STOCKS
Equities remain mixed and are consolidating at higher levels. Broadly we remain cautious on the equities and will be looking for a corrective fall after this consolidation. Dow has to break above 33550 to avoid a fall below 33000 from here. DAX keeps alive the chances of rising to 15500-15700 before a sharp correction is seen. Nikkei can remain sideways between 28000 and 31000. Shanghai can fall to 3400-3350. Sensex and Nifty might have chances to test the upper end of their range in the near-term and then fall back again.
Dow (33503.57, +57.31, +0.17%) continues to oscillate around 33500. Our view remains the same. A strong rise past 33550 is needed to take the index further higher to 33700-34000. While below 33550, the bias is bearish to see a break below 33000 and a fall to 32000-31000 in the coming weeks.
DAX (15202.68, +26.32, +0.17%) sustains higher and is keeping alive the chances of seeing 15500-15700 on the upside before witnessing a strong reversal. As mentioned yesterday, a strong fall below 15000 is needed to negate the above mentioned rise and drag DAX lower from here itself.
Nikkei (29822.36, +113.38, +0.38%) has come-off failing to sustain the break above 30000 in early trades today. Our view remains the same. 28000-30500/31000 is the range that can be seen now. Nikkei can fall towards the lower end of this range on a break below 29500.
Shanghai (3453.64, −28.91, -0.83%) has come down today and keeps our bearish view intact of seeing 3400-3350 and 3250-3200 on the downside. The resistance at 3500 is holding well in line within our expectation. Only a strong break above the level of 3500 will negate the bearish view.
Sensex (49746.21, +84.45, +0.17%) and Nifty (14873.80, +54.75, +0.37%) have chances to move up from here but the upside will be limited. 51000-52000 (Sensex) and 15000-15200 (Nifty) are strong resistance that can cap the upside. As mentioned yesterday, both the indices can remain in a broad range of 48000-51000/52000 (Sensex) and 14200-15200 (Nifty) with a bearish bias to break these ranges on the downside eventually.
COMMODITIES
Precious metals have risen well on Dollar weakness but we need to watch important resistances above current levels. Gold and Silver need to trade above 1760 and 25 respectively in order to move up further towards 1800-1820 and 26.0-26.50 respectively before again declining from there in the medium term.
Brent (63.23) and WTI (59.73) trade within narrow sideways range. Immediate resistance on Brent is seen near 64 which if holds could produce a dip back to 62-60 levels while the WTI may continue to trade in the 57-63 region for the near term.
Gold (1755.30) has risen finally towards our our expected 1760. A break above this if seen and sustains would be an early signal of medium term bullishness. A break above 1760 could take the price higher towards 1800-1820 initially.
Silver (25.42) has risen above 25 negating a fall towards 24-23 immediately and possibly establishing a short rise to 26.0-26.50 before again falling back from there.
Copper (4.0710) has moved up instead of falling below 4 and indicates that interim support at 4 may hold for a few more sessions. Only a break below 4 would bring in lower support near 3.90 into the picture. On the upside there is scope for a rise to 4.20/30 in the medium term.
FOREX
Dollar Index has fallen further taking Euro above 1.19 again but this needs to sustain in order to take Euro higher towards 1.20 and Dollar Index towards 91.6. Dollar Yen tested 109 yesterday but has bounced a bit from there. Break below 109 will indicate further bearishness. EURJPY, Aussie and Pound look ranged to bearish for the near term. USDCNY may continue to rise towards 6.55/58. USDINR needs to sustain above 74.25 today to indicate further rise in the coming weeks. A close below 74.25 could give scope for a corrective dip in early sessions of next week.
Dollar Index (92.138) has managed to fall further and needs to break below 92 to indicate continued bearishness for the near to medium term. Else a bounce back to 92.50 cannot be negated.
Euro (1.1903) has risen above 1.19 again and needs to sustain in order to slowly move up towards 1.20. Watch if price manages to sustain above 1.19 through the day.
EURJPY (130.08) has dipped yet again and seems to be trading along the 130 region for the last few sessions. A range of 131-129.50 may likely hold for now before a sharp break on either side is seen.
Dollar-Yen (109.25) tested 109 yesterday before slightly bouncing higher from there. The bounce could be short lived followed by continued decline below 109 in the near term. In order to keep the bullish possibility intact, Dollar Yen will have to sustain above 109.50; else a decline towards 108 could be on the cards for the coming weeks.
Aussie (0.7637) is trading in a narrow way without any indication of a clear trend in the very near term. A trade between 0.77-0.7550 may hold for the near term.
Pound (1.3729) has been falling sharply and could test 1.3670-1.3600 on the downside before bouncing back from there.
USDCNY (6.5497) has risen slightly but may continue to rise towards 6.55/58 in the near term.
USDINR (74.5950) continued to rise yesterday but if 74.80 holds today we may expect a slight decline to 74.40/20. Note that a close below 74.25 today may indicate some chances of a fall in early sessions of next week else a close above 74.25 today will increase chances of rising over the next few weeks increasing chances of testing 76.0-76.50 on the upside.
INTEREST RATES
The US Treasury yields are inching lower and are coming closer to their key supports which if broken would signal a trend reversal. The price action in the coming days will need a close watch. The German yields continue to consolidate with their uptrend. The bias is bullish to see one more leg of rise before a reversal is seen. The 10Yr GoI has dipped further and is keeping our bearish view intact.
The US 2Yr (0.15%), 5Yr (0.84%), 10Yr (1.63%) and 30Yr (2.31%) Treasury yields have dipped further across tenors. The 10Yr and 30Yr are heading down towards their crucial support levels of 1.55% and 2.2%. While this supports hold, the yields can remain in a range of 1.55%-1.8% (10Yr) and 2.2%-2.5% (30Yr). The bias will still remain bullish. A strong break below 1.55% (10Yr) and 2.2% (30Yr) is necessarily needed to indicate a trend reversal. We will have to wait and watch.
The German 2Yr (-0.72%), 5Yr (-0.67), 10Yr (-0.34%) and the 30Yr (0.22%) are consolidating within their uptrend. -0.40% (10Yr) and 0.20% (30Yr) are important support which will have to be broken to turn the outlook bearish. While above these supports, the yields can rise to -0.20%/-0.15% (10Yr) and 0.35% (30Yr) over the medium-term.
The 10Yr GoI (6.0313%) has declined further and is heading down towards 6% in line with our expectation. Our bearish view of seeing 6% and 5.90% on the downside remains intact.
