STOCKS
Equities continue to remain mixed and seem to need some fresh trigger for a fresh rally. Dow, DAX and Nikkie have bounced but has to surpass their immediate resistances in order to gain momentum and move further higher. Shanghai is holding well above its crucial support but has to surpass 2920 to ease the danger of any fresh fall. Sensex and Nifty are retaining their sideways range and can move down within their range now.
The support at 27600 on the Dow (27875.62, +109.33, +0.39%) that we had mentioned all-through last week seems to be holding. Dow will now need a strong rise past 28000 to gain momentum and target 28250-28400 which have been expecting for some time. While 28000 holds, a narrow consolidation between 27600 and 28000 is possible for some time.
DAX (13163.88, +26.18, +0.20%) has bounced above 13100 again thereby reducing the chances of seeing a corrective fall to 12800-12700 that we had mentioned on Friday However, as we had mentioned earlier, the index has to breach 13200 decisively to completely wipe out the chances of this corrective fall.
Nikkei (23340.33, +227.45, +0.98%) is sustaining well above 23000. A further rise past 23500 will confirm that the corrective fall is over and the broader uptrend has resumed. Such a break will pave way for 24000 and 24800 in the coming weeks.
Shanghai (2904.21, +18.92, +0.66%) is managing to hold above the crucial support level of 2890 but is not gaining momentum to move sharply higher. As mentioned on Friday a strong rise past 2920 is needed to avoid any further fall and take the index higher to 3000 and even higher levels in the coming weeks.
Sensex (40359.41, -215.76, -0.53%) and Nifty (11914.40, -54, -0.45%) have been moving lower over the last couple of trading days. This indicates that their 11800-12050 (Nifty) and 40000-40750 (Sensex) range is holding. Intermediate supports are at 11880 on the Nifty and 40250 on the Sensex. A break below these level can drag the Nifty lower to 11800 and the Sensex to 40000. We expect the indices to retain this range for some more time.
COMMODITIES
Crude prices continue to trade higher. Gold and Silver could dip for a few sessions before bouncing back from support. Copper looks bullish in the near term.
Brent (63.48) is stable near prices seen on Friday while Nymex WTI (57.82) has dipped a bit from levels above 58 seen on last week’s closing. Brent has scope for rising towards 65 while WTI has immediate resistance near 59.30. Rise in the near term could be limited with a possibility of seeing a dip in the medium term.
Gold (1461.70) and Silver (16.94) seems to be falling. Gold is headed towards support near 1440 while Silver may test 16.50-16.00 in the near term.
Copper (2.6510) has risen from levels above 2.60 as mentioned last week. While above support at 2.60, the metal price could rise towards 2.7250 again in the near term.
FOREX
Dollar Index (98.26) is trading higher and looks bullish for the near term targeting 98.50 on the upside. For further rise, the index needs to break above 98.50 for bullish confirmation.
Euro (1.1020) tested immediate support on the daily candles and needs to break below current levels to turn bearish for the near term towards 1.0995. Watch price action near current levels.
Dollar-Yen (108.78) is slightly up and looks bullish while above 108. Dollar Yen is likely to rise towards 109.00-109.50 in the near term. Immediate view is bullish.
EUR-JPY (119.87) is falling back towards support near 119 instead of our expected rise towards 122. It would be important to watch if EURJPY rises from 119 or falls lower in the next few sessions. Watch interim support near 119.50.
Pound (1.2846) and Aussie (0.6796) are mixed. On one hand, Pound may test 1.28/26 on the downside while Aussie looks bullish on a bounce from 0.6769.
USDCNY (7.0351) is likely to hold below 7.05/04 in the near term with a possible dip likely to be restricted to 7.00-6.95.
Dollar-Rupee (71.72) has been stable for the past 3-sessions. A break below 71.63 is needed to turn bearish for the near term. We may continue to look at trade within the broad 71.50-72.00 for this week as well unless a break on either side is seen.
INTEREST RATES
The US Treasury yields have been moving lower over the last couple of week as the uncertainty over the US-China trade deal continues to weigh on the bond market. The Treasury yields are likely move further lower in the coming days. The German yields remain lower but are coming closer to their key supports which are likely to hold and push them higher. The 10Yr GoI looks weak and vulnerable to dip further.
Though the US 2Yr (1.63%), 5Yr (1.63%), 10Yr (1.78%) and 30Yr (2.23%) have bounced on Friday, remains weaker from a broader picture. The 30Yr is likely to face resistance now at 2.25% and can fall to 2.15% and 2.12%. The 10Yr has key resistance near 1.85% which can cap the upside in the near-term and drag it lower to 1.70% and even 1.65% going forward.
The German 2Yr (-0.65%), 5Yr (-0.59%), 10Yr (-0.36%) and 30Yr (0.15%) continues to look weak in the neart-term. The 30Yr has failed to sustain above 0.20% last week. It can now test 0.10% and even 0.05% while it remains below 0.20%. The 10Yr on the other hand can dip to -0.40% and -0.43% from where a bounce is possible.
The Indian 10Yr (07.26 GS 2029) GOI (6.6450%) needs to be seen if it can sustain above 6.64% and see a bounce to 6.70% and 6.75% or not. A break below 6.64% can drag it to 6.60%
The 10Yr (06.45 GS 2029) GoI (6.4996%) has a key resistance at 6.52% which has to be broken to ease the downside pressure and move up further. While below 6.52%, the outlook is bearish to see a revisit of 6.48% and 6.46% on the downside.
