STOCKS
Equities are mixed today. While Dow, Dax and Nikkei trade lower, Shanghai and Indian equities have risen. We may expect a corrective dip in most indices in the near term before resumption of the uptrend. Watch statement on the Jackson Hole meeting today.
Dow (35213.12, -192.38, -0.54%) has fallen yesterday. The fall could be limited to 35250-35000 in the near term before bouncing back towards our expected 35500-35750 zone. We do not negate bullish view while the index is above 35000.
DAX (15793.62, -67.04, -0.42%) has fallen below 15800 and could now test lower support near 15600 which may hold and produce a bounce back towards 16000 in the medium term.
Nikkei (27651.51, -90.78, -0.33%) has come down further today. The resistance mentioned at 28000 seems to hold well. A strong and sustained break above 28000 will pave way for a rise towards 29000. But while below 28000,Nikkei has danger of falling towards the level of 27000.
Shanghai (3519.74, +18.07, +0.52%) has risen again after making a low of 3499.45.The view is bullish,to see a test of 3550 followed by a fall back towards 3450-3400.A strong break above 3550 is needed for the view to be bullish towards 3600.
Nifty (16636.90, +2.25, +0.014%) is stuck between 16600 and 16700.The index has support at 16600 which can hold for now and produce a bounce towards 16700.In case the support at 16600 is broken. The view would be bearish to see a corrective fall towards 16500-16350.
Sensex (55949.10, +4.89, +0.0087%) has also come down. and is possibly heading towards 54000 as mentioned yesterday.
COMMODITIES
Weak Dollar ahead of the Jackson Hole meeting is supportive of commodity prices that trade higher today. Crude prices are higher but could soon face rejection from immediate resistances. Gold has risen well and could test 1810 before coming off. Silver and Copper are stuck within the 23-24 and 4.20-4.30 region within which a slight rise is seen.
Brent (71.67) trades higher today and could test 72.50 before coming off from there, Any rise above 72.50, if seen can take the price to 75 before the expected fall sets in.
WTI (67.97) trades higher too and could test 67-68 before coming off from there. Any rise above 68 can take it to crucial resistance at 70 before a sharp decline is seen.
Gold (1800.8) has bounced back to head towards 1800-1810 as the Dollar trades weak just now ahead of the Jackson Hole meeting. Sharp volatility might be expected in the early sessions next week. Else we may expect rejection from 1810.
Silver (23.66) has been coming down from 23.89 and could test 23.5-23.0 in the near term before rising back to 24-24.50. Note that 23 is a very strong trend support on the 3-day candles.
Copper (4.25) seems to be stuck within 4.20-4.30 and needs to break on either side to give more directional clarity. A break above 4.30 can take it higher to 4.40/50 while a break below 4.20 can drag it down towards 4.0-3.8.
FOREX
Markets wait for statement from the Jackson Hole meeting as that may infuse some volatility into the markets. Dollar Index trades within 92.80-93.20 while Euro is holding below 1.1780 just now but we wait for a sharp and sustained move on either side for more directional clarity. EURJPY may fall towards 129 while Pound looks bearish towards 1.3650. Aussie may hold between 0.72-0.73. USDCNY is bullish towards 6.49/50. USDINR trades low on the NDF but could rise above 74.20 on the onshore markets. Overall broad range of 74.00-74.50 may hold for now. USDJPY fell exactly as expected and could remain within 109.50-110.20/50 for the near term.
Dollar Index (93.0250) is holding below 93.20 with downside limited to 92.80 just now. Immediate range of 92.80-93.20 is likely to hold. We would wait for statements from the Jackson Hole meeting today that could infuse some volatility into the markets.
Euro (1.1755) has dipped from 1.1779 and while below 1.1780, view is bearish towards 1.1725 or lower. A sustained rise above 1.1780 initially and then above 1.18 is needed for Euro to turn bullish again in the longer run.
EURJPY (129.29) has fallen within the 128-130.50 range and may test 19 initially which if fails to produce a bounce could drag the cross down towards 128.50 eventually before attempting to bounce back. Watch price action near 129 for now.
Dollar-Yen (109.98) tested 110.23 yesterday before coming off sharply from there. Our expected resistance near 110.20 has held well and a fall to 109.80/70 is possible before another bounce is seen. A broader range of 109-110.20/50 may continue to hold for some more time.
Aussie (0.7241) does not look as bearish as Pound. 0.72 is likely to hold on the downside as Aussie can attempt to rise back towards 0.73 soon. A broad range of 0.72-0.73 may hold for the next few sessions.
Pound (1.3694) has fallen below our expected 1.37 and looks bearish for a fall to 1.3650 before any bounce takes place. Immediate view is bearish while below 1.3750. Any fall below 1.3650 may take it lower towards 1.36 too. Watch price action near 1.3650.
USDCNY (6.4861) has risen further today and looks bullish towards 6.49/50 in the near term.
USDINR (74.22) has been maintaining above 74.20 on the onshore OTC market over the last couple of sessions while the pair trades lower in the NDF market which quotes 74.12 just now. The RBI does not seem to want to let the pair fall on the OTC market and seems to be trying to keep the pair higher to let it close above 74.00 this month. High fluctuation in the 74.0-74.50 zone comparing both NDF and OTC markets but we would have to wait and watch for a clear and sharp break on either side of the range soon for more directional clarity.
INTEREST RATES
The US Treasury yields remain stable ahead of the Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium today. Will he indicate anything on the stimulus taper or not? We will have to wait and watch. On the charts, while the bounce sustains, there is room for further rise for the Treasury yields. The German Yields sustain higher and can move up further from here to test their resistances in line with our expectation. Thereafter the overall downtrend can resume. The 5Yr GoI remains stuck in the narrow range of 5.68%-5.72.
The US 2Yr (0.24%), 5Yr (0.84%), 10Yr (1.34%) and the 30Yr (1.94%) Treasury yields remain stable ahead of Powell’s speech today at the Jackson Hole Symposium. We retain our view of seeing a rise to 1.4%-1.45% while the 10Yr remains above 1.3%. The 30Yr can rise to 2.1% on a break above 2%. Thereafter a reversal is possible.
The German 2Yr (-0.74%), 5Yr (-0.70%), 10Yr (-0.41%) and 30Yr (0.05%) yields continue to move up in line with our expectation. Our view of seeing a corrective rally to -0.30%/-0.25% (10Yr) and 0.10%-0.15% (30Yr) remains intact. Thereafter the broader downtrend is expected to resume.
The 5Yr GOI (5.6997%) continues to trade in the narrow 5.68%-5.72% range. We will have to wait for a breakout of this range to see whether the yield can go up to 5.74%-5.76% or fall to 5.66%-5.62%.
