STOCKS
Dow has gained momentum and has risen sharply. It is bullish to test 35000 now and the danger of falling below 33500 has been negated. DAX hovers around 15200 and has to break above 15250 to move up towards 15500-15700. Nikkei can move up towards the upper end of its 28500-30500 range. Shanghai remains near the upper end of its 3350-3500 range and is likely to fall back to keep the sideways range intact. Sensex and Nifty can move up further breaking above their current range on the back of the strong surge in the Dow. The danger of seeing a fall that we have been cautioning will get reduced.
Dow (34548.53, +318.19, +0.93%) is gaining momentum and has risen sharply yesterday. The rise to 35000 is happening now. While above 34000 the danger of breaking below 33500 stands negated now. Also from a slightly bigger picture, Dow may now have the potential to target even 36000 on the upside while it remains above 34000.
DAX (15196.74, +25.96, +0.17%) oscillated around 15200 yesterday and has closed on a mixed note. As mentioned yesterday, a strong break above 15250 is needed to negate the danger of the fall to 14500-14000 and bring back the chances of seeing 15500-15700 on the upside into the picture again. The price action in the coming days will need a close watch.
Nikkei (29397.10, +65.73, +0.22%) remains higher above 29000. As mentioned yesterday, a break above 29500 can take Nikkei up towards 30000-30500 in the coming days. Broadly, Nikkei is now moving up within its 28500-30500 range.
Shanghai (3454.39, +13.11, +0.38%) is still stuck inside 3425 and 3475 and keeps the near-term outlook mixed. However, while below 3500, we expect Shanghai to fall towards 3400-3350 in the coming days. Broadly, we expect the 3350-3500 range to remain intact.
Nifty (14724.80, +106.95, +0.73%) is heading up towards the upper end of its 14400-14800 range. The surge in the Dow might help the Nifty to break this range on the upside and move up further towards 15000-15100 in the coming days. That in turn will reduce the danger of the fall breaking below 14400 that we had been mentioning for some time. The price action near 14800 today will need a close watch.
Similarly, Sensex (48949.76, +272.21, +0.56%) can break above 49000 and move up towards 50000 on the back of the strong rise in the Dow overnight. That will reduce the danger of seeing 47000 on the downside that we were mentioning earlier.
COMMODITIES
Commodities have risen sharply today on US Dollar weakness except crude prices which seem to be stable. If the index falls further in the near term, we may expect the rally in commodities (except crude prices) to continue. Crude prices may remain stable while below crucial resistances of 70 and 67 on Brent and WTI respectively. Gold may test resistances of 1820 and 1850/60 soon while Silver may head towards 28. Copper has crucial all time high of 4.75/80 which if breaks could lead Copper into uncharted territory and indicate fresh rally.
Brent (68.06) and WTI (64.73) have dipped a bit unlike the sharp rally in metals. While below 70 and 67 respectively, Crude prices could remain stable ranging within the narrow range as we have been mentioning for the past few days. A break above the mentioned resistance is needed for the crude prices to start a fresh rally and target fresh highs. While below 70 and 67, a fall back to 60 could be possible on both.
Gold (1816.70) has risen sharply breaking above 1800 in line with our expectations. Immediate resistance is seen at 1820 which if breaks to the upside could pull the price to upper resistance near 1850/60. Thereafter, in the longer run Gold needs to see s sustained break above 1860 in order to maintain the bullish rally and head towards 1900+ levels. Watch price action near 1820 and 1860 respectively for a short corrective dip in the medium term.
Silver (27.51) too rose sharply breaking above 27 just as expected. A test of 28 is possible in the near term but to maintain the rally towards 29-30, a sustained break above 28 will be needed. Watch price action near 28 in the near term to see if the price faces rejection or manages to break higher. Overall view is bullish on the longer term charts for the coming weeks.
Copper (4.6435) has risen too in line with other metals but has broken above our expected 4.60. A rise to 4.75/80 cannot be negated in the near term. Any rise past 4.80 would indicate fresh highs in the metal and a strong upcoming rally in the coming weeks. Watch price action near 4.75/80.
