STOCKS
Dow hovers around 35000. The US NFP data release today could be key in deciding whether the Dow can rise past 35250 or will fall back to 34250-34000 and keep the sideways range intact for some more time. DAX is moving up towards the upper end of its 15200-15800 range. We expect the range to break on the upside. Nikkei is managing to hold above 27500 but needs to break above 28000 to move up towards the upper end of its 27000-29500 range. Shanghai seems to be lacking strength to move up and looks likely to fall back. Need to watch closely. Sensex and Nifty sustained higher and stable yesterday. The outlook remains bullish to see further rise from here.
Dow (35064.25, +271.58, +0.78%) has bounced-back again towards 35000. We need to wait and watch to see how it closes today after the NFP data release. Our broader view remains bullish to see a break above 35250 and a rise to 36000. In case if 35250 continues to hold, a dip to 34250-34000 is possible and the broader 33000-35250 range will continue to remain intact.
DAX (15744.67, +52.54, +0.33%) has moved up and is coming to the upper end of its 15200-15800 range. We retain our bullish bias to see an upside break above 15800 and a rise to 16000-16200. Inability to breach 15800 can continue to keep the index in the 15200-15800 range for some more time.
Nikkei (27751.59, +23.47, +0.09%) continues to trade stable above 27500. We reiterate that a strong rise past 28000 is needed to move up towards 29000-29500. It will also negate the danger of seeing a break below 27000 and the fall to 26000. As mentioned yesterday, the 27000-29500 range remains intact for now.
Shanghai (3452.17, −14.37, -0.41%) has come-off today and seems to lack strength to rise towards 3500-3550. A fall below 3440 from here can drag it back to 3400-3350 again. It will also keep the danger alive of seeing a deeper fall to 3200 that we have been cautioning for some time. We will have to wait and watch.
Sensex (54492.84, +123.07, +0.23%) oscillated around 54500 yesterday and sustains higher. The broader view is bullish to see 56000 on the upside while the index remains above the 53500-53000 support zone.
Nifty (16294.60, +35.80, +0.22%) is bullish to see 16500-16600 on the upside. A sustained break above 16300 can accelerate the rally. Strong support will be in the 16000-15900 region.
COMMODITIES
Crude prices have bounced back from lows seen yesterday and could see a short corrective upmove in the near term before again falling back to lower levels. Gold and Silver have dipped and while the Dollar continues to strengthen, Gold could fall towards 1780 and Silver could dip to 25 before rising again. Copper may test 4.20 before bouncing back towards 4.40/50 again. Overall commodities except Crude could remain bearish while Dollar Index rises towards 92.50-93.00 (refer to FOREX section below)
Brent (71.36) tested 69.75 yesterday and has bounced back well. We may expect a rise to 73-74 in the near term. WTI (69.16) on the other hand has support near 67 which when holds can see a bounce to 70-71 before again falling in the medium term.
Gold (1802.80) has fallen on dollar strength and while the Dollar Index is headed towards 92.50-93.0, Gold can fall below 1800 to test 1780 soon. Immediate view would be bearish on a break below 1800.
Silver (25.13) tested 25.53 but fell back from there. We may expect narrow ranged movement between 25-26 for the near term.
Copper (4.3485) can fall towards 4.20 on a break below 4.30. Support is seen at 4.20 from where a bounce looks possible in the medium term back towards 4.50.
FOREX
Dollar Index is headed towards 92.50-93.0 in the near term while Euro can test 1.18 before bouncing back to higher levels. EURJPY can remain ranged within 129-130.50. Aussie can rise towards 0.7450-0.75 while Pound can be ranged within 1.3950-1.3870. USDJPY can rise towards 110.0-110.50 before again falling back towards 109.50-109.00 in the medium term. USDCNY is likely to be ranged within 6.45-6.47 while USDINR may remain above 74 today with upside likely to be seen near 74.30/40.
Dollar Index (92.3470) is rising and could be headed towards 92.50 initially which if holds could produce a rejection towards 92 again. On a break above 92.50, we would watch 93.0-93.30 on the upside which is an important resistance.
Euro (1.1824) has dipped below 1.1850 and could now be headed towards support at 1.18 before a bounce is seen again.
EURJPY (129.93) has bounced from 129.13 this week and can rise towards the upper end of the 129-130.50 zone. The mentioned range is expected to hold for now and it would be important to watch if the cross manages to break above 130.50 in the near term. Immediate view is to see a rise to 130.50.
Dollar-Yen (109.86) has been rising sharply since the last 3-sessions boosted by a strong Dollar and could be headed towards 110-110.50 in the near term before again falling back towards 109.50-109 in the medium term.
Aussie (0.7386) seems to be slowly inching up and could head towards 0.7450 in the coming 1-2 weeks. 0.7450-0.75 is a resistance zone that could hold in the near term.
Pound (1.3916) is likely to hold below 1.3950 and range within 1.3950-1.3870 for the next couple of sessions.
USDCNY (6.4654) is likely to be ranged within 6.45-6.47 for the near term. A break above 6.47 is needed for the pair to rise back towards 6.49/50 again.
USDINR (74.17) can re-test 74.10-74.00 today but is likely to hold above 74 and bounce back towards 74.30/40. Watch RBI policy rate statement today.
INTEREST RATES
The US Treasury yields have risen across tenors. Our view of seeing a corrective rise remains intact. Will the US Non-Farm Payroll (NFP) data release today provide a trigger for the yields to rise further from here? We will have to wait and watch. The German yields are at their key supports. We expect them to see a corrective rally from here before resuming the overall downtrend. The 10Yr GOI has come-off sharply as expected amid muted trading. The 5Yr GoI also has room to move down further from here to test its key support. The Reserve Bank of India’s monetary policy decision is due today.
The US 2Yr (0.20%), 5Yr (0.74%), 10Yr (1.23%) and the 30Yr (1.87%) Treasury yields have risen across tenors. Our view of seeing a corrective rise remains intact. The 10Yr can test 1.3% while it sustains above 1.2% and can extend the upside to 1.45% on a break above 1.3%. The 30Yr can rise to 2% initially on a break above 1.9% and then can even extend up to 2.1%-2.2% thereafter on a break above 2%. Supports are at 1.15%-1.1% (10Yr) and 1.8% (30Yr).
The German 2Yr (-0.78%), 5Yr (-0.77%), 10Yr (-0.50%) and 30Yr (-0.05%) yields are at their key supports. As mentioned yesterday, we expect the yields to see a corrective bounce to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) either from current levels itself or after another 5-10 bps dip. Thereafter a fresh fall can be seen again to keep the broader downtrend intact.
The 10Yr GoI (6.2258%)has come down sharply and keeps our bearish view intact of testing 6.2%-6.1% on the downside. Trading continues to remain muted. The 5Yr GoI (5.7115%) has also come down and can test 5.7%-5.68% as mentioned yesterday. While 5.68%, a fresh rise above 5.7% cannot be ruled out. The price action at 5.68% will need a close watch.
