STOCKS
Dow hovers at the upper end of its 33000-35100 range and is likely to break the range on the upside. DAX is moving up towards the upper end of its 15200-15800 range. Nikkei is coming back towards the lower end of its 27000-29500 range contrary to our expectation to move up within the range. A break below 27000 can see a deeper fall to 26000. Shanghai can consolidate between 3300 and 3450 for some time. Sensex and Nifty can remain in the 52000-53200 and 15600-15900 range. The bias is bullish to see an upside breakout of the range.
Dow (35084.53, +153.60, +0.44%) oscillates around 35000 and keeps alive the chances of breaking above 35100 from here itself. Such a break will take the Dow up to 36000 in line with our bullish view. In case if the Dow dips sharply below 35000, a test of 34500-34000 can be seen again and it will delay the rise to 36000.
DAX (15640.47, +70.11, +0.45%) is moving up towards the upper end of its 15200-15800 range as expected. The bias is bullish to see an upside break of this range and a rise to 16000-16200 in the coming weeks.
Nikkei (27360.41, -422.01, -1.52%) is coming down towards the lower end of its 27000-29500 range. Inability to rise past 28000 this week increases the danger of breaking below 27000 and see a deeper fall to 26000. This will be contrary to our expectation for retaining the 27000-29500 range and see an upside breakout eventually. The price action at 27000 will need a close watch.
Shanghai (3391.51, +29.93, +0.89%) is attempting to bounce back after having fallen sharply in the first half of the week. As mentioned yesterday, a consolidation between 3300 and 3450 can be seen for some time and a strong break above 3450 is needed to bring back the bullishness. While below 3450, the chances of seeing 3200 on the downside cannot be ruled out.
Sensex (52653.07, +209.36, +0.40%) remained stable. It can continue to trade in the 52000-53200 range with a bullish bias to break 53200 eventually and rise to 54000 and higher levels. Strong supports are at 52000 and 51000.
Nifty (15778.45, +69.05, +0.44%) remained stable and can remain in the 15600-15900 range again for some more time. We expect Nifty to break 15900 and rise to 16000-16200 eventually. 15600 and 15500 are strong supports.
COMMODITIES
Commodities trade higher but have come off slightly from the intra-day highs. Crude prices have come off as interim resistances hold. While the prices trade below resistances, crude prices may fall in the coming days. Gold and Silver trade higher but may come off from resistances at 1840 and 25.80-26 respectively. Copper may trade within 4.60-4.40 for now.
Brent (74.49) and WTI (73.07) both tested 74.88 and 73.50 respectively before coming down from there. Brent has held below $75/76 and $74/75 as expected and while that holds, the prices can fall towards $72/70 in the coming days. Note that Brent has a series of resistances within $75-78 region and higher at $80 which is likely to hold and produce a sharp fall in prices over the medium term. WTI on the other hand is likely to hold below $75.
Gold (1832.40) trades higher today but could face rejection from 1840 and fall back to 1820 in the near term. A break above 1840 needs to be seen and sustained in order to take the price to higher levels of 1860. While below 1840, view is bearish to 1820-1800 again.
Silver (25.62) is also trading higher and could face rejection from 25.80-26.00 which if holds strong just now could push the price down towards 25 in the medium term. Watch price action while Silver may remain in the 25-26 region for sometime.
Copper (4.50) is trading in the middle of the 4.40-4.60 region and could move either ways from here. While below 4.60, view is bearish. A break above 4.60 is needed for Copper to turn bullish in the longer run. .
FOREX
Dollar Index trades lower but can bounce back from 91.50-91.80 in the near term. Euro on the other hand may face a short corrective dip from 1.19 before attempting to break higher in the medium term. Aussie and Pound look bullish for a rise to 0.7450/75 and towards 1.40 respectively. EURJPY can fall while below 130.50. USDCNY has fallen as expected but needs to rise from 6.44 to avoid any further decline towards 6.40. USDINR needs to break below 74.20 to fall lower else could be stuck within 74.20-74.40 for the day.
Dollar Index (91.95) has broken below 92 but we need to see if the fall sustains or bounces back towards 92.50 in the near term. Immediate support below current levels is seen at 91.50. Watch price action over the next few sessions.
Euro (1.1880) looks bullish for a rise to 1.19 which may hold and produce a dip to 1.1850 before any further rise is seen in the longer run. Watch price action near 1.19 in the near term.
EURJPY (130.13) tested 130.50 but could not sustain the rise and fell sharply from there. While below 130.50, we may expect the 130.50-129.50 range to hold for the medium term.
Dollar-Yen (109.52) is likely to hold above 109 and rise back to 110. A sustained break below 109 is needed for the pair to turn bearish towards 108.50-108 in the longer run. Watch price action near 109.
Aussie (0.7394) is attempting to break above 0.74 and if it succeeds, we may have to allow for a sharp rise to 0.7450-0.7475 in the near term. Aussie would be stongly bullish on a break above 0.74.
Pound (1.3954) may face rejection from 1.40 and fall to 1.39 in the near to medium term.
USDCNY (6.4527) has come down as expected. A bounce from 6.45/44 can take the pair back to 6.49/50 in the near term but if it fails to bounce from 6.44/45, we may have to allow for a further dip towards 6.42. Watch for a possible bounce from 6.44.
USDINR (74.2950) held above 74.20 yesterday and while that holds, we may have to allow for a possible bounce back to 74.30/40. A sustained break below 74.20 (preferred and more likely) is needed for the pair to fall further down to 74.0 or lower. Watch price action near 74.20 today.
INTEREST RATES
The US Treasury yields have inched slightly up at the far-end. The intermediate supports that are coming up on the Treasury yields can hold for now and produce a corrective rally in the coming weeks before the broader downtrend resumes. The German yields are closer to their supports from where we expect a corrective bounce within its overall downtrend. The 10Yr GoI is inching up with muted trades. The 5Yr has broken the 5.66%-5.7% range on the upside as expected and can now move up in the coming days.
The US 2Yr (0.20%) and 5Yr (0.72%) Treasury yields continue to trade stable while the 10Yr (1.25%) and 30Yr (1.90%) have inched slightly higher. Our view remains the same. The 10Yr has support at 1.2% and 1.1% from where a corrective bounce to 1.45%-1.5% is possible in the coming weeks. Thereafter the broader downtrend can resume. The 30Yr is at its support level of 1.9% and has another at 1.8%. A corrective bounce can be seen from either of these supports towards 2.1%-2.2% going forward.
The German 2Yr (-0.77%), 5Yr (-0.74%), 10Yr (-0.45%) and 30Yr (0.03%) yields continue to remain lower and stable. -0.45%/-0.5% on the 10Yr and 0%/-0.05% on the 30Yr are important supports. We expect the yields to see a corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) from there in the coming weeks and then the broader downtrend can resume again.
The 10Yr GoI (6.2301%) sustains above 6.2% and inching up with muted trades. A rise to 6.3%-6.32% looks likely before the broader downtrend resumes. The 5Yr GOI (5.721%) has broken above 5.7% as expected and can now rise to 5.76%
