STOCKS
Dow continues to remain stable above 34500. Market seems to be waiting to see the important US non-farm payroll and unemployment data release today. It will have to be seen if this data can provide the trigger for the long awaited break above 35000. DAX remains bullish to see 15800 and 16000-16100 on the upside. Nikkei is likely to test 29500-30000 while it sustains above 28500. Shanghai has seen the expected fall and can consolidate sideways for some time within its overall uptrend. Sensex and Nifty continue to trade strong and are retaining their bullish momentum to see 53000-54000 and 16200-16500 respectively.
Dow (34577.04, −23.34, -0.07%) dipped below 34500 but had managed to bounce back well from the low of 34334. The view of seeing a rise to 35000 remains intact while above 34000. Broadly the 33500-35000 range remains intact. The chances are high for the Dow to breach 35000 and rise to 36000 eventually over the medium-term.
DAX (15632.67, +29.96, +0.19%) saw a short-lived dip below 15500 yesterday and has risen back sharply from the low of 15477.32. This keeps the bullish view intact of seeing 15800 initially and 16000-16100 eventually on the upside. DAX has to fall below 15400 to negate this view and come under pressure.
Nikkei (28900.93, −157.18, -0.54%) has dipped below 29000 but can get support at 28500 again. As long as the index sustains above 28500, a rise to 29500-30000 is still possible. That in turn will reduce the danger of seeing 27000-26000 on the downside. From a bigger picture, 28500 and 28000 are important supports which have to be broken to become bearish.
The corrective fall to 3550 has almost happened and Shanghai (3586.47, +2.26, 0.06%) has bounced from the low of 3561.89. A consolidation between 3550 and 3625/3650 is a possibility in the short-term. The long-term outlook is bullish to see an eventual break above 3650 and a rise to 3800. In case if Shanghai breaks below 3550, an extended fall to 3500 is possible before the overall uptrend resumes.
Nifty (15690.35, +114.15, +0.73%) and Sensex (52232.43, +382.95, +0.74%) continues to move up and are keeping the uptrend intact. We retain our bullish view of seeing 16200-16500 (Nifty) and 53000-54000 (Sensex) on the upside in the coming weeks. 15600 (Nifty) and 52000 (Sensex) are the immediate supports now available above the 15450-15400 (Nifty) and 51500-51150 (Nifty) supports mentioned earlier.
COMMODITIES
Commodities trade lower after the US jobless claims came out strongly higher than expected and lead to fresh rise in the US Dollar. Precious metals (Gold, Silver have fallen the most and could recover in the early sessions of the next week as the data-led impact on prices could reduce. Gold may trade above 1860/40 while Silver can be ranged between 27.0-28.50 for the near term. Copper has fallen sharply too and could test 4.40/30 before rising from there. Crude prices have dipped too but could rise back from immediate supports of $70 (Brent) and $68/67 (WTI)
Brent (70.83) and WTI (68.39) have dipped, losing slightly on the gains seen over the last couple of sessions. This dip came in after the US jobless claims came out stronger than anticipated. This dominated the prices well as the crude prices dipped despite a draw seen in the US inventory stock levels (inventories fell by 5.1mln barrels last week compared with expectations of 2.4mln barrels decrease). We may expect a slight dip in prices to $70 (Brent) and $67-66 (WTI) in the near term before again resuming the upmove. Overall view is bullish while above the mentioned supports.
Gold (1864.50) has fallen sharply after the US Dollar strengthened on a stronger than expected US jobs data.1860/40 would be important supports to watch for and the price is expected to soon bounce back in early sessions next week to 1900+ levels. The fall is triggered by the US jobs data and the impact could be short lived.
Silver (27.44) has also fallen well and is likely to trade within 27.0-28.50 region for the near term. The price has attempted to rise above 28.00/50 but has not been able to sustain higher and has been pulled down every time. While above 27, the sideways range could continue.
Copper (4.4760) is no exception to the falling commodity prices on a strong US Dollar and Copper is now heading towards our earlier expected supports of 4.40/30 from where a bounce looks possible in the longer run.
