STOCKS
The US reaching a deal over the weekend on the stimulus could provide a trigger for the Dow to see a final rise to 30800-31000 in the coming days. Thereafter we expect it to see a sharp corrective fall. The resistance at 13800 is holding well on the DAX as expected. Our view of seeing a correction from the 13800-13900 resistance zone remains intact. Nikkei is stuck inside 26500-27000. Shanghai can move up to test 3450 and then can reverse lower again. The 3180-3450 range is likely to remain intact. Sensex and Nifty retain their strength and will have room to rise further before reversing lower.
Dow (30179.05, −124.32, -0.41%) is stuck in between 20820 and 30350 over the last couple of weeks. 30000-30500 could be a possible range for this week. There is room on the upside to test 30800-31000 if a break above 30500 is seen. From a bigger picture we see 31000 to be the cap for this upmove and the Dow is likely to see a sharp corrective fall to 29000-28000 and even lower in the coming weeks.
DAX (13630.51, −36.74, +0.27%) surged to 13774 on Friday and has come-off from there. The resistance at 13800 is holding well in line with our expectation. As we have been mentioning for some time we see 13800-13900 as a strong resistance which is likely to hold and trigger a corrective fall to 13200-13000 initially and then even to 12400 eventually going forward.
Nikkei (26603.60, −159.79, -0.60%) continues to oscillate between 26500 and 27000. The near-term outlook continues to remain mixed. There is room on the upside to test 27500 but a further rise past 27500 could be difficult. We expect Nikkei to see a corrective fall from 27500 targeting 25500-24500 in the coming weeks.
Shanghai (3416.93, +22.03, +0.65%) has risen well above 3400. While above 3400 a rise to test 3450 can be seen again. This in turn will delay our expected fall to 3300-3250 that we had been expecting and mentioning all through last week. Broadly, Shanghai has been ranged between 3180 and 3450 for a long time and we expect this range to hold.
Nifty (13760.55, +19.85, +0.14%) and Sensex (46960.69, +70.35, +0.15%) remains strong. 13800 on Nifty and 47200 on Sensex are key levels to watch today which if broken will pave way for further rise in the coming days. As mentioned on Friday both the Nifty and Sensex can continue to move higher as long as a reversal gets confirmed in the Dow
COMMODITIES
Corrective dip seen in Crude and Copper from immediate resistance levels while Gold and Silver continue to surge. Crude and copper could see some corrective range sideways consolidation for a few sessions before again resuming the uptrend while Gold and Silver look bullish for a further rise towards 1920 and 27-28 respectively.
Brent (50.50) and Nymex WTI (47.65) tested upper resistance levels of 52.32 and 49.31 respectively before coming off from there. We may expect some ranged sideways consolidation before the prices start to move up again in the medium term.
Gold (1902) has surged, rising above 1900 and could have scope to test 1920 on the upside before a corrective dip is again seen. Immediate view is bullish towards upper resistance at 1920.
Silver (26.77) has risen sharply and looks bullish towards 27-28 in the near to medium term. Immediate trend is up.
Copper (3.60) has tested 3.6445 on the upside before falling off from there. The crucial resistance near 3.65 is important just now and while that holds we may expect a dip or a sideways consolidation in the 3.50-3.65 region for sometime. A break above 3.65 is needed to take the prices further up towards 3.70-3.75 in the medium term. For now watch for a possible corrective consolidation within 3.50-3.65.
FOREX
Dollar Index has risen taking up Dollar Yen slightly while Euro trades lower. USDCNY has also bounced decently while Aussie and Pound trade lower. EURJPY remains stuck within the sideways range of 125.50-126.78 as it could not sustain a test of 127 seen last week. Dollar Rupee could possibly rise towards 73.75/80 today on the back of Dollar strength and Euro weakness.
Dollar Index (90.409) has bounced back sharply but needs to break above 91 in order to establish a near term low and continue to move upwards. While below 91, there could be scope of a dip back towards 90 or lower indicating the current bounce to be short lived.
Euro (1.2186) has fallen sharply on Dollar strength. Euro has not been able to make a high above 1.2272 in the recent rally but we may expect the current fall to be limited to 1.21 before the currency again starts to move up. Overall medium term is still bullish as there is scope for a test of 1.2300-1.2350 on the upside. Immediate correction could be short lived.
EURJPY (126.02) has dipped keeping the broad range of 126.78-125.50 intact. The pair was unable to sustain the rise to 127 seen last week. While below 127, we expect the range of 126.78-125.50 to hold for the near term.
Dollar-Yen (103.36) is trying to bounce back too and could attempt a test of 104 on the upside but while below 104.50, the view is to see further downside in Dollar Yen in the coming weeks.
Aussie (0.7575) has fallen too as 0.7650 holds as a decent resistance and as Copper too fell from resistance near 3.65. A dip to 0.75 cannot be negated in the near term before another bounce is seen again in the medium term.
Pound (1.3341) has fallen sharply opening with a gap down today as talks between UK and EU is likely to continue today, past the deadline of Sunday. Also as UK’s Covid cases increase, US Prime Minister has laid out restrictions for London and southeast England. While the markets wait to see the outcome of the UK-EU talks, Pound may remain lower and could fall towards1.31-1.30 on the downside. View is bearish for the near term.
USDCNY (6.5503) has bounced well but needs to break and sustain above the 6.56 level to turn further bullish towards 6.60. For now watch price action near 6.56.
USDINR (73.56) is likely to trade within the broad 73.75/80-73.45 region for the day. Weakness in Euro on Dollar strength possibly indicates that Dollar Rupee could bounce back higher today towards 73.75/80. Watch price action as support near 73.45/50 holds for now.
INTEREST RATES
The US Treasury yields have risen well last week and can retest their crucial long-term resistances in the near-term. The possibility of seeing a sharp corrective fall in equities leaves the chances high for these resistances on the yields to hold and keep the long-term downtrend intact. We will have to wait and watch. The German Yields have room to move up further to test their near-term resistances. It will have to be seen if the German Yields can breach these resistances or not. The 10Yr GoI has come-off after testing the 5.97%-5.98% resistance zone as expected. The 5.90%-5.98% range remains intact and the yield can fall within this range now.
The US 2Yr (0.11%) and the 5Yr (0.37%) Treasury yields remained stable while the 10Yr (0.93%) and the 30Yr (1.67%) have inched higher last week. This keeps alive the chances of revisiting the crucial resistance levels of 1% (1Yr) and 1.75% (30Yr) in the near-term. We expect these resistances to hold and drag the yields lower again thereby keeping the long-term downtrend intact. The price action near 1% (10Yr) and 1.75% (30Yr) will need a close watch.
German 2Yr (-0.74%), 5Yr (-0.75%), 10Yr (-0.58%) and the 30Yr (-0.17%) yields have bounced-back well across tenors last week. Our view of seeing a near-term rise to 0.50% (10Yr) and -0.10% (30Yr) remains intact. It will have to be seen if the yields can breach these levels which in turn can negate the chances of the fall to -0.70% (10Yr) and -0.40% (30Yr) that we had been expecting.
As expected the 10Yr GoI (5.9595%) rose to test the 5.97%-5.98% resistance zone and has also come-off from there in line with our expectation. The 5.90%-5.98% range remains intact and the yield can now fall within this range to 5.92% in the near-term.
