STOCKS
Global equities broadly looks weak in the near term. The Dow and DAX have key resistances ahead and looks vulnerable for a fall in the near term. India’s Sensex and Nifty retains their sideways range but can break the range on the downside.
Dow (26157.16, +6.58, +0.03%) seem to be getting support near 26100. A test of the key resistance at 26250 looks possible while above 26100. But a strong break above 26250 is needed for the Dow to gain strength and rally to 26500 and higher levels. But as long as it trades below 26250, a break and fall below 26000 targeting 25750 and 25700 cannot be ruled out.
DAX (11905.91, +55.34, +0.47%) has made an intermediate bounce as mentioned yesterday. However, the broader picture will continue to remain bearish for a fall to 11600 and 11550 as long as it trades below 12000.
Nikkei (21647, -40.07, -0.18%) has resistance at 21750 which is holding well as of now. A fall to 21500 looks likely and a break below it can drag the index further lower to 21300.
Shanghai (3227.63, -14.3, -0.44%) sustains above 3200 but seems to lack strength to bounce sharply. A range bound move between 3200 and 3280 is possible while it remains above 3200. A break below 3200 can trigger a corrective fall to 3150-3130.
Sensex (38585.35, -353.87, -0.91%) has fallen sharply within its 38500-39000 sideways range. Though the range seems to be holding well as of now, the 3-day candle chart indicates that the Sensex can break 38500 and fall to 38000 in the coming sessions.
Nifty (11584.30, -87.65, -0.75%) can fall to 11500 or even 11400 on a strong break below the range support at 11550. If Nifty manages to bounce from 11550, the 11550-11700 range will remain intact and the index can rise to 11700 thereafter.
COMMODITIES
Gold sustains higher but has a key near-term resistance coming up. Silver struggles to breach a key resistance and looks relatively weaker than gold. Copper looks mixed within is sideways range. Oil continues to trade strong and may see further upticks in the near term.
Gold (1307) is holding above 1300 and is moving higher towards 1310 as expected. Inability to breach 1310 can pull it down to 1305. But a strong break above 1310 will take it further higher to 1315-1317.
The resistance in the 15.25-15.28 region continues to cap the upside in Silver (15.22). A strong break above 15.28 is needed for it to test 15.45. Else a dip to 15.10 and 15 is possible in the coming sessions.
Copper (2.92) looks mixed within its 2.89-2.96 sideways range. It has equal chances dc – either to dip to 2.89 or move higher to 2.96 from current levels.
The supports at 64 and 63.7 on WTI (64.42) seems to be holding well. The outlook remains bullish for a test of 66 in the near term.
Brent (71.67) has risen and is heading towards the crucial 61.8% Fibonacci retracement resistance level of 72.7. A pull-back from this resistance can take Brent lower to 70.7 and 70. But a strong break above 72.7 will pave way for a further rally to 74.
FOREX
Dollar Index recovered after declining sharply post the FOMC minutes yesterday. Pound and Yuan could see some sideways movement while Aussie, Euro and Rupee could strengthen a bit. Euro-Yen looks weak in the coming sessions.
Dollar-Index (96.93) has dipped below 97 and could test 96.75 on the downside which if holds could produce a bounce back towards 97.30 or higher. Break below 96.75 would make it bearish for the medium term.
Euro (1.1276) initially dipped to test 1.1229 yesterday after the ECB comments but has recovered to move higher. A test of 1.13-1.1350 cannot be ruled out in the near term.
Euro-Yen (125.22) saw a narrow trade. A break below 125 would make it bearish towards 124 in the near term. On the upside 126 remains the immediate resistance. Near term looks bearish towards 124.
Dollar Yen (111.06) looks likely to break below 111 to test 110.50 in the coming sessions. A bounce from 110.5 thereafter would lead to a sharp upmove targeting 112-113 in the longer run. On the weekly chart, there is room towards 113 in the coming weeks.
Aussie (0.7159) broke above 0.7150. The speech from the RBA deputy Governor against the market expectation of a near term rate cut aided the currency to strengthen. On the upside Aussie could test 0.72. Break above 0.72, would take it higher to 0.73.
Pound (1.3098) has support at 1.30 as mentioned yesterday and could see trade within 1.30-1.3150 in the near term.
USDCNY (6.7148) is trading within narrow and sideways range. 6.70-6.72 is the immediate range for the next 1-2 sessions.
Dollar-Rupee (69.12) tested 69.10 as expected and could have room to test 69 today. Watch price action near 69 as it could produce a bounce back towards 69.35/50 in the near term. Break below 69 could bring in 68.75/50 into the picture for the medium term.
INTEREST RATES
Difference in views of some policy makers to hike policy rate later this year and that of others who agreed with the patient approach of the FED was evident from the FOMC minutes. The statement also indicated that the view of whether the FED would hike or cut rates is flexible and could shift.
The US yields have fallen. The 2Yr (2.34%), 5YR (2.29%), 10YR (2.48%) and 30YR (2.90%) have all fallen by 1bps. While below 2.92% and 2.52%, the 30YR and 10Yr yields could fall towards 2.88% and 2.45% respectively.
ECB kept interest rates unchanged but indicated downside risks for the Euro. This lead to a sharp fall in the German yields into the negative territory.
The German 10YR (-0.024%) fell from 0% yesterday and could test -0.1% in the near term before bouncing back from there. The 2Yr (-0.591%), 5YR (-0.438%) and 30YR (0.623%) are trading lower too from levels of -0.57%, -0.406% and 0.63% seen yesterday.
The German-US 2YR yield spread (-2.90%) fell to test support levels and could soon bounce back to test -2.93/95% in the near term indicating some rise in the Euro too. A break below -2.90% would turn bearish towards -3%.
The 10Yr GOI (7.5104%) may trade within 7.45-7.60% region in the near term.