FOREX
Dollar Index has fallen well ahead of the NFP data today. A fall to 90.50-90.00 looks possible that could drag up Euro towards 1.21+ in the near term. EURJPY has bounced and while support at 131 holds, view remains bullish. Aussie and Pound have risen within the range and could be headed towards the upper end near 0.78 and 1.40 respectively. USDJPY has dipped a but may test 109-108.50 before rising from there again. USDCNY may remain above 6.44 and head towards 6.50 eventually in the longer run. USDINR may fall further towards 73.50/25 while below 73.80/74.00.
Dollar Index (90.8740) fell early today ahead of the NFP data. The index has also been dragged down by weaker yields. There is scope for a fall toward 90.50-90.00 again on the downside which is a near term support below current levels.
Euro (1.2065) could bounce back on Dollar weakness and held above support at 1.20. There could be scope for a rise to 1.21 before a dip is seen again. For any indication of longer term bullishness, we need to see Dollar Index break below 90.
EURJPY (131.70) has bounced back towards 132. A successive break above 132 is needed for the cross to rise further towards 135. Longer term view is bullish within which a sideways range is seen just now.
Dollar-Yen (109.13) has dipped a bit on Dollar weakness. It seems 109.50 itself is holding as immediate resistance just now. But we need a sharp break below 109 or above 110 to decide on further direction. A possible test of support at108.50 could be possible before a rally sets in again towards 110.
Aussie (0.7777) has risen too and could test 0.78-0.7820 today. Immediate view is bullish.
Pound (1.3905) has broken above 1.39 and could have scope for a rise to 1.40 in the near term. The mentioned 1.38-1.40 range seems to be holding well.
USDCNY (6.4605) has dipped instead of rising higher. A test of 6.44 can be allowed on the downside before a rally towards 6.50 is seen again in the longer run.
USDINR (73.9150) tested 74 on the upside and managed to close below 73.80 yesterday. While immediate resistance at 74 (revised down from 74.30 mentioned over the last few days) holds, we may expect the bearish momentum to remain intact and produce a fall towards 73.50-73.25 in the near term. Watch price action while below 74.00/73.80 today. The NDF offshore rate already quotes 73.5750 just now indicating a possible gap down opening on the OTC market today.
INTEREST RATES
The US Treasury yields remain lower and stable. A gradual dip to test their crucial supports looks likely in the near-term. It will have to be seen if the yields bounce-back to keep the broader uptrend intact or not. The German yields hover near their key resistances. We expect the resistances to hold and the yields to fall going forward. The 10Yr GoI remains bearish but may consolidate in a narrow range before falling further.
The US 2Yr (0.16%) and 5Yr (0.80%) Treasury yields remains stable while the 10Yr (1.57%) and 30Yr (2.24%) have dipped slightly. As mentioned yesterday, the crucial supports at 1.5% (10Yr) and 2.2% (30Yr) can be tested in the near-term. A bounce thereafter will keep the broader uptrend intact and can take the yields up to 1.7%-1.8% (10Yr) and 2.4%-2.5% (30Yr). A strong break below these supports is needed to indicate a trend reversal.
The German 2Yr (-0.70%), 5Yr (-0.60), 10Yr (-0.25%) and the 30Yr (0.34%) yields hover below their crucial resistances. The yields will have to break above -0.20% and 0.35% to move up further higher. While below these resistances a fall back to -0.45% (10Yr) and 0.20% (30Yr) again is possible. A break below -0.27% (10Yr) and 0.28% (30Yr) will trigger this fall.
The 10Yr GoI (5.9742%) remains lower below 6%. Our bearish view of seeing 5.9% on the downside remains intact. A break below the intermediate support level of 5.96% can trigger this fall. While 5.96% holds, the yield can consolidate between 5.96% and 6.04%/06% for some time before falling to 5.9%.
