STOCKS
Equities continue to remain positive. Dow can rise towards the upper end of its 33500-35000 range this week. The bias is bullish to see an upside breakout of this range eventually. The US markets are closed today. DAX has risen above 15500 and can test 15700-15800 while this break sustains. Nikkei can remain ranged between 28500-29500/30000 for some time. Shanghai can see a corrective dip to 3550 before resuming its uptrend. Sensex and Nifty continue to look strong and can move up further from current levels.
Dow (34529.45, +64.81, +0.19%) can rise to 35000 while it sustains the break above 34500 seen on Friday. Inability to breach 35000 can keep the index inside the 33500-35000 range for some more time. However, our bias remains bullish to see a break above 35000 eventually and a rise to 36000 in the coming weeks. We repeat that 33500 and 33000 are important support and only a fall below 33000 will turn the outlook bearish.
DAX (15519.98, +113.25, +0.74%) has risen-back above 15500 on Friday. It has to sustain above 15500 in order to see a further rise to 15700-15800 that we have been expecting for some time. Else the chances of breaking below 15400 and seeing a fall back to 15200-15000 will still be alive. The price action today will need a close watch.
Nikkei (28944.47, −204.94, -0.70%) has dipped below 29000 but has to sustain above 28500 in order to avoid the deeper fall to 27000-26000 that we were mentioning last week. While above 28500, a test of 29500-30000 is possible in the near-term. A strong rise past 30000 will turn the outlook completely bullish again. For now 28500-29500/30000 can be a possible range for sometime.
Shanghai (3589.15, −11.64, -0.32%) has come-off after testing 3625 as expected. A corrective dip to 3550 is possible now and then a bounce-back to 3650 is possible. In case if it breaks below 3550, the corrective fall can extend upto 3550. However, the long-term view is bullish to see 3800 on the upside in the coming months.
Nifty (15435.65, +97.80, +0.64%) and Sensex (51422.88, +307.66, +0.60%) had tested 15450 and 51500 on Friday as expected and remains bullish. A strong rise past 15450 can take the Nifty up to 16200-16500 in the coming weeks. Sensex on the other hand has to rise past 52000 to surge further towards 53000-54000.
COMMODITIES
Both Nymex WTI and Brent have dipped as Brent continues to trade in a narrow range below crucial resistance at $70. A break on the upside will be crucial and would open up chances of a possible rise to $75-77 which could also pull up WTI towards $70. Watch price action near $70 on Brent. Gold and Silver have risen well and could be headed towards $1920-1950 and $29-30 in the near term. Copper needs to rise above 4.70 to head higher towards 4.80/90; else a fall back to 4.60/55 may be possible.
Brent (68.87) and WTI (66.54) have both dipped slightly. WTI has dipped after rising above $67 briefly in the last week while Brent has not managed to break above $70 yet and trades in a narrow sideways range below the important resistance of $70. A break above $70, if seen in the near term could take it higher towards $75-77 before falling from there again in the longer run. Watch price action near $70 on Brent which is important decider of further direction from here. Also watch if WTI rises back above $67.
Gold (1911.20) is up again after the brief and short corrective dip. A test of 1920-1950 is on the cards for the near term.
Silver (28.18) has risen too and could be headed towards the upper target of 29-30.
Copper (4.6780) has risen well and could test 4.80/90 if it breaks above 4.70. Watch price action near current levels in the near term. Failure to rise above 4.70 can drag it down towards 4.60/55 again in the medium term.
FOREX
Dollar Index trades below 90 and needs to break below 89.50/30 in order to fall further down. Euro can test 1.2250/70 in the near term. Dollar Yen looks stable and could test 110 before coming off from there. EURJPY could dip a little before again rising back towards 134-135. Aussie and Pound could be bullish in the near term towards 0.7750-0.78 and 1.43. USDCNY has fallen sharply breaking below 6.36 and could now be headed towards 6.30 in the medium term. This could possibly impact and favor a stronger Rupee today. USDINR is holding above crucial support at 72.3150 and needs to hold that to trade within 72.3150-72.50/60 for now. Any break above 72.70 in the longer run, if seen can take the pair higher again to 72.90/73.00. On the flipside a break below 72.3150 if attempted could take it down to 72 before bouncing from there. We prefer for a sideways range above 72.3150 for now.
Dollar Index (89.967) trades lower but needs to break below 89.50/30 in order to indicate further bearishness in the coming weeks.
Euro (1.2203) has remained above 1.2150 and could rise to 1.2250-1.2270 soon.
EURJPY (133.81) is stable and has dipped from 134. It may fall to 133.50-133 in the near term before again rising to higher levels of 134.50-135 soon.
Dollar-Yen (109.64) continues to trade above 109 and could now move up towards 110 soon. Any break above 110, if seen would open up chances of a rise to 111-112 in the coming weeks.
Aussie (0.7727) has bounced from 0.77 and could again head towards 0.7750-0.78 in the near term.
Pound (1.4199) may rise towards 1.4250-1.43 if it sustains trade above 1.42. Immediate view is likely to be bullish. Any fall from here could again take the Pound down to 1.41. Watch price action near current levels.
USDCNY (6.3599) broke below 6.36 and now could be headed towards 6.30 eventually in the medium term. View is strongly bearish for the next few sessions unless we see any pull back.
USDINR (72.4450) has bounced well from 72.3150 on Friday and we need to see if the bounce sustains and eventually take the pair higher towards 72.50/60. A re-test of 72.30 looks possible today but there could be some sideways consolidation above 72.30 in the near term. A successive break above 72.70/80 eventually would indicate that a near term bottom has been established.
INTEREST RATES
The US Treasury yields have dipped across tenors on Friday. The US Core PCE index surging to 3.06% (YoY) in April had failed to push the yields higher. A further fall from here can drag the yields to the lower end of their respective range in the coming days. The German yields have room to fall further within their current correction and then can resume their uptrend eventually. The 10Yr GoI looks mixed and can consolidate sideways before extending its downtrend.
The US 2Yr (0.14%), 5Yr (0.80%), 10Yr (1.59%) and 30Yr (2.28%) Treasury yields have dipped across tenors on Friday. A fall below 1.57% can drag the 10Yr lower to 1.5%-1.45% in the near-term. The 30Yr can be vulnerable to dip towards 2.2% while it remains below 2.3%. Broadly, 1.57%-1.7% (narrow) and 1.45%-1.8% (broad) are the possible ranges that can be seen on the 10Yr. The 30Yr can remain in the range of 2.25%-2.4% (narrow) or 2.15%-2.5% (broad) for some time.
The German 2Yr (-0.67%), 5Yr (-0.57%), 10Yr (-0.18%) and the 30Yr (0.38%) yields remained stable on Friday within their corrective fall. The chances of the corrective fall extending up to 0.30%-0.25 (30Yr) and -0.30% (10Yr) are still there before we see a fresh rally thereafter. Broadly the trend is up and the German yields are likely to target 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.
The 10Yr GoI (5.9825%) tested 6% and has come-off on Friday. A fall below 5.98% can take it to 5.96%-5.95%. A strong break above 6% is needed to see the corrective rise to 6.02%-6.04% and 6.06% before the downtrend resumes towards 5.9% on the downside over the medium-term. Else, the fall can happen from here itself after some consolidation between 5.95% and 6%.
