Equities look positive and can move up this week. Dow retains the momentum and is heading towards 35000 as expected. DAX has risen above 15250 and can test 15700-15800 on the upside. Nikkei can move up towards the upper end of its 28500-30500 range while Shanghai can fall towards the lower end of its 3350-3500 range. Sensex and Nifty have moved up on Friday breaking above 49000 and 14800 respectively as expected. They have room to move up further to test their crucial resistances in the near-term.
Dow (34777.76, +229.23, +0.66%) has risen further and is heading towards 35000 in line with our expectation. As mentioned on Friday we can expect the index to extend the upside upto 35500 and even 36000 from here before reversing lower again. Outlook is bullish while above 34000.
DAX (15399.65, +202.91, +1.34%) has risen breaking above the key level of 15250. The outlook is now bullish to test 15700-15800 on the upside. Thereafter a pull-back is possible. The danger of seeing a fall to 14500-14000 that we had been cautioning for some time stands negated now.
Nikkei (29620.51, +262.69, +0.89%) has risen breaking above 29500 as expected. A further rise to 30000-30500 can be seen in the coming days in line with our expectation. It will have to be seen if Nikkei breaks above 30500 from here or falls back to retain the 28500-30500 range.
Shanghai (3424.91, +6.03, +0.18%) fell sharply on Friday and is trading just below 3425. As we have been mentioning last week, we expect Shanghai to move down towards 3400-3350 in the coming weeks. Overall 3350-3500 is the possible range and Shanghai can move down towards the lower end of this range.
Nifty (14823.15, +98.35, +0.67%) and Sensex (49206.47, +256.71, +0.52%) have risen breaking above 14800 and 49000 in line with our expectation on Friday. While this break sustains a further rise to 15000-15100 (Nifty) and 50000-50500 (Sensex) can be seen in the coming days. Thereafter a reversal is possible.
Commodities have risen well and trade higher today with Copper surging the most as it breaks above the all time high of 4.6495 seen in Feb’11 to now trade in an uncharted territory. Apart from the recovery in manufacturing output in major countries, Copper seems to be considered as an important metal that would help in the global efforts to cut carbon emissions. Gold and Silver also rally and look bullish just now but we will have to see if it faces rejection from 1860 and 28 levels. Brent and WTI have risen too and could be headed towards immediate resistance of $ 70 and $ 67 respectively.
Brent (68.81) and WTI (65.40) are again rising to re-test resistance levels of $ 70 and $ 67 respectively. While the resistances hold, we may have to consider another dip from there in the medium term. But continuous attempts to test resistance levels could be indicative of a possible break on the upside soon. Watch price action near $ 70 and $ 67 on Brent and WTI over the coming sessions.
Gold (1832.70) has risen sharply breaking above the immediate resistance of 1820 mentioned last week. While above 1820, there is scope for a rise to next level of 1860. Only a break above 1860, if seen and sustained can we look for a test of 1900 or higher in the longer run. A possible dip from 1860 looks possible in the medium term. For now, view is bullish.
Silver (27.81) has also risen and could be headed towards 28 on the upside. Unless a break above 28 is seen, we cannot look for a further rise to 29-30 levels in the medium term. A possible dip from 28 looks likely before testing higher levels of 29-30.
Copper (4.8375) rose sharply above the 4.6495 seen in Feb’11. This has been a significant rise in the Copper reaching to all time highs. We may expect a slight dip from here or slightly higher levels of 4.95/5.00 before again resuming the longer term rally.
Dollar Index fell sharply on Friday post the NFP data release boosting a rise in other currencies. Euro has risen above 1.2150, EURJPY has risen above 132 and both could head towards 1.22-1.2240 and 135 respectively. Aussie and Pound have also risen and could head towards 0.79-0.80 and 1.41-1.42 respectively. Dollar Yen could trade within 108-109-110 region for now while it holds above 108. USDCNY has fallen sharply and could re-test crucial support at 6.42/40 which needs to hold to produce a sharp rise again to higher levels. USDINR may fall to 73.25/00. Note 73 is a crucial support below current levels.
Dollar Index (90.292) has been falling over the last couple of weeks, falling back to support near 90.50-90.00 region. This is crucial and if the index does not manage to rise from 90, it can fall to 89 in the near term. Watch price action near 90 in the near term.
Euro (1.2152) trades just above 1.2150 and could rise towards 1.22-1.2240 in the near term.
EURJPY (132.28) has risen well on surge in Euro. While the cross trades above 132, there is scope for a further rise to 135 in the medium term.
Dollar-Yen (108.88) fell sharply after the Dollar Index fell on Friday post the NFP data release to test 108.33. The pair has risen from then trying to recover a bit. While above 108, we may expect ranged movement within 108-110 for now.
Aussie (0.7840) has risen past 0.78 and if it faces resistance near 0.80-0.79, we may look for a broad sideways range of 0.76-0.80 to hold on for the next few weeks.
Pound (1.4018) has also risen above 1.40 on Dollar weakness and while the index trades lower, Pound could have scope for a rise to 1.41-1.42 in the medium term.
USDCNY (6.4296) has fallen sharply and could re-test crucial long term support near 6.42/40. Unless it sustains and bounces back from 6.40/42 it could be vulnerable to break the support coming from Apr’13. That if happens will be very crucial. Watch price action near 6.40/42 for a bounce.
USDINR (73.5150) closed just below 73.50 on Friday and we continue to expect a dip towards 73.25/73.00 in the near term now boosted by a weak Dollar. Note that 73 is a crucial support below current levels and that could hold in the medium term to produce a sharp bounce.
The US Treasury yields fell after the US NFP data release on Friday but then had risen back sharply from their day’s low. The crucial support levels that we have been mentioning have held very well and keep alive the chances of seeing a rise again. It will have to be seen if the yields can see a strong follow-through rise this week or not. The German yields continue to hover below their crucial resistances and can fall in the coming days while these resistances hold. The 10Yr GoI can see a corrective rise in the near-term before the overall downtrend resumes.
The US (1.60%) and 30Yr (2.30%) have risen back sharply from their lows of 1.47% and 2.16% respectively. The supports at 1.5% and 2.2% that we have been mentioning have held very well. It will have to be seen if they can rise past 1.7% (10Yr) and 2.4% (30Yr) from here to bring back the bullish momentum. We reiterate that a strong break below 1.45% (10Yr, revised lower from 1.5%) and 2.15% (30Yr, revised lower from 2.2%) is needed to indicate a trend reversal and become bearish.
The German 2Yr (-0.69%), 5Yr (-0.59), 10Yr (-0.22%) and the 30Yr (0.35%) yields hover below their crucial resistances. 0.20% and 0.35% are crucial resistances which will have to broken for the yields to move up further from here. While these resistances hold, a fall to -0.45% (10Yr) and 0.20% (30Yr) can be seen in the coming weeks.
The intermediate support at 5.6% has held well and the 10Yr GoI (6.0156%) has risen sharply above 6% on Friday. A corrective rise to 6.04%-6.06% can be seen now in the near-term. Thereafter the overall downtrend can resume targeting 5.9% on the downside.
No Major Data Today
Data on Friday:-
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12:30 18:00 US NFP
…Expected 890K …Previous 916K …Actual 266k
12:30 18:00 US Unemployment Rate
…kshitij Expn 5.8% …Expected 5.7% …Previous 6.0% …Actual 6.1%
12:30 18:00 US Avg Hrly Earnings
…kshitij Expn 1.99 …Expected 0.0 …Previous -0.1 …Actual 0.7
12:30 18:00 CA Labour Force
…Expected -160.5k …Previous 303.1k …Actual -207.1
