STOCKS
Dow has moved up well above 34500. It will have to be seen if the US jobs data release today can provide the possible trigger to break the 34700-35000 resistance region going forward or not. DAX remains mixed and oscillates around 15600 within its 15400-15800 range. Nikkei remains below 29000 and keeps alive the chances of testing 28500 and even lower. Shanghai has fallen sharply within its 3500-3625 range. It will have to be seen if it can bounce back from 3500 or not. Sensex and Nifty are coming down gradually in line with our expectation towards their range supports and will have to be seen if they bounce back in the coming days.
Dow (34633.53, +131.02, +0.38%) has risen further and has come closer to the 34700-35000 resistance region. We reiterate that a strong rise past 35000 is necessarily needed to become more bullish towards 36000. Else, a fall back to 34000-33500 cannot be ruled out again. Will the NFP data release today provide the trigger to break above 35000? We will have to wait and watch.
DAX (15603.81, +72.77, +0.47%) oscillates around 15600 and continues to look mixed in the near-term. As we have been mentioning for some time 15400-15800 can eb the range is in play now. A breakout of this range will then determine whether DAX can go up to 16000-16100 or fall to 15200-15000 and lower from here.
Nikkei (28792.64, +85.60, +0.30%) remains below 29000 and keeps intact the view of seeing 28500 and even 28000 on the downside. Nikkei will have to rise past 29500 from here in order to regain bullish momentum. Also 28000 is a crucial long-term support which we expect to hold and keep the broader uptrend intact.
Shanghai (3539.85, −48.93, -1.36%) has declined sharply and is heading down towards 3500 in line with our expectation. As mentioned earlier, a break below 3500 can see an extended fall to 3450-3400 before a reversal is seen. That in turn will delay the expected break above 3625 and the medium-term rise to 3700-3800. The price action at 3500 will need a close watch now.
Sensex (52318.60, −164.11, -0.31%) and Nifty (15680, −41.50, -0.26%) are continuing to come down gradually towards 52000 and 15600 respectively as expected. A break below 52000 (Sensex) and 15600 can drag the indices further lower to 51000 (Sensex) and 15500-15400 (Nifty). We repeat that 52000-53000 (narrow) or 51000-53000 (broad) and 15600/700-15900 (narrow) or 15400-15900 (broad) are the possible range that can be seen on the Sensex and Nifty respectively for some time before the indices see an upside breakout of this range eventually over the medium-term.
COMMODITIES
Crude prices have risen a bit but WTI seems to have move up more than the Brent bringing down the Brent-WTI spread to 0.60. The spread is at its lowest since last seen in 2016. We may soon expect the spread to rise in the near term. WTI has immediate resistance at $76 while Brent may test $77/78-80 before falling. Gold needs to rise above $1780 to head higher while silver has dipped after testing 26.48 exactly in line with our expectations. Copper is stuck within 4.40-4.10 and may remain so for some more time.
Brent (75.95) and WTI (75.35) both have risen but WTI seems to have risen more than Brent bringing the Brent-WTI spread down to (0.60). On the WTI the resistance of $75 has now risen to $76 which could be tested in the very near term followed by a decline from there towards $72-70. Brent on the other hand may rise to $77/78 from where a dip looks likely. On Brent we may allow for a maximum rise to $80 within the current upmove. For now, watch price action near resistances of $76 and $77/78 on WTI and Brent respectively.
Gold (1778.20) has risen a bit but needs to rise above $1780 and move up in order to continue towards 1800 or higher. Support near 1750/40 may hold for now.
Silver (26.14) tested 26.48 yesterday exactly the upper end of our mentioned 26.50-25.80 range. The price has dipped today and may head towards 26.0-25.80 on the downside. We may expect sideways consolidation to continue for some more time beforea sharp break out is seen on either side.
Copper (4.2370) continues to range within 4.40-4.10 and could dip towards the lower end of the range before attempting to bounce again. Overall ranged movement is likely to hold for now.
FOREX
Dollar Index trades strong today ahead of the NFP and could test 93 while Euro could be headed towards 1.18. EURJPY has risen and needs to break above 132.80 to move up further towards 133-134. Aussie and Pound has fallen sharply and looks weak for the near term. USDCNY may rise to 6.48/50 while USDINR could rise towards 74.75-75.00 before declining from there.
Dollar Index (92.58) is headed higher ahead of the NFP data release today. We may expect a test of 93 before any dip is seen in the longer run.
Euro (1.1842) has dipped and could be headed towards 1.18 in the near term. Note 1.18 is an important support below current levels and might hold in the medium term.
EURJPY (132.14) has broken above 132 contrary to our expectation and could now test 132.80 which also needs to break to ensure further upmove towards 133-134. Watch for a possible dip from 132.80. Immediate view is bullish.
Dollar-Yen (111.56) is rising as expected and could test 112-112.5 before falling off from there. Immediate view is bullish along with a strong Dollar.
Aussie (0.7462) has dipped below 0.7470 and could be headed towards 0.7450-0.74 in the near term.
Pound (1.3766) has fallen below 1.38 on strong Dollar and can continue to remain weak towards 1.36 in the medium term if it does not bounce back immediately from current levels.
USDCNY (6.4752) is up as expected and could soon rise to 6.48/50. View is bullish while above 6.46.
USDINR (74.55) rose well yesterday and could continue to move up in the near term. A rise to 74.75-75.00 is on the cards before any decline sets in.
INTEREST RATES
The US Treasury yields continue to trade stable. The outcome of the US non-farm payroll data could trigger a move either way within our broad expected range. The German yields remain lower and stable and can test their crucial supports in the near-term. A strong bounce from these supports will be needed to keep the medium-term bullish view intact. The 10Yr GoI remains stable within its 6%-6.06% range on the back of very low trading volume.
The US 2Yr (0.26%), 5Yr (0.90%), 10Yr (1.48%) and 30Yr (2.08%) Treasury yields continue to remain stable. The immediate outlook is unclear. We repeat that broadly a range of 1.4%-1.6% (narrow) or 1.3%-1.7% (broad) on the 10Yr and 1.9%-2.25% on the 30Yr can be seen for a few weeks. Thereafter the yields are likely to break the range on the downside and see a fresh fall from a medium-term perspective.
The German 2Yr (-0.68%), 5Yr (-0.59%), 10Yr (-0.20%), 30Yr (0.30%) yields remain lower and stable. As mentioned yesterday, -0.30% (10Yr) and 0.25% (30Yr) are important supports to watch. The yields will have to hold above these supports to keep intact our bullish view of seeing a rise back to -0.10% and 0% (10Yr), 0.40% and 0.55% (30Yr). Else the bullish view will have to be negated.
The 10Yr GoI (6.0392%) has dipped again and is retaining the 6%-6.06% range. The trading volume is very low in the 10Yr GoI and as such the yield can continue to retain this range for now and the volume seems to be high on the 5Yr GoI.
