STOCKS
Equities are trading higher and most indices look bullish in the near term. Watch positive movement in equities globally for the next few days.
Dow (35455.80, +242.68, +0.69%) has risen well after the Jackson Hole meeting last week. We may expect the Dow to rise to 35750 or higher in the medium term.
DAX (15851.75, +58.13, +0.37%) has been fluctuating within 1560-16000 over the last few sessions unable to decide on a clear direction. We may expect a test of 16000 which if breaks can be bullish for the medium term.
Nikkei (27718.86, +77.72, +0.28%) has bounced from 27481.23 seen on Friday. The view is now bullish to see a rise towards 28000 in the coming sessions. While below 28000,the danger of seeing a fall towards 27000 cannot be negated.
Shanghai (3533.26, +11.10, +0.32%) trades above 3500.The view is now bullish to see a test of 3550 and eventually 3600.If Shanghai fails to sustain above 3500 then a corrective fall towards 3400 is possible in the coming sessions..
Nifty (16705.20, +68.30, +0.41%) has crossed the level of 16700.If nifty sustains above 16700,there are high chances of seeing a rise towards 16800/850 on the upside..
Sensex (56124.72, +15.62, +0.31%) has risen sharply above the level of 56000. While above 56000 we can see a test of 57000 on the upside in the coming sessions
COMMODITIES
Weak Dollar after the Jackson Hole meeting has been positive for commodities as most commodity prices have risen sharply. Brent and WTI can rise to 75 and 70 respectively before again declining from there. Gold and Silver looks bullish too. Copper may test 4.40.
Brent (73.02) has broken above 72.50 and could be headed towards 75-77 again before any decline sets in. We expect 75 to hold as a decent resistance in the near term.
WTI (68.64) too has risen and can test upper resistance at 70 before any decline is seen.
Gold (1817.20) has come off from 1821.9 tested on Friday. We have to see if the price sustains above 1820/25 to head towards 1840 eventually or holds below 1820 to fall back to 1800. A rise looks more likely just now.
Silver (24.13) has risen too and is bullish for a rise to 24.50.
Copper (4.3480) has broken the range of 4.20-4.30 on the upside. A rise towards 4.40 can be seen in the coming days. Thereafter, whether it sustains or falls back will have to be seen.
FOREX
Expected volatility has been seen after the Jackson Hole meeting where it was stated that the central bank would begin tapering before end of the year. Dollar Index trades lower taking up Euro to 1.18+ levels and while that sustain, a rise to 1.1850-1.19 could be seen. USDJPY has come off and could test 109.40-109. Pound and Aussie are bullish for the near term. USDCNY is falling towards 6.45/44 while USDINR can dip too towards 73.45/25.
Dollar Index (92.617) has come off sharply after the Jackson Hole meeting on Friday where the central bank has is likely to begin tapering before the end of this year. However, it has been stated that there is “much ground to cover” before any rake hikes are seen. Breaking below 92.80/60 will indicate further bearishness for the index dragging it towards 92 eventually. Immediate view is bearish.
Euro (1.1807) has risen well and could be headed towards resistance at 1.1850 from where a decline looks possible. A break above 1.1850, if seen and sustained will be positive and take the exchange further up towards 1.19.
EURJPY (129.62) has risen well too and could test 130-130.50 on the upside soon before facing any rejection there. The cross has to break above 130.50 and sustain in order to indicate fresh bullishness for the medium term and look for fresh upside targets. Till then we may expect 130.50 to hold and produce a rejection.
Dollar-Yen (109.78) seems to have come off sharply and while the dollar Index trades lower, USDJPY can also move down to test 109.40-109.00 soon.
Aussie (0.7298) is likely to test 0.7350 before facing rejection from there. Failure to rise from current levels can drag it lower to 0.7250 from here itself.
Pound (1.3768) has scope to rise towards 1.3840 and face rejection from there for a fall towards 1.37.
USDCNY (6.4674) has fallen sharply and could be headed towards 6.45/44 before again bouncing back from there.
USDINR (73.6850) fell sharply on Friday before the Jackson Hole meeting. Immediate support is seen at 73.60 which if breaks can take the pair further down to 73.45/25. If the falling momentum sustains, there is scope for an eventual fall towards 73 in the longer run. Any immediate bounce if seen can take the pair higher to 74.0-74.20 again.
INTEREST RATES
The US Treasury yields have dipped across tenors following the Fed Chairman Jerome Powell’s speech on Friday. Powell said that the Fed will begin the stimulus taper this year. However, he had indicated that the interest rate hike might take a longer time. The Treasury yields have support near current levels which will have to hold in order to see a rise from here. We will have to wait and see. The German yields remain stable and are keeping alive the chances of seeing a corrective rally before resuming the downtrend. The 5Yr GoI remains stuck in the 5.68%-5.72% range and needs to see a breakout of this range to get clarity.
The US 2Yr (0.22%), 5Yr (0.79%), 10Yr (1.30%) and the 30Yr (1.91%) Treasury yields have come down sharply across tenors on Friday. The 10Yr will have to sustain above 1.28% and the 30Yr above 1.87% in order to keep the chances alive of seeing the rise to 1.4%-1.45% (10Yr) and 2%- 2.1% (30Yr) that we have been mentioning last week. Else the yields can fall-back to 1.2%-1.18% (10Yr) and 1.8%-1.75% (30Yr). We will have to wait and watch.
The German 2Yr (-0.75%), 5Yr (-0.71%), 10Yr (-0.43%) and 30Yr (0.04%) yields have dipped slightly. The 30Yr keeps alive the chances of seeing a rise to 0.10%-0.20% (revised up from 0.15% mentioned on Friday). The 10Yr on the other hand has to break above -0.40% in order to gain momentum and move up to test -0.30%/-0.25% (10Yr) on the upside. Thereafter the yields can reverse lower and resume the broader downtrend.
The 5Yr GOI (5.6831%) is still oscillating within the 5.68%-5.72% range. We repeat that we have to wait for a breakout of this range to see if the yield can move up to 5.74%-5.76% or fall to 5.66%-5.62% from here.
