Dow and DAX remain stable at higher levels and look mixed. Dow has to get a strong follow-through rise above 34000 to move further up. For DAX upside could be capped at 15500-15700 from here. Nikkei remains stable within its 28000-31000 range. Shanghai is moving down within its 3350-3500 range. Sensex and Nifty are moving up within their respective range of 14150-14700 and 47000-49000. Overall the equities are in a consolidation phase now and we need to wait and watch to get clarity.
Dow (33981.57, ?61.92, -0.18%) remains stable around 34000. Our view remains the same. Dow has to sustain above 33500 and get a strong follow-through rise above 34000 to move up to 35000. A break below 33500 and a subsequent fall below 33000 will turn the outlook bearish for seeing 32000-31000 on the downside.
DAX (15296.34, +16.72, +0.11%) continues to lack momentum although it sustains above 15200. We reiterate that 15500 and 15700 are important resistances that can cap the upside. We expect DAX to fall below 15000 and target 14500-14000 on the downside eventually in the coming weeks.
Nikkei (29074.44, ?51.79, -0.18%) has come-off slightly today but is still trading above 29000. While above 29000, the near-term view is bullish to see a rise towards 30000-30500. Broadly, Nikkei can oscillate in a range of 28500-30500 (narrow) or 28000-31000 (broad) in the coming days.
Shanghai (3420.66, ?20.51, -0.60%) has come-off sharply from the high of 3497.12. This keeps the 3350-3500 range intact. Shanghai can now move down towards 3350 – the lower end of the range in the coming days.
Nifty (14485, +143.65, +1%) and Sensex (48386.51, +508.06, +1.06%) are moving up within their respective range of 14150-14600/700 and 47000-49000. We expect this range to remain intact for some time. The overall bias is negative for the indices to break these ranges on the downside eventually and fall to 14000-13800 (Nifty) and 46000 (Sensex) going forward.
Copper looks most bullish among the other commodities mentioned below and could be headed towards 4.60 in the medium term before a decline from there is seen. Brent and WTI have dipped a bit and could possibly remain ranged for the near term between 70/68-64 for Brent and 67/65-61 on WTI. Gold has been falling off unable to break above 1800. While above 1760, there is still some scope for a reversal and a rise back to 1800-1820. Failure to sustain above 1760 could indicate medium term bearishness. Watch price action near 1760. Silver looks stable and could be ranged within 25-27 in the near term.
Brent (65.84) and WTI (62.09) have both dipped slightly but still has scope for a rise towards 68-70 and 65-67 respectively. Ranged movement ould be possible in the near term with downside restricted at 64 for Brent and 61 for WTI.
Gold (1774.70) continues to dip some more from levels seen yesterday. Important would be to see if it manages to sustain above 1760 or falls lower. While above immediate support near 1760, there is still some scope for a rise towards 1800-1820 in the medium term.
Silver (26.12) looks stable and may continue to trade within 25-27 region for the medium term.
Copper (4.4805) looks strongly bullish juts now and can be headed towards 4.60 soon before a pullback is seen from there.
Dollar Index has bounced a bit taking Euro down to 1.2066. Dollar Index may dip back after a brief test of 91.30/35 which could again take Euro higher in the medium term. EURJPY looks ranged just now while Dollar Yen has scope for a rise to 108.50-109 before dipping back from there. Pound and Aussie are in a short corrective dip and is expected to rise again in the medium term towards 1.40 and 0.79. USDCNY looks ranged within 6.48-6.50 for the very near term. USDINR needs to sustain below 74.70 to head towards 74.40 else the range of 74.70-75.10 may continue to hold.
Dollar Index (90.969) has bounced well from 90.68 but the rise could be short lived and we may expect a decline again from 91.30/35 levels.
Euro (1.2066) has dipped below 1.21 and trades lower. We do not look for a break below 1.20 in the current move and expect a bounce back soon towards 1.21+ levels.
EURJPY (130.70) looks ranged for now and could trade within 129-131 for sometime unless a sharp breakout is seen on either side. A break above 131 is needed for the cross to move higher.
Dollar-Yen (108.35) has bounced back above 108 on Dollar strength. A possible test of 108.50-109 could be possible before again falling from there.
Aussie (0.7786) has dipped slightly from 0.78. The dip is likely to be short lived and we may soon expect a rise in Aussie towards 0.79 especially boosted by the sharp rise in Copper (refer to commodities section above)
Pound (1.3878) has dipped after a short corrective bounce seen over the last 2-sessions. Failure to rise above 1.39 could pull it down to 1.38-1.37 again in the near term.
USDCNY (6.4863) is ranged with narrow movements just now. The pair has scope for a rise towards 6.50/52 while downside could be restricted to 6.46 in the near term.
USDINR (74.72) managed to break below 74.80 yesterday to test 74.67 before closing at 74.72. The pair has to sustain trade below 74.80/70 today also to fall towards 74.45/40 but looking at the dip in Euro and Dollar strength, we may expect USDINR to move back into the 74.70-75.10 region today. Watch price action near 74.70.
The US Treasury yields remain stable above their crucial supports. The outcome of the US Fed meeting tomorrow could decide whether the yields will continue to sustain above their supports and keep the uptrend intact or not. We will have to wait and watch. The German Yields remain higher and stable. The outlook is bullish to see further rise from here before a sharp reversal is seen. The 10Yr GoI is coming down in line with our expectation and keeps our bearish view intact. It can fall further from here.
The US 2Yr (0.17%), 5Yr (0.83%), 10Yr (1.57%) and 30Yr (2.25%) remain lower and stable. 2.2% on the 30Yr and 1.5% on the 10Yr are the important levels that have to hold to take the yields higher again and keep the uptrend intact. A strong break below these levels will indicate a trend reversal and can drag the yields lower to 1.2% (10Yr) and 2% (30Yr) in the coming weeks. The price action in the coming days will need a close watch.
The German 2Yr (-0.70%), 5Yr (-0.60), 10Yr (-0.25%) and the 30Yr (0.28%) yields remain stable. Our view remains the same. We expect the yields to break above -0.25% (10Yr) and 0.30% (30Yr) and see a rise to -0.20%/-0.15% (10Yr) and 0.35% (30Yr) in the coming weeks. As mentioned yesterday, the yields will have to fall below -0.35% (10Yr) and 0.20% (30Yr) to negate the above mentioned rise.
The 10Yr GoI (6.0379%) has dipped further and is heading down towards 6% as expected. Our bearish view is intact. We expect the 10Yr GoI to break 6% and extend the fall to 5.9% in the coming weeks.
3:00 8:30 BOJ Meeting
13:00 18:30 US Case Schiller
Expn16.93% …Expected11.8% …Previous11.1%
14:00 19:30 US Cons Conf
Expn111.63 …Expected112.0 …Previous109.7 –
9:00 14:30 GER IFO Business Climate
Expn94.4 …Expected97.7 …Previous96.6 …Actual96.8
9:00 14:30 GER IFO Business Situations
Expn90.9 …Expected94.5 …Previous93.0 …Actual94.1
9:00 14:30 GER IFO Business Expectations
Expn95.3 …Expected101.4 …Previous100.4 …Actual99.5
12:30 18:00 US Durable Goods Orders
Expn-10.53% …Expected2.5% …Previous-1.1% …Actual0.5%