Dow and DAX continue to trade mixed and are stuck around 34000 and 15200 respectively. Dow has to get a strong follow through rise above 34000 to move up. DAX keeps alive the chances of seeing 15500-15700 before reversing lower. Nikkei and Shanghai are closed till Wednesday this week. Sensex and Nifty have bounced sharply yesterday but needs to get a strong follow through rise today to avoid a fall again. The price action today will need a close watch.
Dow (34113.23, +238.38, +0.70%) continues to remain mixed and oscillates around 34000. Our view remains the same. A sustained rise above 34000 is needed to see 35000 on the upside. 33500 is an important support. A break below it and a subsequent fall below 33000 will be bearish to see 32000-31000 on the downside.
DAX (15236.47, +100.56, +0.66%) seems to lack strong follow-through selling below 15200. This keeps alive the chances of seeing 15500-15700 on the upside before the expected reversal to 14500-14000 is seen.
Nikkei (28812.63) and Shanghai (3446.86, ?28.04, -0.81%) are closed till Wednesday this week.
Nifty (14634.15, +3.05, +0.02%) and Sensex (48718.52, ?63.84, -0.13%) had risen back sharply after testing 14400 and 48000 respectively. Nifty has to sustain above 14600 to move further up to 14800. Else a fall back to 14400-14200 cannot be ruled out. Sensex has to break above 49000 from here to negate the chances of the fall to 47000 mentioned yesterday. We will have to wait and watch.
Commodities trade higher today. Brent and WTI have risen slightly and could move up to test resistances near 68-70 and 65-67 respectively before falling from there. Gold has risen sharply and needs to break above 1800 to head further towards 1820+ levels. Silver has also risen well and needs to break above 27 and sustain to move higher. Else the range of 27-25 may remain intact. Copper has moved up well and is bullish while above 4.40. A rise to 4.60 is on the cards.
Brent (67.64) has risen and could test 68-70 levels which could limit the immediate upside and produce a short corrective fall towards 64 in the medium term.
WTI (64.55) on the other hand, has also risen slightly and could test 65-67 levels before again falling lower. Immediate view is bullish but upside is limited to near term resistances.
Gold (1790.00) has risen again indicating a possible test of 1800. In the medium term, a break above 1800 is needed to take the price higher. Silver (26.93) has also risen well and needs to break above 27 to head higher to 28-29 levels in the near term. Till then the 25-27 range could hold strong.
Copper (4.5090) is bullish while above 4.40 and may rise to test 4.60 on the upside.
Dollar Index fell yesterday but has managed to bounce back taking Euro to lower levels. EURJPY may trade stable within 131-132 before rising higher in the longer run. Aussie and Pound look stable just now. Lower trade volumes seen in USDJPY and USDCNY as the markets are closed for Golden week and Labor Day respectively till 5th May. USDINR may test 73.80 but a break below this if seen would indicate further bearishness going forward. On the upside we may expect the movement to be restricted to 74.30 and higher at 74.50/60.
NOTE: Despite the lower spot closing of 73.92 (USDINR), the 1month forward premia rose to almost 8.50% after closing at 7.19% (yield wise) rising from 5.36% seen on last Friday. This has been a sharp rise and the premium needs to come off immediately to lower levels again this week. Also the Cash/Spot rose to 5/10p yesterday rising from 3/5p earlier. This also needs to come down to earlier levels.
USDINR (73.92) rose to 74.3250 yesterday exactly in line with expectation but came back sharply to test lower support of 73.90 and closed near the day’s lows. It could possibly indicate that the pair may continue to fall lower in the near term. A break a below 73.80, if seen would indicate further bearishness for the pair in the medium term. Else a bounce back to 74+ levels if seen could take it higher towards 74.30 again.
Dollar Index (91.12) fell yesterday after the lower than expected US ISM index. Additionally holidays in Japan and China led to lower trade volumes for the Dollar which dragged the index lower. The Dollar Index has bounced back a bit from yesterday’s low of 90.87. We do not negate a rise to 92 over the medium term/. View is bullish while above 90.50-91.00.
