STOCKS
Dow is attempting to move up towards the upper end of its 33500-35000 range. We retain our bullish bias to see an upside breakout of this range eventually. DAX seems to be losing momentum and can fall-back to retain its 14800-15500 range. The expected upside breakout of this range is getting delayed. Nikkei has surged above 29000 but needs to breach 29500 to become bullish and avoid a fall-back. Shanghai has resistance coming up now and can see a corrective fall before resuming the uptrend. Sensex and Nifty remain bullish to test 51500-52000 and 15400-15450 respectively.
Dow (34464.64, +141.59, +0.41%) broke above 34500 but did not sustain. A sustained break above 34500 can take it to 35000, the upper end of the 33500-35000 range in the coming days. Broadly our view is bullish to see a break above 35000 and a rise to 36000 while the Dow remains above its key supports at 33500 and 33000. Only a fall below 33000 will turn the outlook bearish.
DAX (15406.73, −43.99, +0.28%) has dipped further and looks vulnerable for a fall towards 15200-15000 again. As mentioned yesterday, a break below 15400 can trigger this all. Broadly, the 14800-15500 range is going to hold well for some more time and the rise to 15700-15800 that we are expecting will get delayed.
Nikkei (29125.47, +576.46, +2.02%) has surged above 29000 and can now test 29500. The price action at 29500 will need a close watch. A break above 29500 will pave way for 30000 and higher levels. It will also negate the fall to 27000-26000 that we were expecting.
Shanghai (3606.71, −2.14, -0.06%) tested 3626.36 yesterday and has come-off from there. 3625-3650 can be an intermediate resistance. While that holds, a corrective fall to 3550-3500 cannot be ruled out. But as mentioned yesterday, the long-term view is bullish to see 3800 on the upside.
Nifty (15337.85, +36.40, +0.24%) and Sensex (51115.22, +97.70, +0.19%) remains bullish and are heading towards 15400-15450 and 51500-52000 in line with our expectation. A strong rise past 15450 (Nifty) and 52000 (Sensex) will increase the bullish momentum to see 16200-16500 (Nifty) and 53000/54000 (Sensex). The price action in the coming days will need a close watch to see if the indices break above these levels or will see a corrective fall.
COMMODITIES
Commodities are mixed today. Crude and Copper trade higher today while Gold and Silver seems stable. WTI has broken above resistance near $67 and needs to reak above $68 too in order to rise further towards $70/72. Brent on the other hand is yet to break above $70 and still has scope for rejection. Failure to fall from $70 would open up $75-77 on the upside. Gold may trade between 1890-1920 while Silver is bullish while above 27. Copper needs to break above 4.70 in order to head towards 4.80/90.
Brent (69.39) and WTI (67.11) saw a short and brief dip yesterday but has again risen to trade higher. WTI has broken above $67 and if it manages to break above $68 too in he very near term, a rise to $70-72 could be on the cards. Brent on the other hand is yet to test resistance at $70 and we would keep a close watch to see if the resistance holds to produce a fall from there or Brent manages to break higher. If a break above $70 is seen, we will have to allow for an upward extension to $75-77 before a sharp fall takes place.
Gold (1897.30) is stable below 1900. Immediate resistance at 1920 seems to be holding for now and Gold could trade within 1890-1920 range for a few sessions, eventually rising towards the higher end of the range. In the longer run, a break above 1920 would take it towards 1950.
Silver (27.88) has risen slightly and while above 27, there is still scope to see a rise towards 28-29-30 on the upside in the coming weeks.
Copper (4.6660) rose sharply breaking above 4.60, contrary to our expectation of a fall to 4.40/30. While there is scope for a ranged movement above 4.55, A break above 4.70 would pave way for a further rise to 4.80/90 on the upside. Watch price action near 4.70.
FOREX
Dollar Index hovers around 90 and needs to break on either side successively to indicate further direction from here. Euro could limit its fall to 1.2100/50 from where a bounce looks possible. Aussie looks stable while Pound has risen again to test 1.42 and a break above that will be needed to confirm further bullishness. Dollar Yen has risen and could test 110. Thereafter a break above 110 or a fall from there would indicate further movement. USDCNY needs to hold above 6.36 else a sharp fall towards 6.30 can come into the picture. USDINR can test 72.50/39 before bouncing from there.
Dollar Index (90.085) looks stable around 90 and needs to show a sustained rise or fall on either side of 90 to indicate further movement from here. We would wait and watch for a rise or fall from current levels.
Euro (1.2183) has dipped while 1.2265 holds as immediate resistance level. But we may soon see a bounce from 1.2150-1.2100 in the near term. Downside could be limited to 1.21 in the near term.
EURJPY (133.88) has risen in line with our expectation and could rise towards 134-135 steadily.
Dollar-Yen (109.85) has risen well and could test 110. A break above 110, if seen would take the pair further up towards 111-112 region. Only if 110 holds, we may again look for a fall to 108.50. Watch price action near 110.
Aussie (0.7743) continues to remain stable and could steadily rise towards 0.78.
Pound (1.4190) has risen again to attempt a test of 1.42. Unless a break above 1.42 is seen we cannot look for higher targets of 1.43. For now 1.42-1.40 range continues to hold and a break above 1.42 looks likely.
USDCNY (6.3753) continues to trade below 6.40 and can test 6.36. Failure to bounce back from 6.36 can drag it much lower towards 6.30 in the coming weeks. Watch price action near 6.36 closely.
USDINR (72.5950) tested 72.52 on the downside before closing slightly higher. A test of 72.50 looks possible today but if the pair does not bounce back from there, it could be dragged lower to test 72.39, the next important support. Thereafter a break below 72.39 should sustain to bring in chances of a fall to 72.25/00. We would wait to see price action near 72.50/39 for now. A shot corrective bounce looks possible.
INTEREST RATES
The US Treasury yields have bounced-back well yesterday. A further rise from here will reduce the chances of seeing a fall to the lower of their broad range that we have been mentioning over the last few days. Overall the Treasury yields are likely to consolidate at higher levels for some time. The US PCE data release today will need a close watch to see if it can push the yields higher. The German yields have risen back sharply yesterday and are giving early signs of an end of the corrective fall. It will have to be seen if the yields can move up further in the coming days and confirm the same. The 10Yr GoI has risen yesterday and keeps alive the chances of seeing a corrective bounce before resuming the downtrend.
The US 2Yr (0.15%) Treasury yield remains stable while the 5Yr (0.82%), 10Yr (1.61%) and 30Yr (2.29%) have risen back. The 10Yr has risen above 1.6% and while this sustains a further rise to 1.7% can be seen in the near-term. That will keep the 10Yr in a range of 1.57% -1.7% for some time and reduce the chances of seeing 1.5% on the downside. The 30Yr on the other hand can avoid the fall to 2.2% if it breaks above 2.3% from here which will pave way for a test of 2.4% again.
The German 2Yr (-0.67%), 5Yr (-0.56%), 10Yr (-0.17%) and the 30Yr (0.38%) yields have risen back sharply across tenors. A further rise from here will indicate the end of the corrective fall and the resumption of the uptrend. Our broader view remains bullish to see 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term. -0.25% (10Yr) and 0.30%/0.28% (30Yr) are important supports that can limit the downside from here.
The 10Yr GoI (5.9873%) has moved up yesterday. This keeps alive the chances of seeing a corrective bounce to 6.02%-6.04% and even 6.06% first. Thereafter the yield can reverse lower and resume the downtrend targeting 5.9% on the downside.
