STOCKS
Most indices gained sharply contrary to expectations but could soon test resistance levels from where some rejection is possible.
Dow (22557.60, +0.68%) shot up after the ISM Manufacturing index soared to 60.8 in September, the highest since 2004. Dow is headed towards 22600-22750 levels from where a rejection is expected which could push back the index towards 22430-22400 levels n the medium term.
Dax (12902.65, +0.58%) has indeed tested 12900 as expected and looks strongly bullish just now. The index could soon test the previous high of 12951 seen in Jun’17. In case a break above 12951 is seen, we may expect a test of 13000 in the near term. Trend looks potentially bullish.
Nikkei (20560.79, +0.78%) has broken above the previous high of 20481, contrary to our expectation and could be headed towards 20700 in the coming sessions from where some rejection is possible. While Dollar Yen is headed towards 113.50-114.00 levels, Nikkei could remain bullish in the near term.
Shanghai (3348.94, +0.28%) is almost stable within 3360-3325 region and could trade sideways for a few more sessions before resuming the uptrend.
Nifty (9788.60, +0.20%) has fair chances of testing 9875-9900 while above 9700. 9900 could act as a decent near term resistance which could push the index back towards 9700 or lower in the coming sessions.
COMMODITIES
Overall commodities look bearish for the coming sessions.
Gold (1270.22) is coming off as expected. 1260 is the immediate downside from where a slight bounce could occur. In the longer run we could see a test of 1250. Near to medium term looks bearish.
Silver (16.55) could come off to 16.25 in the near term. Maximum upside of 16.75 is seen in the next few sessions. Near term looks bearish. .
Brent (55.89) has been falling since the last few sessions and could find some support near 55 while WTI (50.42) fell sharply yesterday from 51.67 to 50.08. WTI looks bearish now and could now target 49.50-49.00 in the near term before bouncing back from there.
Copper (2.9350) came off from 3.00 and could re-test support at 2.90. Consolidation in the 2.90-3.00 region is possible for a few sessions.
FOREX
Good strength in the Dollar yesterday (Monday), with the Dollar Index (93.87) coming close to 94.00 enroute 94.51; the Euro (1.1707) breaking below last week’s low of 1.1716 and Dollar-Yen (113.10) rising again after having dipped to 112.09 last week.
With this, Dollar-Yen (113.10) could test crucial Resistance at 113.50-60 this week, and the Euro-Yen (132.44) may find immediate Support at 132.00, the 21-day MA, reducing the chances of falling towards 131.00.
For the Euro (1.1707), it seems the market has decided to push it lower towards 1.1665. With Resistance at 94.51 on the Dollar Index, the Euro too might find Support near 1.1665.
The Pound (1.3249) also fell sharply yesterday, in line with our view that the upmove since 1.1985 (Jan ’17) may have ended. Medium term target can be 1.30, with immediate Supports seen near 1.32 and 1.3150.
A low of 0.7781 has been seen on the Aussie (0.7820) yesterday, which might turn out to be a Support for the week. Else, there may be room down to 0.7750-00. We have to see how it behaves today.
Dollar-Yuan (6.6532) saw a high of 6.6819, a little short of our target of 6.70, and has come off a bit. This now suggests chances of sideways consolidation between 6.62-6.70 over the next couple of weeks. Dollar-Rupee had closed at 65.29 on Friday, but is trading higher near 65.50 on the NDF just now. Support is seen at 65.20-10-00 now.
INTEREST RATES
US Yields (5Yr 1.93%, 10Yr 2.34% and 30Yr 2.88%) trade marginally higher than Friday. As mentioned, the 10Yr (2.34%) may rise towards 2.50%, while the 30Yr (2.88%) may rise towards 3.00%.
The US Yield Curve has dipped a bit though, contrary to expectation, with the 30-10 (0.54%) down a bit from 0.56% and 0.60% earlier, and the 30-5 (0.95%) down from 0.96% and 0.99%. But, Supports should be available near 0.54% and 0.90% respectively.
The RBI policy is due today. It is reported that most players expect the RBI to do nothing and keep rates on hold today. The 10Yr GOI (6.6632%) remains below 6.70% now and we anticipate a dip towards 6.60% over the coming days/ weeks.
Contrary to our expectation of resistance near 2.24%, the US-Japan 10Yr Spread (2.26%) could be breaking to the upside, supporting the rise in Dollar-Yen (113.10).
