STOCKS
Dow has risen from immediate trend support and looks bullish towards 35250. Dax can rise towards 15800/80 too in the near term. Nikkei and Shanghai have scope to test 30000 and 3575/50 before rising back from there. Indian equities have surged well over the past few sessions and look strongly bullish for the medium term, but we may expect some pause or pull back today.
Dow (34751.32, -63.07, -0.18%) rose slightly yesterday. Trend support is seen near 34500 on the daily candles and while that holds, we nay expect a slow and steady rise towards 35250 in the coming week. Any break below 34500 if seen (less likely) can be strongly bearish.
DAX (15651.75, +35.75, +0.23%) has risen too and has scope to test 15800-15850 in the near term. Range of 15850-15400 may continue to hold.
Nikkei (30485.11, +161.77, +0.53%) has risen today but unless a rise above 30750 is seen, there is scope for a fall towards 30000 in the near term. Immediate range of 30000-30750 can hold for now. Only on a break below 30000 if seen would open up chances of a possible fall to 29000 or lower. Till then we may expect the mentioned range to hold.
Shanghai (3606.31, -1.36, -0.038%) has declined sharply over the last 1-2 sessions. A test of immediate support near 3575-3550 is possible before a sharp rise back towards 3625-3650 or higher is seen in the medium term.
Nifty (17629.50, +110.05, +0.63%) tested 17645 yesterday which may act as an interim resistance on the very near term charts. Although the longer term view is to see an eventual rise to 17800/850, we may expect a pause in the upmove today for a small correction or stability. Any fall from here could extend to 17400 on the downside before resuming the uptrend.
Sensex (59141.16, +417.96, +0.71%) tested our expected 59000 yesterday to close higher. While medium term view is bullish for a test of 60000, we may have to allow for a pause or short correction from current levels before resumption of upmove. Watch price action today near current levels.
COMMODITIES
Strong US Dollar pushes metal prices down which can continue for another few sessions before any recovery is seen. Gold, Silver and Copper have all fallen. Gold can test 1725-1700 while Silver can fall towards 22 in the near term. Copper has scope to test 4.20 before bouncing back from there towards 4.40.
Brent (75.46) sustains trade above $75 and while that holds, a further rise towards resistances of 77-78-80 can be tested which can produce a sharp decline towards 70 in the medium term. WTI (72.20) is also trading above 72 and can face rejection from 73-75 region soon. Watch price action to see a near term rejection from respective resistance zones.
Gold (1758.30) has broken below 1780/65 mentioned yesterday and can be headed towards 1725-1700 in the near term. View is bearish while below 1765/60.
Silver (22.89) has also broken below 23.50 and could test 22 in the near term before bouncing back from there.
Copper (4.3030) has fallen too and could test the lower end of the 4.20-4.40 range before bouncing back from there.
FOREX
Sharp rise in Dollar Index after a higher retail sales data yesterday. The index can head towards 93.0-93.25 from where a rejection is possible. Euro has fallen sharply and could test 1.1750-1.1700 before attempting to rise but broadly 1.16-1.19 may continue to hold for the coming weeks. EURJPY has tested 128.60 before bouncing back from there. A range of 128-130.50 may hold for now. Aussie and Pound look bearish too for the near term. USDCNY has risen well and can dip from 6.47/48 in the near term. USDINR tested 73.3450 yesterday but can rise back to 73.80 today backed up by a weak Euro and Chinese Yuan.
Dollar Index (92.911) has risen sharply and can continue to rise towards immediate resistance near 93-93.25 from where a decline can be expected.
Euro (1.1764) has given way exactly as mentioned in yesterday’s edition. The exchange has tested 1.1750 before slightly bouncing from there. We need to see if it holds above 1.1750 to bounce back to 1.18 and higher else it can fall to 1.1725-1.1700 in the near term strengthening the downtrend. While below 1.1750, chances of a fall towards 1.1650 would open up.
EURJPY (129.27) has fallen in line with our expectation to test 128.607 before bouncing back sharply from there. We need to see if 128.50-128 holds in the near term to trigger a bounce back to 130-130.50 in the medium term. While above 128, immediate view is bullish. A broad range of 130.50-128 may continue to hold.
Dollar-Yen (109.85) has risen well but continues to hold within the 109-110.50 range. Within the range the exchange can rise towards the upper end.
Aussie (0.7286) has broken below 0.73 and looks bearish towards 0.7250-0.72 in the near term before any attempt to bounce back from there. Immediate view is bearish while below 0.73.
Pound (1.3789) is holding within the range of 1.3750-1.39 and could continue to trade within the range trying to move up towards 1.39 from current levels.
USDCNY (6.4572) rose sharply from levels near 6.43 but can face rejection from 6.47/48 in the near term and fall further towards 6.40 soon. Watch price action near 6.47/48 in the near term.
USDINR (73.52) tested 73.3450 yesterday but bounced back sharply. A rise to 73.80 looks possible today as both Euro and Chinese Yuan have weakened against the Dollar.
INTEREST RATES
The US Treasury yields have risen back well after the US retail sales data release yesterday. The US retail sales rose 0.8% (MoM) in August after declining 2.17% in July. While the bounce in yields sustain, a further rise to test the key resistances cannot be ruled out ahead of the US Federal Reserve meeting next week. The German yields hover near their crucial resistances and will have to be watched closely for a reversal from here and mark the end of the corrective rally. The 5Yr and 10Yr GoI remains bearish to fall further. However, a sideways consolidation is a possibility before a further fall is seen.
The US 2Yr (0.22%), 5Yr (0.84%), 10Yr (1.34%) and the 30Yr (1.88%) Treasury yields have risen back across tenors. The 10Yr has moved above 1.3% and has brought back the chances of testing 1.4%. Can the upside extend up to 1.45%-1.5% that we had expected earlier? We will have to wait and see. The 30Yr on the other hand has to break above 1.9% to gain bullish momentum and rise to 2% and higher levels.
The German 2Yr (-0.71), 5Yr (-0.62%), 10Yr (-0.30%) and 30Yr (0.19%) yields remain higher and stable. The 10Yr is just entering into its -0.30%/-0.25% resistance zone and the 30Yr is just below the key level of 0.20%.We expect the yields to reverse lower from and resume the broader downtrend. The price action in the coming days will need a close watch.
The Indian 10Yr GoI (6.1682%)remains lower and keeps intact the bearish view of seeing 6.12%-6.1% while below 6.2%. The medium-term view is also bearish to see 6.05%-6% on the downside.
The 5Yr GoI (5.6025%) is managing to sustain above 5.6%. While above 5.6% a range of 5.6%-5.64% is possible in the near-term. However, while below 5.64%, the broader bias is bearish to break 5.6% and fall to 5.55%-5.5% eventually in the coming days.
