STOCKS
The Dow has risen back into the 27500-28000 resistance zone and will have to be seen if it can breach 28000 decisively to negate the danger of seeing a fall again. Sensex and Nifty can also move up today taking cues from the rise in the US markets last night and the SGX-Nifty (11360.50, +106.50, +0.95%) in the morning trades. But key resistances at 11350 on the Nifty and 38400-39000 on the Sensex will have to be broken to become bullish again. DAX is struggling to move strongly above 12800 and remains vulnerable to fall again. Trading in Nikkei is halted today due to technical glitch. Shanghai is closed for a week from today (01-Oct-20) to next Thursday (08-Oct-20).
The Dow (27781.70, +329.04, +1.20%) has bounced-back above 27500 and has tested 28000 as well. It will have to be seen if it can get a strong follow-through rise and surpass 28000 decisively from here. A strong rise above 28000 will negate the danger of seeing 27000-26500 that we have been mentioning and in turn it will pave way for a rise to 28500-29000. We will have to wait and see.
DAX (12760.73, −65.09, -0.51%) seems to be struggling to see a strong follow-through rise above 12800. Inability to rise past 12800 decisively from here can drag it to 12400. It will also keep the index vulnerable to test 12000 on the downside eventually. A strong close above 12800 is needed to see a rise to 13000-13200 again.
Trading in Nikkei (23184.93) has been halted today due to technical glitch. Yesterday, the index declined sharply failing to break the 23000-23500 range on the upside. It can test the lower end of the range. A breakout on either side of 23000-23500 will decide whether the index will move up to 24000 or fall to 22500.
Shanghai (3218.05) remains stuck in between 3200 and 3250. The Chinese markets are closed from today (01-Oct-20) to next Thursday (08-Oct-20) on account of public holidays.
Nifty (11247.55, +25.15, +0.22%) sustains above 11200 and could move up to test 11350 today following the rise in the US markets last night and the SGX Nifty (11360.50, +106.50, +0.95%). However, we reiterate that a strong rise past 11350 will be needed to turn the outlook bullish and bring back the chances of seeing 11600-11800 levels again. While below 11350 the bias will continue to remain negative.
Sensex (38067.93, +94.71, +0.25%) on the other hand can test its resistances at 38400 and can extend the rise to 39000 if it manages to breach 38400. However, as we have been mentioning over the last few days a strong rise past 39000 is needed to become bullish to test 40000 levels again. While below 39000 the broader view is negative.
COMMODITIES
Crude prices trade higher today but could remain within a range for the near term. Gold and Silver could be ranged too but look bearish for the medium term. We may expect Gold to fall to 1840 and Silver could head towards 23-20 in the longer run. Copper is bullish while above 3.
Brent (42.29) and Nymex WTI (40.16) have both bounced back from slightly lower levels seen yesterday. We may expect some sideways trade for the near term on both Brent (within 40-45) and on WTI (within 39-44).
Gold (1896.50) has declined from 1900 itself instead of testing the upper resistance at 1920. While below 1900, view is to see resumption of the fall towards 1840 initially and lower towards 1800 in the medium term.
Silver (23.67) is likely to see some ranged trade within 25-23 for the near term. A break below 23 thereafter could drag the price lower towards 20 in the longer run.
Copper (3.0420) could trade within 3.0-3.10 region for some time before attempting to rise towards 3.15/20 in the longer run.
FOREX
Contrary to our expectation of a rise in dollar Index, it has fallen, leading to strength in most currencies. Euro may test 1.18, EURJPY could re-test 124.40. Aussie and Pound look bullish towards 0.72 and 1.30/31. The Chinese Yuan has strengthened well and could continue to trade stronger towards 6.75. Stronger Euro and Yuan could drag down USDINR too towards 73.40/30.
Dollar Index (93.70) has fallen well contrary to our expectation of re-testing 95+ levels. A dip below 94 has now brought the index back into the earlier trading zone and unless a bounce from 93.50 is seen immediately, we may expect a fall towards 92.70 soon. This could be positive for most currencies.
Euro (1.1745) has risen well and if the Dollar Index continues to fall, we may expect a decent rise in Euro in the near term towards 1.18 or slightly higher. Immediate view is bullish for the next 2-3 sessions.
EURJPY (123.84) is bearish while below 124.40. Only a sustained break above 124.40 would force us to revise our targets to higher levels. For now watch price action near 124.40.
Dollar-Yen (105.46) could be seen within 105-106 region for the next 4-5 sessions at least.
Aussie (0.7181) has risen well and could test 0.72 on the upside. But we would keep a close watch at 0.72 to see if that breaks on the upside or falls back towards 0.71. Overall broad range of 0.70-0.72 is likely to hold for the medium term.
Pound (1.2938) has risen well on dollar weakness. We may expect a test of 1.30/31in the near term.
USDCNY (6.7898) has dipped sharply from 6.8167 falling towards our expected 6.80/78 levels. A break below 6.78 would be bearish for a fall to 6.75 in the coming sessions. Watch price action near 6.78. The fall would be triggered by a weaker Dollar.
USDINR (73.77) may attempt to break below 73.75/50 as Dollar trades weak and most currencies look strong today. Upside is likely to be capped at 74. View is bearish for today. We may expect a range of 73.35-73.75 for the next few sessions while Dollar remains weak.
INTEREST RATES
The US Treasury yields have risen sharply at the far-end (10Yr and 30Yr). This keeps the chances alive of seeing a rise in the near-term before the broader downtrend resumes. The German yields remain lower and stable. The outlook continues to remain bearish and a further fall is possible in the coming days. The 10Yr GoI has dipped below an intermediate support yesterday and can extend the fall further today.
The US 2Yr (0.13%), 5Yr (0.28%), 10Yr (0.70%) and the 30Yr (1.47%) Treasury yields had moved up sharply at the far end. The 30Yr is holding well above 1.40% and is keeping alive the chances of seeing 1.50%-1.60% on the upside before a fresh fall to 1.30%-1.25% happens over the medium-term. The 10Yr however will have to breach 0.73% decisively in order to move up towards 0.80% and 0.90%. While below 0.73% it can remain stuck in a range of 0.65%-0.73% or 0.60%-0.73%.
The German 2Yr (-0.71%), 5Yr (-0.72%), 10Yr (-0.52%) and the 30Yr (-0.10%) yields have inched slightly higher. The downtrend remains intact. We expect the 10Yr to test -0.60% and the 30Yr to fall to -0.20% from where an intermediate bounce is possible. However, from a bigger picture the 10Yr and 30Yr can extend the fall to -0.70% and -0.35% respectively on an eventual break below 0.60% and -0.20% respectively.
The 10Yr GoI (6.0155%) has dipped further breaking below 6.02% – the support mentioned yesterday. While below 6.02% a further fall to 5.98% is possible in the near-term. As mentioned in the Evening Comments yesterday, 5.975%-6.08% is the range in play just now. A breakout of this range will decide whether the yield will move up 6.10%-6.15% or fall to 5.90%.
