STOCKS
Equities seem to need some fresh trigger to move up strongly from here. Dow seems to lack strong follow-through buying to rise past 35000 decisively. It has to sustain above 34500 to avoid a fresh fall. DAX has room to move up to 16000-16200 if it breaks above 15800 from here. Nikkei is coming down again and can trade in a broad range of 27200-29200. Shanghai retains its 3500-3625 range for now but needs to remain cautious to see if it will break the range on the downside as it seems to lack strength to move up within the range. Sensex and Nifty have come up to the upper end of their 52000-53000 and 15600-15900 range and need to see if they can break the range on the upside now or will continue to retain the range for some more time.
Dow (34933.23, +44.44, +0.13%) continues to hover around 35000 and seems to lack strong follow-through rise above 35000. As we have been mentioning for some time, a strong rise past 35100 is needed to become bullish for 36000. Key support is at 34500 which if broken can drag the Dow to 34000-33500 again. The price action in the coming days will need a close watch to see on which side of 34500-35100 does the Dow breaks.
DAX (15788.98, −0.66, -0.004%) remains higher and keeps alive the chances of breaking above 15800. Such a break can pave way for a further rise to 16000-16200. However, DAX has to rise past 16200 to become strongly bullish. Inability to breach 15800 from here can continue to keep the index in the range of 15300-15800 for some more time.
Nikkei (28348.14, −260.35, -0.91%) has come down below 28500. The rise to 29000-29500 that we were expecting seems not to be happening. While below 28500, Nikkei can fall to 28000 and 27500 again. Broadly, 27200-29200 is the range within which Nikkei can oscillate for some time.
Shanghai (3523.38, −5.13, -0.15%) is not gaining strength to move up within its 3500-3625 range. As mentioned yesterday, in case of a break below 3500, Shanhgai can fall to 3450-3400 and then see a fresh rise. While above 3400, the long-term outlook is bullish to see 3700-3800 on the upside in the coming months.
As expected, the Sensex (52904.05, +134.32, -0.25%) and Nifty (15853.95, +41.60, +0.26%) have risen and closed near the upper end of their 52000-53000 and 15600-15900 range respectively. It will have to be seen if they can break their range on the upside and move up to 54000 and 16000-16200 that we have been expecting for some time. Failure to break above 53000 (Sensex) and 15900 (Nifty) can continue to keep the indices in the range for some more time.
COMMODITIES
Commodities seem to have recovered the movements seen over the last few sessions. Brent and WTI test immediate trend support which if breaks could drag them lower towards 72/71 and 70/68 respectively. Gold and silver have risen and could be headed towards 1840/60 and 26.50/27 respectively. Copper may remain within 4.15-4.40 for some more sessions.
Brent ( 74.08) and Nymex WTI (72.46) have dipped as resistance near 77/78 seems to be holding well for now. On Brent, 73 is an immediate support which if breaks can make the price vulnerable to further fall towards 72/71 levels else a bounce back to 78/80 could be possible in the medium term. On the other hand, WTI has support at 72 which if breaks could take it down towards 70/68 eventually. Watch price action near current support levels on both.
Gold (1826.60) has risen well breaking above the first resistance level of 1820 and could now be headed towards 1840/60 on the upside in the near term. View is bullish while above 1820.
Silver (26.33) has also risen well and could be headed towards 26.50, a break above which can take the price higher towards 27inthe medium term.
Copper (4.2850) trades slightly higher within the 4.15-4.40 region. While 4.40 holds, it can produce a fall towards 4.15 on the downside soon. We need to see a break on either side of the range for further directional clarity.
FOREX
Currency pairs are mostly within a range and needs clear break on either side of the ranges to give clarity on further direction. Dollar Index is ranged within 92-93 while Aussie and Pound are ranged within 0.74-0.75 and 1.39-1.3735 respectively. EURJPY can fall to 129 before bouncing back from there while Dollar Yen can re-test 109.50. Euro needs to break above 1.1850 to move up further else a near term range of 1.18-1.1850 can hold for now. USDINR may trade within narrow range of 74.40-74.60 and broad range of 74.20-4.80 in the near term.
Dollar Index (92.474) has come down a bit but continues to trade within 92-93 without giving any clarity on further direction. While above 92, there is still scope of testing 93 on the upside.
Euro (1.1825) bounced back well from levels near 1.1770 seen yesterday but we have to see if Euro manages to sustain a rise past 1.1850 and move up rather than fall back towards 1.18 again in the near term. Immediate range of 1.18-1.1850 may hold for a few sessions before the Euro attempts to move higher eventually. View is bullish while above 1.1770/1.18.
EURJPY (129.91) continues to fall lower and could be soon headed towards 129. Thereafter a bounce to 130-130.50 could be possible.
Dollar-Yen (109.86) has fallen again after testing 110.70 on the upside, as expected. We may see a test of 109.50 in the near term, a break below which could pave way for a further fall towards 108.50-108.00 eventually. If 109.50 produces a bounce again we may have to allow for a rise back to 110.80-111 in the medium term.
Aussie (0.7453) seems to be trading in a stable range of 0.74-0.75 and needs to see a sustained break on either side to give clarity on further direction from here. A break below 0.74, if seen would set a long term bearish trend for Aussie.
Pound (1.3823) trades within 1.39-1.3735 region and may continue to hold within this range for some more time before a clear break on either side is seen.
USDCNY (6.4678) is stuck within 6.44-6.48 and needs a clear and sustained break on either side to indicate further direction from here.
USDINR (74.5875) is likely to trade within 74.40-74.60 region with possible extensions to 74.20 and 74.80 on either side.
INTEREST RATES
The US Treasury yields have declined sharply contrary to our expectation to move up further. The US Federal Reserve Chairman Jerome Powell stating that the central bank still has a long way to go to make changes in its monetary policy has dragged the yields lower. The crucial support levels on the yields can be revisited in the coming days. The German yields have moved down further and are keeping our bearish view intact. They have room to fall further from here. The 10Yr GoI remained stable yesterday and is likely to keep the chances alive of seeing a rise again while it remains above 6.18%.
The US 2Yr (0.23%), 5Yr (0.78%), 10Yr (1.33%) and 30Yr (1.96%) Treasury yields have come-off sharply contrary to our expectation to move up further. A fall below 1.3% on the 10Yr will reduce the chances of seeing 1.45%-1.5% on the upside immediately. In turn that will drag the 10Yr down to retest the 1.25%-1.2% support zone again. The 30Yr on the other hand looks likely to revisit its crucial 1.9% support level in the coming days instead of moving up to 2.1%-2.2%.
The German 2Yr (-0.69%), 5Yr (-0.62%), 10Yr (-0.32%), 30Yr (0.27%) have come down further in line with our expectation. The bearish view is intact. We expect the German yields to fall towards 0.10%-0.8% (30Yr) and -0.45% / -0.50% (10Yr) in the coming weeks.
The 10Yr GoI (6.2001%)remained stable around 6.20%. We retain our view of seeing a rise to 6.3%-6.32% while the yield remains above 6.18% before a fresh fall is seen. The 5Yr GoI (5.6922%) can trade in the range of 5.68%-5.77%.
