen above 94. While the Dollar index looks bullish for a rise towards 95.15, we may expect a test of 1.1540-1.1480 on the downside on Euro before a bounce back is seen in the longer run. Bearish pressure on Euro is likely to remain intact while the Dollar index trades above 94.
EURJPY (122.76) is trading slightly lower today. A test of 122 is possible on the downside in the next 3-4 sessions. Failure to bounce from 122 could then open up chances of a further fall towards 120 in the longer run.
Dollar-Yen (105.08) has risen along with the US Dollar and looks bullish for the near term towards 105.50/70 initially.
Aussie (0.7130) has fallen as expected and could soon test 0.70. Failure to bounce from 0.70 could take it lower towards 0.6750 in the next few weeks. For now watch price action near 0.70.
Pound (1.2721) has also fallen sharply on Dollar strength and could be headed towards 1.26 soon. Near term looks bearish.
USDCNY (6.7938) has risen and looks likely for a break above 6.80 to head towards 6.90/95 in the next 3-4 sessions. Our earlier mentioned range of 6.80-6.75 may be negated if the Dollar strength continues. Upside pressure could be maintained for the next 1-week at least.
USDINR (73.58) could also open higher today as most currencies trade weak against the US Dollar. A test of 73.60/70/80 looks possible for the near term.
INTEREST RATES
The US Treasury yields remain stable near the lower end of their short-term range. As mentioned yesterday, we will have to see if the yields can bounce and see one more leg of rise before resuming the long-term downtrend or will break the range support and fall from here itself. The German yields continue to trade lower and are keeping our bearish view intact. The 10Yr GoI remains mixed and can continue to trade in a sideways range.
The US 2Yr (0.13%), 5Yr (0.26%), 10Yr (0.67%) and the 30Yr (1.42%) Treasury yields remain stable. Our view remains the same. The 30Yr has to sustain above 1.40% to see a rise first to 1.60% and then fall-back sharply towards 1.30%-1.25%. A break below 1.40% can trigger the fall from here itself. The 10Yr on the other hand will have to see a breakout of its current 0.65%-0.73% range to give a clear picture on whether it will move up to 0.80%-0.90% and then fall or will decline to 0.50% from here itself.
The German 2Yr (-0.72%) and the 5Yr (-0.72%) German yields remain stable while the 10Yr (-0.51%) and the 30Yr (-0.06%) have inched slightly higher. The view remains bearish. We expect the 10Yr to test -0.20% in the coming weeks. A break below -0.10% can accelerate the fall. The 10Yr can fall to -0.60% and even -0.70%.
The 10Yr GoI (6.0107%) remains in a narrow range of 5.98%-6.03% within its broad 5.95%-6.05% range that we have been mentioning for some time. The near-term outlook is mixed. A breakout on either side of 5.95%-6.05% will decide whether the 10Yr GoI will move up to 6.10% or fall to 5.90% going forward.
