STOCKS
Dow closed on a positive note but the other indices mentioned below closed in the red, dipping slightly from higher levels seen over the last few sessions. We need to watch price action to see if Nifty and sensex can produce a short corrective dip and Shanghai can hold below crucial resistance at 3550 and fall further in the near term. Nikkei also needs to break above 28000 to turn bullish but will it see a corrective dip before rising again? We would wait and watch price action near respective immediate supports and resistance levels.
Dow (35405.50, +39.24, +0.11%) has been rising in line with our expectations. A rise to35500-35750 is expected soon.
DAX (15860.66, -45.19, -0.28%) has dipped slightly after testing 15932 on the upside. Note that 16000 can produce a small corrective dip that could be short lived and extend to 15800-15650 before the upmove resumes again. Watch price action near current levels. A break above 16000 on the flip side will be strongly bullish.
Nikkei (27693.42, -31.38, -0.11%) has come down slightly today. The resistance at 28000 is holding fow now.A strong break above the level of 28000 is needed for the view to be bullish towards 29000.While below 28000, the chances of seeing a fall towards 27000 cannot be negated.
Shanghai (3520.18, -20.20, -0.57%) has come down after testing a high of 3540 yesterday. Note that 3550 is an important resistance on the 3-day candles and while that holds, Shanghai can fall towards 3500-3450 initially while on the broader range there is scope towards 3350 on the downside. A break above 3550 will be needed to make the index strongly bullish.
Nifty (16634.65, +10.05, +0.06%) has come off yesterday after testing the level of 16712.45 in line with our expectations. A corrective fall towards 16500 is possible now before we see a rise towards 16700 and eventually 16800.
Sensex (55944.21, -14.77, -0.026%) has come down after testing 56000. A fall towards 54000 is possible from here before we see an eventual rise towards 57000 in the medium term.
COMMODITIES
Crude prices trade higher ahead of the Fed’s Jackson Hole meeting and on hopes of increase in oil demand after US drug Regulator granted full approval to the Pfizer Inc/BioNTech SE Covid-19 vaccine that is expected to impact the Covid vaccine rates. Brent and WTI may face rejection fro immediate resistance near 72.50 and 68-70 respectively. Failure to face rejection from 72.50 on Brent can open up chances of a further rise to 75 before the expected fall takes place. Gold trades lower while Silver is up today. Copper will have to break above 4.30 to rise further and while below 4.30, a dip to 4.20/4.00 cannot be ruled out.
Brent (71.80) has risen today and is likely to test 72.50 before coming off from there. Failure to fall from 72.50 will open up chances of a possible test of 75 on the upside before a sharp decline sets it. We would initially look at price action near 72.50 which is expected to produce a rejection over the next 1-2 sessions.
WTI (67.81) can test 68-70 before the expected dip is seen.
Gold (1791.20) has dipped to test 1788 before bouncing from there. If the bounce holds, we may expect a re-test of 1800-1810 region in the near term else a fall back towards 1770/65 cannot be ruled out. Watch price action near current levels.
Silver (23.84) has risen from levels seen yesterday and could be headed towards 24 in the next few sessions. A sustained and strong rise above 24 is needed to negate bearishness towards 23-22.50 in the medium term.
Copper (4.2505) has dipped as the interim resistance near 4.30 seems to be holding well. A fall to 4.00 is possible on a break below 4.20. Else the price needs to rise above 4.30 to head higher.
FOREX
Dollar Index has fallen sharply ahead of the Jackson Hole meeting due tomorrow pulling up Euro to levels above 1.1750. Euro needs to hold above 1.1750 to trade higher else it can fall back to lower levels soon. Similarly support at 92.50 is expected to hold on Dollar-Index. Aussie, Pound and EURJPY have risen well but a small corrective dip could be expected in the next few sessions before resumption of upmove again. USDINR may fall back towards 74.10/74.00 while broad range of 74.0-74.50 is likely to hold in the medium term. Dollar Yen and USDCNY is ranged for now.
Dollar Index (92.88) has fallen sharply ahead of the Jackson Hole meeting scheduled tomorrow. A test of 92.50/60 is possible before the index bounces higher again. Failure to hold above 92.50 will turn bearish opening up chances of a fall to 92. Watch price action near 92.60/50 on a further dip from current levels.
Euro (1.1763) rose to test immediate trend resistance at 1.1774 before dipping slightly from there. While the resistance holds, Euro can come down towards 1.1748-1.1730 in the near term. A break above 1.1774-1.18 will be needed for it to turn bullish again.
EURJPY (129.38) has dipped from 129.50 and could dip further towards 129 before bouncing back from there. A broad range of 128-130.50 continues to hold in the medium term.
Dollar-Yen (109.99) has risen as expected but the broad range of 109-110.50 continues to hold unless a sustained break on either side is seen. There is resistance near 110.20-110.50 from where the pair can again face rejection.
Aussie (0.7263) could hold below 0.73 in the near term. A corrective dip to 0.7250/30 looks possible before it bounces back again to higher levels.
Pound (1.3753) has dipped slightly from 1.3766 and could fall towards 1.37 before again rising up sharply.
USDCNY (6.4820) has risen and could head towards 6.49/50 in the near term. A broad range of 6.50-6.45 can hold for the medium term.
USDINR (74.25) closed above 74.20 yesterday but selling is seen on the NDF markets that quotes 74.11 just now indicating a possible decline in the pair today. A broad range of 74.50-74.00 is likely to hold for the medium term within which the pair is likely to trade within 74.10-74.30 region for most of the time. The movement in the Dollar-Rupee has been sideways and unable to give clarity on further direction. At such times we would like to wait for a clear break out on either side of the mentioned range that would turn out to be a sharp movement to be seen soon. For now watch for a possible dip to 74.10 today. The RBI will be keen to prevent a month close below 74.
INTEREST RATES
The US Treasury yields have risen well and have room to move up further ahead of the Jackson Hole meeting tomorrow. Strong resistances are ahead which we expect to hold. Can the yields come down again following the Fed Chairman’s speech at Jackson Hole tomorrow? We will have to wait and see. The German yields have moved up and are in a corrective rally now. A further rise is possible from here before the broader downtrend resumes. The 5Yr GoI is stuck in a narrow range and looks mixed in the near-term with equal chances of moving on either side from here.
The US 2Yr (0.24%) Treasury yield remains stable while the 5Yr (0.83%), 10Yr (1.34%) and the 30Yr (1.95%) have risen further sharply. The 10Yr has risen past 1.3% and can now head towards 1.4%-1.45%. The 30Yr can surge to 2.1% on a break above 2%. The price action thereafter will need a close watch to see if the yields are reversing lower again or not.
The German 2Yr (-0.75%), 5Yr (-0.71%), 10Yr (-0.42%) and 30Yr (0.04%) yields have moved up sharply especially at the far-end. The expected corrective rally is happening now. The 10Yr can go up to -0.30%/-0.25% and the 30Yr to 0.10%-0.15% in the coming days. Thereafter we expect a fresh fall and the broader downtrend can resume again.
The 5Yr GOI (5.6854%) is stuck in a narrow range of 5.68%-5.72% over the last few days. The near-term outlook is mixed. A breakout on either side of 5.68%-5.72% can take it up to 5.74%-5.76% or drag it down to 5.66%-5.62%. Broadly, 5.62%-5.76% could be the range of trade.
