STOCKS
Equities are turning mixed. Dow keeps alive the chances of seeing 32000 before reversing lower. DAX has dipped below 14000 and looks vulnerable to fall from here itself. Nikkei remains higher and stable. It has to sustain above 30000 to move higher. Shanghai has near-term resistances that can trigger a corrective fall before the long-term uptrend resumes. Sensex and Nifty have room to move down further and can consolidate sideways for some time.
Dow (31613.02, +90.27, +0.29%) fell below 31500 but had risen-back sharply from the low of 31338.76. The near-term bullish view of seeing 32000 on the upside remains intact. Thereafter we expect the Dow to reverse lower and see a corrective fall to 31000-30000 or even lower.
DAX (13909.27, −155.33, -1.10%) has declined below 14000. The chances of seeing a break above 14200 and an extended rise to 14500-14600 stands reduced now. While below 14000, DAX can see the expected fall to 13600 and even 13400-13200 from here itself.
Nikkei (30335.90, +43.71, +0.14%) remains stable below 30500 after the sharp pull-back from the high of 30714.52 on Tuesday. Our view remains the same. While above 30000, the outlook is bullish to see 33000-34000 on the upside. Only a strong break below 30000 will negate this rise and trigger a corrective fall to 29000-28000. The price action in the coming days will need a close watch to gauge whether Nikkie can sustain above 30000 or not.
Shanghai (3697.47, +42.38, +1.16%) reopened with a wide gap-up but had come-off from the high of 3731.69. Intermediate resistance is at 3730-3750. While this resistance holds, a corrective fall to 3600-3550 cannot be ruled out. However, from a bigger picture, 3600-3400 will be a broad support zone that will limit the downside and keep the potential to target 4400 from a long-term perspective.
Sensex (51703.83, -400.34, 0.77%) has dipped below 52000. A fall to 51000 is likely while it remains below 52000. The level of 51000 is crucial to watch as a break below it can trigger a sharp corrective fall.
Nifty (15208.90, -104.55, -0.68%) has managed to hold above 15200 yesterday. A break below 15200 can drag it to 15000. A strong rise past 15400 will now be needed to bring back the bullish momentum. Broadly, we can look for a range of 15000-15400 for some time.
COMMODITIES
Gold has declined sharply on strong Dollar but Silver remains stable and relatively bullish than gold. Copper is coming closer to a key resistance and can see a corrective fall in the coming days. Brent and WTI looks bullish and can rise further from current levels.
Brent (65.42) and WTI (61.95) have risen well. Brent has risen past its resistance at 65 and can now rise to 68-70. WTI has room to test 63-63.50.
Gold (1783) has been falling sharply boosted by a strong Dollar over the last couple of sessions. A dip to 1760-1740 cannot be negated in the very near term. View is bearish for a fall to 1740 initially in the coming sessions.
Silver (27.40) is surprisingly holding stable above support at 26 and does not look as bearish as Gold. While above 26, Silver looks optimistic for a possible rise towards 29.50-30 in the medium term. Silver could most likely be stable while Gold falls and show a sharp rise as Gold indicates signs of bounce from lower supports.
Copper (3.89) has risen to test 3.90 as expected. Resistance is at 3.913.92 from where a corrective fall to 3.80 or even lower is possible in the near-term.
FOREX
Dollar Index rose well after the strong US Retails sales data and may indicate immediate weakness in major and EM currencies for a few sessions before a reversal is again seen. Euro may test 1.20-1.1948 while EURJPY may bounce back from 127. Aussie and Pound may dip to 07680 and 1.3760 respectively in the near term. USDCNY may remain ranged while USDINR may rise to test 73 before dipping from there.
Dollar Index (90.93) rose to 91.06 yesterday after the US Retail sales rose sharply from 5.88 (Y/Y% seen for Dec’20) to 10.83 (Y/Y%) for Jan’21. A sustained break above 91 can take the Dollar Index to 91.50 or even 92 on the upside and a sharp reversal can be seen thereafter.
Euro (1.2039) has dipped sharply breaking below immediate support near 1.2095 as Dollar Index rose sharply following the positive and strong US Retail sales figures. While below 1.21, the currency may continue to decline towards 1.20-1.1948 in the near term before again bouncing back from there to higher levels. Watch out for a weaker trade while Euro holds below 1.21.
EURJPY (127.45) has dipped as 128.45 seems to be holding for now. Watch for a possible bounce from 127 in the near term that could keep the bullish view intact for the medium term. Failure to hold above 127 could drag it lower towards 126-125.75 again in the near term.
Dollar-Yen (105.88) has dipped below 106 after testing 106.23 on the upside. While below 106, the pair may extend towards 105.5 before again bouncing back to higher levels.
Aussie (0.7757) has dipped too but watch price action near 0.7680 to see if it holds and produces a bounce towards 0.7750-0.7800 again in the near term.
Pound (1.3853) has dipped too and is holding below 1.40 just now. While the Dollar trades strong, we may expect a dip in Pound towards 1.3760 in the near term from where a bounce may again be seen.
USDCNY (6.4508) is ranged and likely to remain stable this week within the narrow 6.44-6.46 region.
USDINR (72.7450) rose well to test 72.92 yesterday and could aim to test 73 today while downside could be limited to 72.70. A break above 73 if seen would make the pair further bullish for the medium term. For today watch price action on a test of 73.
INTEREST RATES
The US Treasury yields have dipped across tenors. The price action in the coming sessions will need a close watch to see if they can get a strong follow-through rise from here in order to sustain the breakout of the long-term resistances and confirm the trend reversal. The strong US retail sales number released yesterday can support the yields to stay higher. The German yields have dipped but have support near current levels that can limit the downside. The near-term outlook is bullish and the yields can move up further from current levels to test their key resistances and then can reverse lower. The 10Yr GOI is bullish and can rise in the coming days.
The US 2Yr (0.10%), 5Yr (0.54%), 10Yr (1.26%) and 30Yr (2.03%)have dipped back across tenors. The 10Yr and 30Yr seem to lack strength to sustain the break above their crucial resistance levels of 1.25% and 2.05% respectively. We will have to wait and watch. A strong follow-through rise from here will be bullish to see 1.45%-1.55% (10Yr) and 2.20%-2.40% (30Yr) on the upside over the medium-term. As mentioned yesterday, the 10Yr will have to fall below 1.20% to negate the above mentioned rise.
The German 2Yr (-0.71%), 5Yr (-0.65%), 10Yr (-0.37%) and 30Yr (0.13 %) have dipped slightly. However, the near-term bullish view remains intact. The 10Yr can rise to 0.30%/-0.25% (10Yr) while it stays above -0.40% and the 30Yr can test 0.20% on the upside. We reiterate that 0.20% is a strong resistance on the 30Yr from where a reversal is possible.
The10Yr GoI (6.1173%, 05.77 GS 2030) had bounced sharply from the low of 6.0945% yesterday. The outlook is bullish to see a rise to see 6.15%-6.16% and even 6.20% on the upside. Support is in the 6.10%-6.09% region.
The 10Yr GoI (6.0305%, 05.85 GS 2030) sustains higher and keeps alive the chances of breaking above 6.04%. Such a break will pave way for a rise to 6.08%-6.10% in the coming days. That will negate the danger of seeing 5.93%-5.90% on the downside.
