STOCKS
Global equities broadly remain positive. Market seems to be ignoring the recent threat from Trump that more tariffs will be levied on China if its President does not attend the G-20 meeting. Further development on this front will need a watch to see if it can alter the current market sentiment. Otherwise, indices like the Dow, Nikkei remain positive. Shanghai retains its sideways move. Sensex and Nifty remains mixed and can consolidate sideways for some time. DAX was closed yesterday on account of a public holiday
Dow (26062.68, +78.74, +0.30%) has risen further and keeps our bullish view intact for a test of 26500-26600. Intermediate resistance is at 26250. While that holds an interim dip to 26000-25800 can be seen before we a test of 26500-26600.
Nikkei (21185.30, +50.88, +0.24%) is trading strong. Itlooks likely to breach the resistance at 21200 and rally further towards 21500 as against our expectation for a fall from 21200.
Shanghai (2889.45, +37.32, +1.31%) is getting support near 2820 and has bounced sharply from there. It can test 2910 and then reverse lower to keep the seideways move intact.
Sensex (39784.52, +168.62, +0.43%) and Nifty (11922.70, +52.05,+0.44%) seems to be lacking strength although they sustained higher yesterday. We expect the indices to remain range bound for some time. Nifty can trade between 11800 and 12100 while the Sensex can trade sideways between 39300 and 40300.
COMMODITIES
The upmove in gold and silver are losing steam. The broader weakness could come into play in the absence of any fresh triggers. Copper continues to consolidate within its overall downtrend. The mentioned resistances on oil has been holding very well as expected. Oil might consolidate in the near term before resuming its overall down trend.
Gold (1328.43) remains lower and looks vulnerable for a fall to 1320 and 1310. The price action indicates that the upmove could have come to an end.
Silver (14.69) has declined and is heading towards 14.6 as expected. The broader downtrend remains intact and silver can test 14.25-14 in the coming weeks. A break below 14.5 will trigger this fall.
Copper (2.67) oscillates between 2.60 and 2.68 as expected within its overall downtrend. While below 2.68, the bias is bearish for copper to break 2.60 and test 2.58-2.55 on the downside.
Brent (62.45) has reversed lower to test 62 as expected. We might see some sideways consolidation between 62 and 64/65 before the overall downtrend resumes targeting 60-58 and eventually 55.
WTI (53.50) on the other hand can trade between 53 and 55/56 for some time and then fall to 51-50. We retain our long-term bearish outlook for a fall to 45.
FOREX
Most currencies are stable and seem to be in a sideways range-trade that could continue for some more sessions in the near term.
Dollar Index (96.81) is holding above 96.50 just now. The index could see some pause and trade within 96.50-97.00 for 3-4 sessions before resuming the fall below 96.50. A break below 96.50 could take it down to lower support near 95.80/70.
Euro (1.1312) could be ranged in the 1.1350-1.1280 region for sometime before moving up towards 1.14 in the near term. A reversal seems to have taken place with bullish sentiment setting in for the medium term.
Euro-Yen (122.85) is trading higher and while it moves up, the pair could rise towards 124 in the near term before falling again from there.
Dollar-Yen (108.60) is trading below important levels of 109.0-109.5. Note that 109.50 is a crucial resistance now and if holds, could push Dollar-Yen again towards 107 in the medium term. We could see some range trade below 109.50/00 for the next 3-4 sessions.
Aussie (0.6959) could rise towards 0.7050-0.7100 while it remains above 0.6950.
Pound (1.2681) is holding below 1.2750 and seems to be trading sideways between 1.2750 and 1.2650. After a few more sessions of range trade, Pound is likely to move up towards 1.28-1.2850 levels or even higher.
USDCNY (6.9164) dipped back from 6.9341 but while above 6.90, the pair could still have some scope of moving higher in the medium term.
USDINR (69.66) tested 69.66 yesterday closing near the day’s high as expected. Although we consider a rise to 70.00-70.10 on the upside, Dollar-Rupee is likely to see a corrective dip towards 69.50/40 today. A break above 69.75/80 would accelerate a rise towards the upper limit of 70.10.
INTEREST RATES
The US yields have risen on news that Trump has declined to place tariffs on Mexican imports and the yields could now test earlier support turned resistance. The 30Yr (2.64%) could test 2.75% on the upside while the 10Yr (2.16%) and 5YR (1.92%) may move up towards 2.20% and 1.95% respectively. Longer term trend is bearish within which we may see the current rise as a corrective upmove.
The US-Japan 10YR (2.27%) is trying to rise towards 2.30/35% which if seen could pull up Dollar-Yen in the near term. Immediate correlation between the yield spread and the currency is positive directionally and is likely to continue in the near term.
The 10YR GOI (7.22740%) saw a sharp rise yesterday after testing 7% on the downside. The yield may rise further towards 7.30/35% in the near term and could be bullish for Dollar-Rupee.
The German yields are also bouncing from support levels and are headed higher. The 10Yr (-0.217%) could move up towards -0.11% while the 30Yr (0.399%) could test 0.50% on the upside.
