STOCKS
Slight recovery seen in most equities but the important near term supports to need to hold strong in order to send the index up again. Dow and Dax have supports at 35500 and 16100 respectively which need to hold for the index to start moving up again. Nikkei needs to sustain above 29750 while Shanghai needs to trade above 3550. Nifty and Sensex too may respect near term supports at 17200 and 58000 and bounce back soon.
Dow (35619.25, +17.27, +0.049%) has risen slightly today. The view remains bearish to test support near 35500.
DAX (16115.69, -44.28, -0.27%) has come down slightly today. Support can be seen at 16100 which can hold for now and produce a bounce towards 16400 before we see a dip again.
Nikkei (29774.11, +28.24, +0.095%) has broken above the interim resistance at 29750. The index now has room to rise up towards 30000/31000 in the near term.
Shanghai (3592.98, +10.9, +0.30%) has risen today and is heading towards 3600 as mentioned earlier. A strong and sustained break above 3600 is needed to test 3700. Else, we can see a corrective fall from 3600 back towards 3500.
Nifty (17416.55, -348.25, -1.96%) went down sharply to test 17280 before rising again to close at 17416.55 yesterday. The 17200 level is a strong support which can hold and produce a bounce. Failure to hold above 17200 can take the index towards 17000.
Sensex (58465.89, -1170.12, -1.96%) fell to test the support at 58000 before bouncing back from there. While above 58000 the view remains bullish to see a rise towards 59000-60000 soon.
COMMODITIES
Precious metals have fallen sharply and look bearish on Dollar strength. Gold can test 1800-1780/60 in the near term while Silver can fall to 24. Copper has risen a bit and needs to break above 4.45 to move higher. Crude prices are stable and has scope to fall towards important supports near 76/75 (Brent) and 73-70 (WTI). Immediate view is bearish for both crude prices and precious metals.
Brent (79.46) has scope to fall towards 76-75 while below 80/79. WTI (76.34) on the other hand has scope to fall towards 73-70 on a break below 75. Immediate view is bearish.
Gold (1810.20) has fallen back sharply as Dollar Index has moved up and continues to look strong. While the US Dollar trades strong, Gold can fall in the near to medium term towards 1780/60 again on a break below 1800. View has turned bearish for the near term. Watch support near 1800-1780.
Silver (24.31) too is coming off as resistance near 25.50 is holding well. A fall to 24 cannot be negated in the very near term. Any break below 24 can trigger a further fall towards 23-22. Watch price action near 24.
Copper (4.4140) has risen well but needs to break above resistance near 4.45 to turn further bullish. A sideways trade within 4.45-4.25 for some sessions looks possible before breaking on either side.
FOREX
Dollar Index trades higher and targets 97.50-98 while above 96.50, taking up Dollar Yen along towards 116+ and dragging down Euro towards 1.12-1.10. Aussie and Pound continue to trade lower and is bearish for the medium term. EURJPY has bounced well from support at 128 and needs to sustain to move higher. Surprisingly, USDCNY and USDINR are broadly ranged and may continue so for some more sessions. USDCNY can trade within 6.39-6.37 while USDINR can trade within 74.50/60-74.20/00 in the near term.
Dollar Index (96.54) has risen to break above immediate resistance at 96.50. A sustained trade above 96.50 would open up chances of a rise to 97.50-98 which is the next crucial resistance zone and likely to produce a rejection back towards 96-94 in the longer run. For now, view remains bullish while above 96.50.
Euro (1.1236) has fallen relentlessly. Euro could be vulnerable for a fall to 1.10 if there is no bounce in the near term from 1.12. Confirmation of further bearishness would come in on a break below 1.12 as Dollar Index is headed towards 98. Overall bearishness in Euro is likely to continue.
EURJPY (129.25) has bounced well from support at 128 and can move up towards 130 initially. Thereafter we need to see if it manages to break above 130 or falls off from there.
Aussie (0.7223) continues to trade lower after breaking below support at 0.7250. While Aussie trades below 0.7250. it has scope to fall towards 0.72-0.7170 in the next few sessions. View is bearish just now.
Pound (1.3394) continues to fall and could test 1.3350-1.330 in the near term. Immediate view is bearish.
Dollar-Yen (115.06) has seen a good rally from the 113.50 Support over the last three days. If the current rise past 115.00 sustains, the pair can target 116+ soon. With the US Dollar looking strong the pair may get upward momentum in the coming sessions.
USDCNY (6.3853) is trading within a very narrow range. A sideways range of 6.39-6.37 looks likely to hold just now.
USDINR (74.40) rose to test 74.50 yesterday. We would keep a close watch at resistance near 74.50/60 which may hold and produce a fall back towards 74.25-74.00 in the coming sessions. Immediate upside could be capped at 74.50/60.
INTEREST RATES
The US Treasury yields have risen sharply contrary to our expectation to see a fall at the far-end. Jerome Powell getting the nod for a second term has triggered the rise in the yields. There is room for further rise and a close watch is needed to see if the yields are breaking above their key resistances or not. The German yields have seen some recovery bounce. But it is likely to be short-lived and the yields are likely to fall-back again to keep the broader bearish view intact. The 5Yr and 10Yr GoI have risen back yesterday and can move up to test the upper end of their respective range in the near-term.
The US 2Yr (0.63%), 5Yr (1.32%), 10Yr (1.62%) and the 30Yr (1.96%) have risen sharply across tenors contrary to our expectation to see a fall at the far-end. The 10Yr is back above 1.6% and can now retest the 1.65%-1.67% region. It will have to be seen if it reverses lower again from there or extends the upside to 1.7%-1.75%. The 30Yr on the other hand can test 2% and can extend the upside to 2.1% if it breaks above 2%.
The German 2Yr (-0.76%), 5Yr (-0.61%), 10Yr (-0.31%) and 30Yr (0.02%) yields have recovered across tenors after having fallen sharply towards the end of last week. However, we expect the bounce-back to be short-lived. Our bearish view remains intact to see a fall to -0.45% and -0.5% on the 10Yr and -0.1% and -0.2% on the 30Yr in the coming weeks.
The Indian 10Yr GoI (6.3513%) has risen back again. But the resistance at 6.38% can continue to cap the upside and drag the yield down to 6.3% in the near-term. 6.3%-6.38% could be the narrow range of trade within the broad 6.3%-6.45% range. We retain our bearish view of seeing a downside break below 6.3% and a fall to 6.2% eventually over the medium-term.
The 5Yr GoI (5.6882%) has risen back after testing 5.66%. This keeps the 5.66%-5.75%/5.78 range intact. As mentioned yesterday, a test of 5.7%-5.73% looks likely now. From a bigger picture we expect the 5Yr GoI to break this range below 5.66% and fall to 5.63%-5.62%.