Euro (1.2043) trades lower and seems to be maintaining below 1.21. A test of 1.20 cannot be negated in the next few sessions and any break below 1.20 could trigger a faster move towards 1.19 on the downside. Watch price action near 1.20 in the near term.
EURJPY (131.54) looks sideways ranged and could trade within 131-132 for sometime before rising higher in the medium to longer term. An eventual rise to 135 is not negated but needs a break above 132 to confirm.
Dollar-Yen (109.24) is seeing a low trade volume as Japan is closed till 5th May for the Golden week but we may expect volatility to increase in the second half of the week. A possible test of 109.75-110 is possible on the upside from where a sharp fall is possible.
Aussie (0.7738) has risen slightly maintaining above 0.77 for now. As mentioned yesterday, there is scope for a fall to 0.7645 before a rise back to 0.78 or higher is seen in the near to medium term.
Pound (1.3879) looks stable and could be ranged within 1.40-1.38 in the near term. Unless a break on either is side is seen, we continue to look for the mentioned range to hold.
USDCNY (6.4730) is closed for labor day till tomorrow 5th May and we may expect a possible upmove in the pair in the second half of the week.
The US Treasury yields seem to be in need of a fresh trigger to move up sharply higher from here. From a bigger picture, while the yields remain above their current supports, the chances of a rise in the coming weeks cannot be ruled out. We will have to wait and watch. The German Yields hover near their crucial resistance. A reversal is possible if they fail to breach their resistances. The 10Yr GoI fell sharply yesterday and keeps our bearish view intact. A further fall is possible in the coming days.
The US 2Yr (0.16%) Treasury yield remains stable while the 5Yr (0.82%), 10Yr (1.60%) and 30Yr (2.28%) have dipped slightly. The yields seem to be in need of a fresh trigger to move up sharply from here. However, while above 1.5% (10Yr) and 2.2% (30Yr) we remain bullish on the yields to see a rise to 1.7%-1.8% (10Yr) and 2.4%-2.5% (30Yr) in the coming weeks. The bullish outlook will get negated only if the yields break below 1.5% (10Yr) and 2.2% (30Yr).
The German 2Yr (-0.69%), 5Yr (-0.59), 10Yr (-0.21%) and the 30Yr (0.35%) yields remain stable near their crucial resistances. -0.20% (10Yr) and 0.35% (30Yr) have to be broken decisively for the yields to move further up from here. A pull-back from here can take the yields lower to -0.45% (10Yr) and 0.20% (30Yr) again. The price action in the coming days will need a close watch.
The 10Yr GoI (6.002%) had declined sharply to test 6% in line with our expectation. Our bearish view remains intact of seeing 5.9% on the downside. A break below 6% can trigger this fall. 6.06% is an intermediate resistance that can cap the upside if the yield bounces from current levels.
0:30 6:00 Australia Trade Balance
…kshitij Expn 7.72A$ Bln …Expected 8.3A$ Bln …Previous 7.5A$ Bln …Actual 5.6A$ Bln
3:15 8:45 CN PMI
…kshitij Expn 51.37 …Previous 50.6 –
4:30 10:00 RBA Meeting –
…Expected 0.1% …Previous 0.10%
8:30 14:00 UK PMI
…Expected 51.69 …Previous 58.9
12:30 18:00 US Trade Balance
…kshitij Expn -70.65$ Bln …Expected -74.4B$ Bln …Previous -71.1$ Bln
Data Yesterday:-
————–
22:30 4:00 AU PMI
…kshitij Expn 64.66 …Expected 59.6 …Previous 59.9 …Actual 61.7
5:00 10:30 IN Manufacturing PMI
…kshitij Expn 31.22 …Previous 55.4 …Actual 55.4
7:30 13:00 CH PMI
…kshitij Expn 57.63 …Expected 66.4 …Previous 66.3 …Actual 66.4
8:00 13:30 EU PMI
…Expected 63.3 …Previous 62.5 …Actual 66.2
14:00 19:30 US Manufacturing ISM
…kshitij Expn 60.38 …Expected 65 …Previous 64.7 …Actual 60.7
14:00 19:30 CA PMI
…kshitij Expn 50.76 …Previous 58.5 …Actual 57.2
