STOCKS
Equities continue to trade positive and remain bullish. The Dow can rise to 36000. DAX can test 16000-16200. Nikkei can gain momentum on a break above 28000 and rise to 29000. Shanghai looks mixed and has to break above 3560 to gain bullish momentum. Sensex and Nifty are bullish to test 57000 and 16700 respectively.
Dow (35366.26, +30.55, +0.09%) sustains well above 35250. This keeps our bullish view intact of testing 35500-35750 initially and 36000-36200 eventually in the coming weeks.
DAX (15905.85, +53.06, +0.33%) has been stuck in a range of 15600-16000 for more than two weeks. It is now heading towards the upper end of this range. While above 15600, the bias is bullish to see a break above 16000 and test 16200 on the upside.
Nikkei (27733.11, +1.01, +0.004%) remains higher and can test 28000. As mentioned yesterday, a strong break above 28000 will be needed to move up further towards 29000. Else it can come-off and remain in a narrow range of 27000-28000. Price action at 28000 will need a close watch.
Shanghai (3512.64, −1.83, -0.05%) hovers near the intermediate resistance level of 3520. A break above it can take it up to 3560. A sustained break above 3560 is necessarily needed to become bullish again. A pull-back from 3560 can drag it to 3400 again. Overall the picture is mixed.
Sensex (55958.98, +403.19, +0.73%) has tested 56000 as expected. The view remains bullish. The current upmove has room to test 57000 on the upside and then see a pull-back from there.
Nifty (16624.60, +128.15, +0.78%) has risen above 16500 yesterday as expected and can now test 16700. A break above 16700 will strengthen the bullish momentum and will take the index further up to 16800-16850.
COMMODITIES
Commodities have reversed a bit after trading higher for the last 2-sessions. Gold has come off below 1800, Silver is headed towards 23 while below 24, Copper might face resistance at 4.30 which needs to break in order to move towards 4.40/50; else a sharp decline from 4.30 is likely. Crude prices have dipped and could see some more of a fall in the very near term.
Brent (70.65) rose to test 71.20 on the upside before coming off from there as mentioned yesterday. While below 72.50, we can look for a di back towards 69-68 initially and then slowly towards 65 again. Watch price action near current levels.
WTI (67.19) also tested 67.66 before coming off from there. While below 67, a dip to 64 could be possible in the near term.
Gold (1796.20) has failed to rise above the 1800-1810 zone and has instead fallen back below 1800. Gold needs to bounce back immediately in order to move up else a fall back to 1780-1770/65 cannot be negated in the near term. While below 1810-1800, view ion Gold will be bearish.
Silver (23.72) has fallen from 23.89 and while the [rice holds below 24, there is scope for a test of 23 or even lower in the medium term. Watch price action near 23 now in the next few sessions.
Copper (4.2570) has risen above 4.20 but could face interim trend resistance at 4.30 which needs to break in order to move further up towards 4.40/50. Else a decline from 4.30 looks likely.
FOREX
Corrective declines seen in the currency markets as the FED prepares for its Jackson Hole meeting on Friday. Dollar Index trades near 93 and could test 93.30 on the upside. A broad range of 92.50-93.30/50 holds for now. Euro trades below 1.1750 and a fall to 1.17 cannot be ruled out. Aussie and Pound trades stable but may face some immediate declines before again bouncing back to higher levels. EURJPY and USDJPY is within 128-129.50 and 109-110.50 respectively. USDCNY can rise towards 6.49/50 while above 6.47. USDINR needs to break above 74.20 to head higher else could trade within 74.0-74.20.
Dollar Index (93.03) has bounced as expected and is headed towards 93.30 while above 93. Immediate view is bullish from here. Broad range of 92.50-93.30/50 may hold for now.
Euro (1.1735) trades below 1.1750-1.1780 region and while the dip continues, we may have to allow for a re-test of 1.17 before a bounce is seen. Immediate view is bearish while below 1.1765/75 which is an immediate resistance.
EURJPY (128.85) trades slightly higher today but has been oscillating in the 128.59-129.20 region for the last 1-2 sessions. A break on either side is needed for the cross to test either 128 or 130-130.50. Watch price action near current levels to see which way it chooses to move.
Dollar-Yen (109.79) dipped to 109.41 yesterday before bouncing back from there. The pair is highly fluctuating within 110.20-109.40. We continue to see a broad range of 109-110.50 to hold for now and unless a sustained break on either side is seen, there is lack of clarity on further direction from here.
Aussie (0.7242) has has dipped from 0.7271 and could extend to 0.72 on the downside before a bounce is seen again that may eventually extend to 0.73 in the medium term.
Pound (1.3716) has dipped slightly below 1.3750. We need to see if the dip sustains or the pound manages to bounce back to 1.38 and higher.
USDCNY (6.4774) tested 6.4664-6.4654 before bouncing back from there and could now be headed towards resistance near 6.49-6.50 soon. Immediate view is bullish while above 6.47. Any break below 6.47 if seen again would open possibilities of a fall to 6.45.
USDINR (74.1975) bounced back to 74.20 from 74.10. We need to see if the pair manages to break above 74.20 to move up towards 74.40/50 or continues to trade within the narrow 74-74.20 region for a few sessions.
INTEREST RATES
The US Treasury yields have risen. It will have to be seen if they can rise past their immediate resistance and see a corrective rally from here. Such a move will negate our view of seeing a dip that we have been mentioning for some time. Jerome Powell’s speech at the Jackson Hole meeting on Friday will be a crucial event to watch. The German yields are holding above their key supports and a strong bounce from here can trigger a corrective rally within their broader downtrend. The 5Yr GoI can oscillate in a broad range and can move up within this range in the near-term.
The US 2Yr (0.25%), 5Yr (0.79%), (1.29%) and the 30Yr (1.91%) Treasury yields have risen across tenors. 1.3% on the 10Yr is crucial and a sustained break above it will negate the chances of testing 1.18% on the downside that we have been mentioning over the last few days. In turn that will pave way for a fresh rise to 1.4%-1.45%. The 30Yr has to sustain above 1.9% to move up further towards 2%-2.1% and negate the fall to 1.8%. Overall it is a wait and watch situation.
The German 2Yr (-0.76%), 5Yr (-0.74%), 10Yr (-0.48%) and 30Yr (-0.03%) yields remain stable. We will have to wait and see if the yields get a strong bounce from here in order to see a corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr). Thereafter the broader downtrend can resume. Inability to see a strong bounce from here will leave the yields in danger of falling to -0.6% (10Yr) and -0.2% (30Yr) from here itself.
The 5Yr GOI (5.699%) remains higher and stable. As mentioned yesterday, we can expect it to trade in a broad range of 5.63/62%-5.74/76%. Within this range, we see high chances of the yield moving up towards 5.74%-5.76% in the near-term.
