STOCKS
Major indices like the Dow, DAX and Nikkei are hovering and poised around their key near-term resistances at the moment. Dow has resistance at 28300. For DAX and Nikkei the resistances are at 13200 and 23400. The bias remains positive to see a break above these resistances and a rise in Dow, DAX and Nikkei. Can the US Federal Reserve Chairman Jerome Powell’s speech today provide this trigger? We will have to wait and see. Shanghai is coming down and can fall within the broad 3180-3450 range. Sensex and Nifty sustains higher and are keeping our broader bullish view intact.
Dow (28331.92, +83.48, +0.30%) has risen and closed just above 28300 and keeps our bullish bias intact. With an immediate support at 28000, the Dow is likely to move up to 28500-29000 in the coming days in line with our expectation.
DAX (13190.15, +128.53, +0.98%)continues to remain higher and hovers around the key resistance level of 13200. We retain our bullish view of seeing a rise to 13800 in the near-term. In case of a dip from here, 12800 can be tested again and the rise to 13800 will get delayed further.
Nikkei (23186.61, −104.25, +0.45%) sustains higher but is struggling to breach the 23300-23400 region. While below 23400, a range of 22700-23400 can be seen for a few days. However, while above 22700 our bullish view of seeing 23800-24000 on the upside will continue to remain intact. Also we reiterate that 24000 is a strong resistance from where a sharp corrective fall is possible.
Shanghai (3338.11, +8.37, +0.25%) has declined below 3350 and looks weak. Inability to bounce-back above 3350 will be bearish to see a fall to 3250 in the coming days. From a broader picture the 3180-3450/70 range continues to remain intact and the index is currently coming down within this range.
Nifty (11549.60, +77.35, +0.67%) has moved up further and is heading towards 11600 in line with our expectation. As we have been mentioning for some time, the upside can extend up to 11750-11800 and even higher. However, we will have to watch closely to gauge the chances of seeing a corrective fall from any where between 11800 and 12000 eventually.
Sensex (39073.92, +230.04, +0.59%) has risen above 39000 in line with our expectation. A strong follow-through rise from here will take the Sensex up to our preferred targets of 39500-40000 in the coming weeks. There are chances to see a corrective dip from around 40000 which we will have to wait and watch.
COMMODITIES
Watch for a further draw in Crude weekly US inventory data that could pull up crude prices in the near term. Gold and Silver have risen but could see limited upside just now to be followed by another short corrective dip. A possible sideways correction is going on in the precious metals on the near term charts. Copper is stuck in a range too and could now move up towards 3.05, the upper end of the range. Unless a break out on either side is seen, the price may continue to trade sideways.
Brent (45.68) and WTI (43.33) have dipped slightly from levels seen yesterday but may rise higher again if the US weekly inventory data by the EIA indicates a draw in line with analyst expectations of seeing a 3.4mln barrel draw. Overall our near term targets of seeing a test of 47.50 and 44-45 respectively on Brent and WTI remains intact.
Gold (1951.80) has moved up possibly indicating that the support near 1920 is holding well for now. A test of 1960/80 could be on the cards for the next few sessions before another sip back towards 1930/20 is seen. A possible triangular pattern correction looks likely on the near term charts, which if hold true, could be indicative of a bullish Gold in the medium term. Watch ranged movement for some more sessions to be followed by a sharp breakout on the upside if the pattern holds, else a dip below 1920 would initiate further bearishness.
Silver (27.32) has moved up too holding above support at 26 mentioned yesterday. A rise now towards 28-29 could be on the cards.
Copper (2.9630) remains stuck in the 2.90-3.05 region and needs to break on the upside in order to turn bullish for the longer run. For now, a rise back towards 3.0-3.05 is possible within the range.
FOREX
Markets are all ears to the policy speech by Jerome Powell due today titled “Monetary Policy Framework Review”. It would be a virtual session of the Fed at Jackson Hole which may emphasize on inflation and how to bring them back to above 2%. Currencies trade in a ranged fashion just now ahead of the Powell speech but we may expect some triggers for any sharp movements over today (after the speech) and tomorrow. The weakness in USDCNY if seen further could be supportive of a stronger Rupee while Euro could remain above 1.17. Aussie and Pound look stable just now while EURJPY can move up from immediate support levels.
Dollar Index (92.95) is stuck within a sideways range of 92-93.50 and could hold on to this range for some more sessions. Watch for outcome from Powell’s speech today that could trigger some movement in the index.
Euro (1.1825) has immediate support near 1.1740 as mentioned yesterday and while that holds, Euro could trade within 1.1740-1.19 region for the near to medium term. View is stable within a sideways range for some sessions.
EURJPY (125.36) has support near 125 and while that holds we may expect trade within 125-126 for now. View is bullish while above 125.
Dollar-Yen (106.02) fell back, unable to rise above 106.50/60 yesterday. Trade within 105.5-106.5 could be possible in the near term.
Aussie (0.7191) is trading higher from levels seen yesterday. Near term trade is likely to be ranged for now but may move up towards 0.73/74 soon.
Pound (1.3197) could move up to test 1.3299 but may again fall back from there towards 1.30. Overall broad range of 1.30-1.33 looks likely for the near term.
USDCNY (6.8859) has broken below 6.90 and could trigger a sharper fall in the near term. While below 6.90, view is bearish towards 6.86/85 in the next few sessions. Any corrective bounce from here, if seen could be limited to 6.90 on the upside.
USDINR (74.32) held well within 74.50/60-74.20/15 range as expected and could continue to remain so for now before falling further towards 74.00 or lower. While the longer term view remains bearish for USDINR, immediate ranged view looks possible just now.
INTEREST RATES
The US Treasury yields have come-off after rising in the US session yesterday. The US Federal Reserve Chairman Jerome Powell’s speech at the virtual Jackson Hole conference today will be watched closely. Market is widely expecting a policy change on the inflation front in this conference. As mentioned yesterday, a strong follow-through rise from here will negate our view of seeing a near-term dip and in turn will take the Treasury yields higher from here itself. The German Yields sustain higher and are heading towards their key resistances which if broken will negate our broader bearish view. The 10Yr GoI has risen back sharply from its low yesterday and keeps our bullish view intact to see 6.30%-6.35% on the upside.
After moving up in the US session yesterday, the US 2Yr (0.14%), 5Yr (0.28%), 10Yr (0.68%) and the 30Yr (1.40%) Treasury yields have come-off again to the levels seen on yesterday’s early Asian trades. As mentioned yesterday the 10Yr will have to break above 0.70% decisively to avoid a dip to 0.50% and move up to 0.80% from here itself. The 30Yr on the other hand will have to sustain above 1.35% to move up to 1.50% from here itself and avoid the dip to 1.30%-1.25%.
The German 2Yr (-0.67%), 5Yr (-0.64%) and 10Yr (-0.42%) yields remain stable while the 30Yr (0.03%) has inched further higher. As mentioned yesterday, -0.39% is an important level to watch on the 10Yr. A break above it will negate our earlier bearish view of seeing a fall to -0.55% on the downside and will take the yield up to -0.30%. The 30Yr on the other hand is heading towards 0.07% as expected and need to be seen if it can breach 0.07% or not.
The 10Yr GOI (6.2046%) has risen-back sharply from the low of 6.1359% yesterday. This keeps our broader bullish view intact of seeing 6.30%-6.35% on the upside.
