STOCKS
Equity markets across the world gained a bit yesterday and are now in “No Man’s Land”. Importantly, if they stage a further rise from here, they would still face stronger medium term Resistances overhead. So, Trump jawboning the Fed might not yield much.
Nikkei (20656, +0.43%) trades just below 20700. A break above that could be potentially bullish, but further Resistances in the 20800-21000 region would also have to be broken.
The Shanghai (2889, +0.23%) has crucial Resistance near 2905 (wrongly mentioned as 2875 yesterday, apologies) on the Daily Candles. Some positive trade news will be needed to break that, failing which we can see one more decline towards 2700 (down 7% from 2905). That would be a better region from where a more sustainable rally could unfold.
We saw the Nifty (11053.90, +0.06%) rise to 11146.90 yesterday, but it failed to sustain the rally. While the world waits to hear something positive from Trump, India waits to hear something from Nirmala Sitharaman. A fresh dip towards 10900 could strengthen Bears again. Similarly, the Sensex (37402.49) faces a crucial Resistance on the 21-day MA right just overhead. Failure to break above that could drive it down towards 36500.
Good gains were seen on the DAX (11715.37, +1.32%)yesterday, breaking above the resistance at 11650 we mentioned yesterday. However, it still has crucial/ strong Resistance near 12000, which needs to be broken for further bullishness.
Like the other indices, the Dow (26135.79, +0.96%) moved up yesterday to an intra-day high of 26222.32. We have to see whether the rise sustains and whether the Dow can break above 26484, the 21-day MA.
COMMODITIES
Gold and Silver have dipped and looks vulnerable for a corrective fall in the coming days. Copper, though trading stable, is bearish in the short term. Brent and WTI have risen following an attack on a Saudi oil field. Oil has room to inch higher but has key resistance coming up which can cap the upside and drag the prices lower again.
Gold (1496) has dipped below 1500 and is vulnerable for a corrective fall to 1480 and 1473. Resistance is at 1507.
Similarly, Silver (16.89) has declined below 17 and has an immediate support at 16.80. A break below it can drag silver lower to 16.7 and 16.6.
Copper (2.60) is hovering around 2.60. The view remains the same. A strong resistance is at 2.64. The outlook is bearish to break 2.55 and fall to 2.50 in the short term.
Brent (59.83) is inching higher to test 60.50 as expected. The resistance in the 60.50-60.75 region can cap the upside and drag Brent lower again to 58. Broadly, we expect Brent to remain range bound between 58 and 62 for some time.
WTI (56.14) has risen towards 56.20 as expected and can move further higher towards the next key resistance level of 56.80 in the near term. While 56.80 hold, a fall to 55-54 is possible.
FOREX
Dollar has moved further higher and remains bullish. Euro has key resistance which can cap the upside and keep it pressured on the downside. Dollar-Yen is inching higher towards the upper end of its range. Aussie continues to consolidate. Pound has to surpass a key resistance to extend the current bounce-back move. The USDCNY and USDINR continues to remain bullish and can move further higher from their current levels.
The Dollar Index (98.32) can test 98.50 in the near term. It has to be seen if it can breach 98.5 and rise to 99-99.15 immediately or it comes down to 98.3-98.2 once and then moves up again.
Euro (1.1086) remains bearish to test 1.1030 on the downside. Resistance is at 1.1095 which can cap the upside and keep the bearish view intact. A break below 1.1075 can accelerate the fall.
Dollar-Yen (106.59) has been inching higher within the expected 105-107 sideways range. The pair can move higher to 106.85 and 107 in the coming sessions. The bias is bullish for the Dollar-Yen to break 107 and rise to 108.5-109 over the medium term.
EUR-JPY (118.16) is moving higher as expected within its overall downtrend. The cross can test 118.5 or 119 on the upside in the near term while it sustains above 118.
Aussie (0.6778) continues to trade stable within its 0.6735-0.6835 sideways range. A breakout on either side of this range will determine the next move. Out bias is to see an upside break above 0.6835 and a rise to 0.69-0.70 in the short term.
Pound (1.2132) is facing resistance near 1.2175. It has to sustain above 1.2100 in order to keep the bullish view intact for a rise to 1.23. A break below 1.21 will negate the chances of the above mentioned rise and will drag the Pound lower to 1.20 again.
USDCNY (7.0635) has risen beyond 7.06 and remains bullish to test 7.08-7.09 in the coming days.
USDINR (71.4350) is holding well above 71 and has bounced sharply from the low of 71.0525 yesterday. The outlook is bullish to test 71.67 on a break above 71.52 in the near term. The current move has room to test even 71.82-71.85 on the upside.
INTEREST RATES
The US Treasury yields are getting a breather. As mentioned yesterday, they can see an intermediate bounce before resuming the overall downtrend. The German yields can also witness a corrective bounce in the near term within their broader downtrend. The 10Yr GoI is holding well above 6.50% and can test 6.68% on the upside on a break above 6.62%.
The US Treasury yields have bounced across tenors. The 2Yr (1.52%), 10Yr (1.59%) and 30Yr (2.07%) were up 3 bps each while the 5Yr (1.46%) was up 4 bps. Though there is room for further rise, the upside is likely to be capped. As mentioned yesterday, the 30Yr has strong resistance at 2.15% which can cap the upside and drag the yield lower again. The 5Yr has to break above the immediate resistance level of 1.48% to move further higher.
The German yields remained stable at the near end while the far end witnessed a bounce. The 2Yr (-0.91%) and 5Yr (-0.88%) were stable and the 10Yr (-0.65%) and 30Yr (-0.15%) were up 3 bps and 6 bps respectively. The 30Yr can test its resistances at -0.11 and -0.08% while it sustains above -0.20% and then can possibly turn lower again. The 10Yr can test -0.58% in the near term before resuming the downtrend.
The 10Yr GoI (6.5820%) is holding well above 6.50%. The outlook is bullish for it to breach 6.62% and rise to 6.68% in the coming sessions.
