STOCKS
Dow and DAX looks mixed and could be range bound. 33500-35000 on the Dow and 14800-15500 on DAX could be the possible range. Asians look relatively weak. Nikkei can fall to 27000-26000 while it remains below 28500. Shanghai has come back into its 3350-3500 range and can fall to 3450-3400 now. Sensex and Nifty have declined sharply yesterday and look weak to fall further. Any intermediate bounce could be short-lived. They have to rise past 50500 (Sensex) and 15100 (Nifty) decisively to bring back the bullishness.
Dow (34084.15, +188.11, +0.55%) has risen back above 34000. The 33500-35000 range continues to remain intact. We reiterate that 33500 and 33000 are crucial supports. Only a break below 33000 will turn the outlook bearish. While above these supports the bias is bullish to see a break above 35000 and rise to 36000 eventually over the medium-term.
DAX (15370.26, +256.70, +1.70%) has risen back sharply above 15200 again and keeps alive the chances of seeing 15700-15800 on the upside. The chances of testing 14800 that we had mentioned yesterday stand reduced now. As mentioned yesterday, 14800-15500 is the range for now. The bias is bullish while above 14800 to break 15500 and rise to 15700-15800.
Nikkei (28222.13, +123.88, +0.44%) has risen well above 28000 and can test 28500 – the important immediate resistance again. While below 28500, our view continues to remain bearish to see a fall to 27000-26000 on the downside. A strong rise past 28500 is needed to negate the bearish view.
Shanghai (3488.35, −18.59, -0.53%) has declined below 3500. As mentioned yesterday, a further fall to 3450-3400 is possible now and the chances of a rise past 3525 stands negated. The 3350-3500 can come back into play again.
Nifty (14906.05, −124.10, -0.83%) and Sensex (49564.86, −337.78, -0.68%) fell sharply yesterday. Our view of seeing 14800-14600 on Nifty and 49000 on Sensex remains intact. The broader picture continues to look weak. Any bounce in the coming sessions could be short-lived. A sustained rise past 15100 (Nifty) and 50500 (Sensex) is necessarily needed to bring back fresh bullishness.
COMMODITIES
Crude prices trade lower but have bounced from lower supports of our mentioned ranges of $65-70 and $62-67 for Brent and WTI respectively. We may expect a steady rise in prices in the near term while supports hold. Gold holds below 1880 and come off to 1860/40 in the near term. Silver is bullish while above 27-27.50 and could re-attempt to rise above 28 soon. Copper is bearish while below 4.60.
Brent (65.25) and WTI (62.10) fell to test 65.14 and 61.87 respectively after the EIA released the US inventory levels showing an increase of 1.3mln barrels for week ended 14th May. Adding to this was the news of progress on the US-Iran nuclear deal where if the US lifts sanctions, it could boost oil shipments adding to global oil supply. Overall our expected range of $65-70 on Brent and $62-67 on WTI has held well as the prices bounced after testing the lower end of the mentioned range. We may expect the prices to rise within the range in the near term. Only a break on either side of the range would indicate further clarity on movements but our preference would be to see an eventual fall in prices in the longer run.
Gold (1872.5) looks stable and has dipped a bit after testing 1878 on the upside. Immediate resistance at 1880 seems to be holding just now and while that holds, a short corrective dip to 1840/30 cannot be negated. Watch price action near current levels.
Silver (27.68) trades above 27-27.50 and while so, we may expect the upside targets of 29.50-30.00 to remain intact and to be tested in the medium term. Only a fall below 27, if seen would negate bullish possibilities.
Copper (4.5250) is almost stable below resistance at 4.60. We continue to look for lower support levels of 4.40/30 to be tested soon. Immediate view is bearish while below 4.60.
FOREX
Dollar Index has fallen below 90 and seems bearish now towards 89.50/30. Euro could test 1.23-1.2320 before dipping from there. Aussie and Pound look stable just now but could rise from current levels slowly. USDCNY has fallen again from levels above 6.44 and could re-test 6.43 before rising higher. USDINR may trade above 73 for a few sessions before rising higher towards 73.30/50.
Dollar Index (89.76) has fallen back to levels below 90 as the brief rise seen yesterday was only due to the FOMC minutes released for the April policy meet. While the index holds below 90, it is strongly bearish for a fall to 89.50/30 and further lower in the medium term. Watch price action near 89.50/30 in the near term as it is likely to break lower.
Euro (1.2230) has risen again on fall in the Dollar Index. Euro could be headed towards 1.23-1.2320 in the near term. Immediate view is bullish.
EURJPY (133.13) trades higher and could rise towards 133.50 or even higher in the near to medium term. A break above 133.50 would trigger further rise towards 134-135-136 in the coming weeks.
Dollar-Yen (108.86) may also fall along with the Dollar Index in the near term. A break below 108.50 may trigger such a fall. Else a bounce back from 108.50 can be seen taking it up to 109-109.50 again in the medium term. Watch price action near 108.50.
Aussie (0.7756) looks stable and could trade within the broad 0.78-0.7750 region for now. A break on either side would then give some clarity on future movements.
Pound (1.4177) has risen sharply again on weakness in the Dollar Index. A break above 1.42 is needed to take the exchange rate higher towards 1.4250 initially.
USDCNY (6.4340) tested levels above 6.44 but has come down again from there. A fall to 6.42 cannot be negated while Dollar trades weak.
USDINR (73.1050) traded within 73.17-73.08 yesterday. We continue to expect some sideways movement above 73 for some time before rising higher towards 73.30/50 slowly. On the downside, watch support at 73.0-72.90 in the near term.
INTEREST RATES
The US Treasury yields have dipped across tenors failing to hold on to the gains made after the US Federal Reserve April meeting minutes release on Wednesday. Supports are there near current levels which can hold and take the yields up again within their broad sideways range in the coming days. The German yields continue to trade stable and keep our bullish view intact. The 10Yr GoI remains mixed in the near-term and is not clear whether the fall to 5.9% will happen from here itself or after a corrective bounce.
The US 2Yr (0.15%), 5Yr (0.82%), 10Yr (1.63%) and 30Yr (2.33%) Treasury yields have dipped across tenors. 1.6% is an immediate support for the 10Yr and a narrow range of 1.6%-1.7% is possible in the near-term within our broad expected range of 1.45%-1.8%. A break above 1.7% is needed to move up towards the upper end of its broad range. the 30Yr has support at 2.3% from where it can bounce towards 2.4% again. 2.15%-2.5% is the broad range possible in the 30Yr and a break above 2.4% will pave way for further rise.
The German 2Yr (-0.66%), 5Yr (-0.50), 10Yr (-0.11%) and the 30Yr (0.43%) yields continue to trade stable and are keeping our bullish view intact. We expect the yields to move up to 0% (10Yr) and 0.55% (30Yr) in the coming weeks while they remain above -0.20% (10Yr) and 0.35% (30Yr).
The 10Yr GoI (5.9686%) is stuck in a narrow range above 5.95%. The near-term view is mixed. The broader view is bearish to see 5.9% on the downside. Whether this fall happens from here itself or after a corrective bounce to 6.02%-6.04% is not very clear. We will have to wait and watch