FOREX
US private payrolls increased by 978000 jobs in May according to the ADP jobs data that was released yesterday. This has taken the Dollar Index sharply up leading to a fall in almost all other currencies globally. Euro, EURJPY, Aussie, Pound, Chinese Yuan all trade weak against the US Dollar but may recover by mid of next week. USDINR can bounce towards 73.20/30 today keeping the range of 72.90-73.30 intact. A break on either side could open up chances of testing 72.80/75 or 73.40/50. Volatility could be expected today as the RBI would release monetary policy statement.
Dollar Index (90.536) rose sharply after the stronger than expected US jobs data that came out yesterday. The index has scope for a rise to 90.98 which above 90.50 before a dip is seen possibly by the end of next week. Watch price action if it sustains above 90.50.
Euro (1.2118) has fallen as expected yesterday and could test 1.21 from where a bounce looks possible. Failure to sustain above 1.21 may take it down to 1.2050. Watch price action near 1.21.
EURJPY (133.54) has dipped slightly. A break below 133.50, if seen can take the cross lower towards 133.20/00. But overall long term view is still bullish.
Dollar-Yen (110.21) has risen sharply breaking above 109.80 and rising above 110, boosted by a rise in the Dollar Index. The next important resistance is 111 on the 3-day candle chart which will soon be tested. It would be important to see of 111 holds and produces a sharp rejection or allows for a further rise towards 112 in the longer run.
Aussie (0.7655) has fallen sharply too and could test 0.76 before bouncing back from there. Immediate view is bearish.
Pound (1.4101) has fallen sharply on fresh rise in the US Dollar and a successive break below 1.41 could make the Pound vulnerable to a fall towards 1.4050-1.40 in the longer run. Watch price action near 1.41 from where an immediate bounce is needed to negate further fall.
USDCNY (6.4031) has bounced well and negates any fall below 6.36 in the near to medium term. While above support near 6.35/36, USDCNY looks bullish for a test of 6.41/42 on the upside before a short corrective dip is possible. Overall view is bullish for an eventual rise to 644/45 in the medium term.
USDINR (72.9125) tested exactly the lower end of our mentioned range of 72.90-73.30 yesterday and while 72.90 holds we may expect a bounce back to 72.20/30 on the upside again. Note that we may allow for a test of 72.80/75 (revised from 72.70/60 mentioned in the evening comments yesterday) on a break below 72.90 today but broadly expect a bounce back towards 73.20/30 keeping the broad range of 72.90-73.30 intact for the day. RBI policy statement today could keep the exchange volatile today.
INTEREST RATES
The US Treasury yields have risen back and have high chances of moving up toward the upper end of their narrow 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) range. The US jobs data today will need a close watch to see how it influences the yield movement. The German yields remain in their correction phase. A further dip is possible from here before resuming the uptrend. The 10Yr GoI can resume its downtrend from here itself if it fails to rise back above 6% today. The RBI’s monetary policy outcome is due today.
The US 2Yr (0.16%), 5Yr (0.84%), 10Yr (1.63%) and 30Yr (2.30%) Treasury yields have risen back sharply across tenor from near the lower end of their range. As expected, the 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) range is holding well and the yields are likely to move up towards the upper end of this range in the near-term. 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) will be the wider range of trade that can be seen over the next couple of months.
The German 2Yr (-0.68%), 5Yr (-0.58%), 10Yr (-0.19%) and the 30Yr (0.37%) yields remain lower and stable. Our view of seeing a near-term dip to 0.30%-0.25 (30Yr) and -0.30% (10Yr) remains intact. Thereafter the yields can see fresh rally to keep the broader uptrend intact. We expect the German yields to rise to 0% (10Yr) and 0.55% (30Yr) in the coming weeks.
The 10Yr GoI (5.9994%) has dipped below 6%. Inability to rise above 6% today can drag it to 5.95% again in the coming days indicating the resumption of the downtrend. Such a fall will increase the chances of seeing 5.9% from here itself without seeing a corrective rise to 6.04%-6.06% that we had been expecting.
