STOCKS
It seems that the global trade tensions continue to weigh on investor sentiments, leading to further fall in the Dow Jones. Dow (24461.70, -0.80%) may test 24250 in the coming sessions and look bearish for the near term.
Dax (12511.91, -1.44%) has possibility of testing 12300 while the index trades below 12800-12900. Near to medium term looks bearish for Dax too.
Nikkei (22520.97, -0.76%) tested 22800, in line with our expectation and may get some rejection from here towards 22200 or lower again. This is the third attempt to 22800 since May’18 and the index would find difficulty in breaking above 22800 just now. While the index trades below 22800, it could either be ranged in the 22000-22800 region or come off sharply in the longer run.
Shanghai (2861.89, -0.48%) tested 2950 on the upside before coming off from there. Support for the index could come from lower levels of 2800-2750 which would be gradually tested in the next couple of weeks. View remains bearish while below 3000.
Sensex (35432.39, -0.32%) is trading in the narrow 35300-35750 region and could soon move sharply on either side deciding the further course of movement. Nifty (10741.10, -0.29%) also trades just below 10850 and a break on the upside would be necessary to start a fresh upmove. Else a fall back to lower levels of 10600 would come into picture for the medium term.
COMMODITIES
News states that OPEC is likely to raise production by 0.5 mln barrels and while the markets wait for some decision from the OPEC meeting, crude prices could trade a bit higher. WTI (66.39) has moved up a bit and could test 67.0-67.5 levels in the near term. Brent (73.92) is also trading at slightly higher levels and has scope towards 75-76 just now.
Gold (1268.90) is almost stable. As mentioned earlier, we may look for an eventual fall towards 1250-1240 in the medium term.
Copper (3.0260) is trading lower as expected and it would be important to watch price action near 3.0. a break below 3, if seen would take the index towards 2.95-2.90 levels; else the index could bounce back from 3 to again rise to 3.10 and higher.
FOREX
Euro (1.1603) : Euro dipped to a more than 10 months low yesterday (1.1508) but then bounced from there towards 1.16. If it breaches 1.162, it could move up to 1.173 where the 34 days MA could provide crucial resistance. Inability to breach 1.162 would make it bearish towards 1.145 in the next week itself.
Dollar Index (94.86): Dollar Index has support near 94.5, which it could test next week. While above 94.5, it could again rise back towards 95.5.
Dollar Yen (110.01): As per our expectation at the beginning of the week, Dollar Yen has continued to oscillate between 111.0-109.5. As mentioned yesterday, Yen strength might resurface in the weeks ahead as markets get increasingly risk averse. A break below support on daily candles (near 109.5-110.0) sometime next week/week after that, is likely to make it bearish towards 107 in the medium term.
Euro Yen (127.65): If Euro moves past 1.162, Euro Yen might spend another week trading in the 127-130 zone above horizontal support on weekly line chart. However, likelihood of a gradual downtrend towards 1.24 (support on weekly candles) stays intact.
Pound (1.3257): Pound tested support in downward channel on daily candles near 1.31 yesterday and is now bouncing from there. It might see a rise towards 1.335 next week and then dip from there again, possibly targeting 1.30 in 2 weeks time.
Dollar Rupee (67.985): A dip into the 67.90-70 region could produce a strong bounce towards 68.50-65.
INTEREST RATES
Yields again dipped as global trade war worries continue to persist. Moreover, the Italian govt appointed 2 Euroskeptic lawmakers at the helm of important economic committees, thereby re-igniting fears of instability in the Euro zone.
German 10 year yield (0.335%) as per expectation, is tending towards support near 0.3% on the medium term chart and might test it next week.
US 10 year (2.9095%), 30 Year (3.052%), 5 Year (2.78%), 2 Year (2.55%) : US 10 Year yield is more or less stable around 2.9% currently as two opposing forces act on it:
1) the expectation of higher inflation in case the trade war intensifies (would be bullish for yields)
2) a sentiment of risk aversion due to the trade war (would be bearish for yields)
We might have to wait for a break below 2.85% before we can say that the 2nd factor is stronger.
