Dow can see a rise today following the strong job numbers released on Friday. A test of 33500-33550 is possible while it sustains above 33000 and then a reversal is possible. DAX also has room to test 15500-15700 while it sustains above 15050. Nikkei is heading towards the upper end of its 28000-31000 range. Shanghai needs a close watch this week to see if it can breach 3500 or not. Sensex and Nifty have room to move up but resistances ahead can cap the upside and keep the indices pressured on the downside to fall-back over the medium-term in line with our expectation. Shanghai and DAX are closed today.
Dow (33153.21, +171.66, +0.52%) continues to hold above 33000 and has room to test 33500-33550 (revised up from 33450-33500) this week. We expect the Dow to reverse lower thereafter and a subsequent fall below 33000 can take it to 32000-31000. A break above 33550 can see an extended rise to 33750 and higher.
DAX (15107.17, +98.83, +0.66%) has risen above 15050. While this break sustains a further rise to 15500-15700 is possible. It will also negate/delay our view of seeing a fall to 14000-13800 immediately. DAX is closed today.
Nikkei (30083.19, +229.19, +0.77%) has risen above 30000 and can head up towards 30500-31000 in the near-term. As we have been mentioning for some time, 28000- 30500/31000 can be the range and Nikkei is likely to reverse lower from the 30500-31000 region to keep this range intact. A strong break above 31000 is needed to move further up and become more bullish.
Shanghai (3484.39, +18.06, +0.52%) has broken and closed above 3470 last week and can test 3500. A strong rise past 3500 will negate the chances of seeing 3250-3200 on the downside that we have been mentioning for some time. The price action at 3500 will need a close watch in the coming days. Shanghai is closed today.
Sensex (50029.83, +520.68, +1.05%) has risen back above 50000 and needs to see if it can sustain. A test of 51000 is possible before a reversal towards 49000-48000 is seen again. We expect 51000 to cap the upside and keep the index pressured to see 48000-47000 on the downside.
Nifty (14867.35, +176.65, +1.20%) can test 15000 and even 15200 while it sustains above 14800 now. The expected fall to 14400-14200 and 14000-13800 will get delayed and it can happen after a revisit of 15000-15200 levels.
Commodities have recovered from the sharp fall seen last week but need to break above crucial levels to indicate sustained upmove. Crude prices have important resistance s near 66 (Brent) and 63-64 (WTI) while Gold and Silver need to break above 1760 and 26 respectively. Copper has to break above 4.10 to turn further bullish. Watch price action near immediate resistances.
Brent (64.40) and WTI (61.06) look ranged for now. Brent could face rejection from 66 and fall back to 62-60 levels while WTI may face rejection from 63-64 levels before dipping back to 59-57.
Gold (1727.10) has risen well but has to rise above 1740-1760 levels to establish a bullish sentiment for the near to medium term. While below 1760, view for Gold remains bearish for a fall back towards 1720-1700 again. Watch for a possible break above 1760 on the upside.
Silver (24.99) has also bounced well from 23.74 seen last week. But while below 25.50, Silver could be bearish for a dip towards 23-22. Only a sustained break above 25.50-26.00, we may again consider further upmove targeting 29-30 in the longer run.
Copper (4.0640) rose back to levels above 4 instead of testing 3.80 on the downside. While above 4, the chances of a fall below 3.90 reduces and instead we may expect a rise towards interim resistance at 4.10 in the near term. A break above 4.10 is needed for the price to move up further.
Most currencies look stable just now and have bounced well after the fall seen last week. USDCNY, Euro, Dollar-Yen and Aussie look bullish just now but need to rise above the immediate hurdles of 6.58, 1.1830, 111 and 0.7550 to turn further bullish for the medium to longer term. Dollar Index is holding below 93.50 and could eventually fall towards 92 and lower. Watch if USDINR breaks below 73 today to test 72.80, or rises back to immediate resistance of 73.40 on the upside.
Dollar Index (92.964) has been holding well below 93.50 and while that holds, we may expect ranged movement in the index between 93.30-92.65 in the near term. A sustained break on either side would then decide on further movement.
Euro (1.1765) has bounced well from crucial support at 1.17 and could trade within 1.17-1.1830 region for sometime before rising higher in the longer run. Watch for a possible break above 1.1830 in the medium term.
EURJPY (130.11) is again heading towards resistance near 131 and while that holds, a dip back to 129.50 may be possible. On the contrary a sustained break above 131 would open up chances of a rise towards 135.
Dollar-Yen (110.56) looks stable just now as if to pause after a sharp rally. A rise again from here towards 111-112 could be possible after the short corrective sideways consolidation.
Aussie (0.7621 seems to be trading within a narrow range of 0.77-0.7550 and needs to break on either side to give more clarity on further direction from here.
Pound (1.3834) needs to break above 1.3850 to move higher towards 1.39-1.3940 on the upside. View is stable just now but we would watch for a possible rise in the near term if it sustains above 1.3850.
USDCNY (6.5646) is likely to remain ranged within 6.58-6.54 before a sharp break on the upside is seen for further upmove. Longer term view on the USDCNY is bullish.
USDINR (73.11) has crucial support at 72.80 while upside could be limited to 73.40 in the very near term.
The US Treasury yields sustain higher and are keeping alive the chances of seeing further rise before a strong reversal. German yields have dipped across tenors and will have to hold above their key supports to keep the bullish view intact. The 10Yr GoI is moving up within its range. We expect the range to remain intact and to break on the downside eventually going forward.
The US 2Yr (0.18%) and 5Yr (0.96%) Treasury yields have inched up slightly but the 10Yr (1.71%) and 30Yr (2.35%) have come-off from levels seen in early sessions on Friday. The trend continues to remain up. A break above 1.8% on the 10Yr can take it up to 2%. The 30Yr can target 2.9%-3% on a strong break above 2.5%-2.6%. Thereafter we can expect a strong trend reversal. As mentioned on Friday, the yields will have to fall 1.5% (10Yr) and 2.2% (30Yr) from here itself to negate the above mentioned rise and also to indicate a reversal.
The German 2Yr (-0.72%), 5Yr (-0.66), 10Yr (-0.33%) and the 30Yr (0.22%) have dipped across tenors. -0.40% (10Yr) and 0.18% (revised lower from 0.20% mentioned all through last week) are the important supports that has to hold to keep intact the bullish view of seeing -0.20%/-0.15% (10Yr) and 0.35% (30Yr) on the upside. A strong break below -0.40% (10Yr) and 0.20% (30Yr) will negate the bullish view. The price action in the coming days will need a close watch.
The 10Yr GoI (6.1768%) is heading towards the upper end of its 6.10%-6.20% range. We expect this range to remain intact for some time and then break below 6.10% eventually to test 6%-5.90% on the downside over the medium-term. In case of a break above 6.20%, an extended rise to 6.24%-6.26% which in turn will delay the fall below 6.10%.
5:00 10:30 IN Manufacturing PMI
…Expected59.23 …Previous57.5 …Actual57.5
DATA on Friday
2:30 18:00 US NFP
Expn655K …Expecte468K …Previous916K
12:30 18:00 US Unemployment Rate
Expn6.0% …Expected6.0% …Previous6.2% …Actual6.0%
12:30 18:00 US Avg Hrly Earnings
Expn0.37 …Expected0.1 …Previous0.3 …Actual-0.1
