STOCKS
Dow has come-off after testing 35000 and needs to sustain above 34500 to keep the chances alive of breaking above 35100 from here. DAX hovers at the upper end of its 15400-15800 range and needs to see if it is breaking above 15800 or will retain the sideways range. Nikkei sustains above 28500 and has room to move up in the near-term. Shanghai can remain within its 3500-3625 range for some more time. Sensex and Nifty can also continue to oscillate within their 52000-53000 and 15600-15900 range respectively.
Dow (34888.79, −107.39, -0.31%) failed to sustain the break above 35000 yesterday and has closed lower. We reiterate that a strong rise past 35100 is needed to strengthen the bullish case for a rise to 36000. For this the Dow has to sustain above 34500 in the coming days. A break below 34500 will increase the chances of revisiting 33500 levels on the downside.
DAX (15789.64, −0.87, -0.01%) hovers at the key resistance level of 15800. A strong break above 15800 is needed for the DAX to move further up towards 16000 and 16200. Else the 15400-15800 range can continue to remain intact for some more time. Also as mentioned yesterday, DAX will have to rise past 16200 to become extremely bullish.
Nikkei (28652.19, −66.05, -0.23%) sustains above 28500 and keeps intact our view of seeing a rise to 29000-29500 in the coming days. Inability break 29500 from here can keep the index in the range of 27500-29500 for some time. However, the bias is positive to see a strong break above 29500 and a subsequent rise past 30000 to target 31000-32000 if not immediately but eventually over the medium-term.
Shanghai (3529.64, −36.88, -1.03%) oscillates near the middle of its 3500-3625 range. We expect it to retain this range for some more time before a break above 3625 and a rise to 3700-3800 is seen over the medium-term. In case if Shanghai breaks below 3500, an extended fall to 3450-3400 is possible before a fresh rise which in turn will delay the rally to 3700-3800 mentioned above.
As expected, the Sensex (52769.73, +397.04, +0.76%) and Nifty (15812.35, +119.75, +0.76%) moved up within their 52000-53000 and 15600-15900 range respectively yesterday. The indices can remain stuck inside this range for some more time before we get an eventual break on the upside and see a rise to 54000 (Sensex) and 16000-16200 (Nifty) going forward.
COMMODITIES
Commodities see a short pull back today but may soon recover to head back to higher levels. The International Energy Agency (IEA) in its monthly report released yesterday mentioned a possibility of depending oil supply deficit if OPEC+ is unable to reach on a deal. The agency expects crude price to remain volatile until the OPEC+ gives further clarity on its production policy. Crude prices have dipped a bit but can rally towards $78-80 soon before a decline is seen in the medium term. Gold, Silver and Copper have dipped too and could rise back soon in the coming sessions. A range of 1770-1820/40, 25.80-26.50 and 4.15-4.40 may hold respectively on Gold, Silver and Copper.
Brent (76.31) and WTI (75.02) have dipped slightly from $76.48 and $75.22 respectively. A short pull back is possible while below $77/78 levels before attempting to move higher and test resistance zone of $78-80 on the upside. The current dip is short lived and we may expect a rise in the prices soon towards crucial resistance levels.
Gold (1810.40) rose to test 1813 yesterday but has not been able to rise further to test 1820. While below 1820, we may expect a ranged movement between 1820-1790 region before the price attempts to rise towards 1840 or higher in the longer run. Trend support is seen near 1780/70.
Silver (26.07) has dipped instead of moving higher to test 26.50-27. The price can test 26.0-25.80 before again bouncing back to higher levels. A range of 25.80-26.50 may hold well for the near term.
Copper (4.2720) has dipped after a short rise seen yesterday. Overall range of 4.15-4.40 may hold for another week or so before a break on either side is seen.
FOREX
Dollar Index moved up sharply to test 92.80 after a higher than expected US CPI data release yesterday, dragging down Euro to levels below 1.18 and pulling down other currencies globally. Aussie and Pound have fallen sharply too but could soon bounce back from current levels. EURJPY has fallen sharply and could head towards 129.50 while below immediate resistance at 131. Dollar Yen rose to test 110.80 as expected and could now see a corrective dip towards 110.50/30 before again attempting to rise further. USDINR may rise to test 74.60 and any break on the upside can open up chances of a rise to 74.80 or even 75. Weak Chinese Yuan and weak Euro may support weak Rupee today.
Dollar Index (92.7250) is holding below 92.80 just now. The index saw a sharp rise to 92.80 yesterday after the US CPI data release that came out higher than expected. We need to see if the rise sustains or the index falls back towards 92 in the coming sessions.
Euro (1.1783) fell sharply below 1.18 and is yet to see any corrective rise from there. Any fall below current levels would make Euro vulnerable to test 1.1750 on the downside before a bounce is seen. Watch price action near current levels.
EURJPY (130.21) fell sharply and could not sustain a rise above 131. We may expect a fall in the cross towards 129.50-129.00 in the near to medium term.
Dollar-Yen (110.49) has dipped from 110.70 as expected yesterday. We may now see the corrective dip to extend towards 110.50/110.30 before a rise back to higher levels is seen. Immediate support is seen at 110 and while that holds, overall view is bullish to test 111 or higher.
Aussie (0.7463) has bounced well and can rise towards 0.75 in the near term. View is bullish for the very near term.
Pound (1.3820) has bounced a bit after facing a sharp fall yesterday. A rise back towards 1.3850-1.3900 can be possible soon.
USDCNY (6.4748) has bounced well as expected and can be headed towards 6.48/50 in the near term. View is bullish while above 6.46.
USDINR (74.5750) could possibly attempt to rise within the 74.40-74.60 range as Euro has weakened a bit along with some weakness in the Chinese Yuan. Any break above 74.60 would again open up chances of a rise to 74.75/80 on the upside, delaying immediate chances if falling towards 74.20/74.00. Watch for a possible rise today and price action near 74.60.
INTEREST RATES
The US Treasury yields had risen yesterday following the inflation data release. The US Headline CPI rose 5.3% (YoY) and the Core CPI surged 4.45% (YoY) in June. The expected corrective rise in the Treasury yields is happening now and there is room to move up further from here. The German yields remain lower and stable. The view is bearish to see further fall from here. The 10Yr GoI fell yesterday but is holding well above its support at 6.18%. While above this support the near-term outlook is bullish.
The US 2Yr (0.25%), 5Yr (0.83%), 10Yr (1.40%) and 30Yr (2.03%) Treasury yields have moved up across tenors. The corrective rise to 1.45%-1.5% on the 10Yr and 2.1%-2.2% 30Yr is happening in line with our expectation. Thereafter a fresh fall is possible. We will have to wait and watch. Supports are at 1.25%-1.2% (10Yr) and 1.9% (30Yr).
The German 2Yr (-0.68%), 5Yr (-0.60%), 10Yr (-0.30%), 30Yr (0.20%) continues to trade stable. We retain our bearish view of seeing a fall to 0.10%-0.8% (30Yr) and -0.45% / -0.50% (10Yr) in the coming weeks.
The 10Yr GoI (6.2044%)has risen back sharply from the low of 6.1885% yesterday. 6.19%-6.18% is a good support zone while above which the outlook is bullish to see a test of 6.3%-6.32% on the upside. Thereafter a fresh fall is possible.
