STOCKS
Global equities like the Dow and DAX remains mixed in the near-term while the broader picture continues to remain positive. Nikkei is heading towards a crucial resistance which has to be broken to extend the upmove. Shanghai retains its sideways range. Sensex and Nifty are turning vulnerable to break their sideways range on the downside and see a sharp fall on profit booking.
Dow (26089.61, -17.16, -0.07%) is stuck in a narrow range above 26000. Our bias is bullish for the Dow to breach the resistance at 26250 and rise to 26500-26600 in the coming days. Key supports are at 26000 and 25750.
DAX (12096.40, -72.65, -0.60%) can dip to test 12000 in the near term before we see the uptrend resuming towards our preferred target of 12300.
Nikkei (21167.72, +50.83, +0.24%) sustains above 21000. But as mentioned earlier, it has to breach 212500 to gain momentum and target 21500-21750. Inability to breach 21250 can drag it below 21000 targeting 20750 and 20500 on the downside.
Shanghai (2895.39, +13.41, +0.47%) retains its 2835-2950 sideways range and we have to wait for a breakout of this range to get a clear cue on the next trend. While below 2920, the index can fall within this range towards 2850 in the near term.
Sensex (39741.36, -15.45, -0.04%) and Nifty (11914.05, +7.85, +0.07%) retains their 39300-40300 and 11800-12200 range respectively. However, the bias is turning bearish for them to break the range on the downside and fall to 38500-38000 (Sensex) and 11700-11600 (Nifty)
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COMMODITIES
Gold has to surpass the crucial resistance at 1360 to gain further momentum and avoid a fresh fall. Silver looks relatively weaken than gold. Copper can continue to consolidate within its overall downtrend. Oil can inch higher in the near term. A sideways consolidation looks likely before a fresh leg of downmove begins in oil.
Gold (1340) spiked to 1358 on Friday and has come-off sharply from there. While below 1345, it can dip to 1330 and 1320 ahead of the Fed meeting. Gold has to surpass 1360 decisively in order to turn the outlook bullish. Else a fall to 1300-1280 cannot be ruled out in the coming weeks.
The resistance at 15.1 has been holding very well for Silver (14.85). The outlook is bearish for a fall to 14.5 and 14.25. The resistance in the 15.0-15.10 region can continue to cap the upside.
Copper (2.64) fell on Friday within its sideways range as expected on Friday. It is likely to retain the 2.60-2.68 sideways range for some more time with the bias continuing to remain negative for it to break the range below 2.60 and fall to 2.58 and 2.55.
Brent (62.27) sustains above 61 and has moved higher as expected. A test of 63-64 looks likely in the near term, but a break below 64 is unlikely. As mentioned earlier, a sideways consolidation between 59.5 and 64 is possible before a fresh leg of downmove begins.
Similarly, WTI (52.67) can move up to 54 and 54.5 in the near term while it remains above 52. It can trade sideways between 50.5 and 55 for some time within its overall downtrend.
FOREX
Dollar index has gained momentum after the US retail sales data release on Friday. It looks bullish to rise further. Most of the major currencies are getting closer to their key supports. The outcome of the Fed meeting on Wednesday would be the trigger to decide whether these supports hold or not and set the trend. Dollar-Rupee looks bullish in the near-term and has room to test 70.10 and even 70.25 while it remains above 69.50.
Dollar Index (97.51) is bullish. Immediate support is in the 97.45-97.35 region. Key short-term support is at 97. While above 97.35, a rise to 97.8 (initially) and then to 98.25-97.45(eventually) can be seen in the coming days.
Contrary to our expectation Euro (1.1220) has declined below 1.1260. It will have to be see if it can sustain above 1.12 or not and avoid further fall to 1.1175 and 1.1125. Inability to rise past 1.1260 from current levels can drag the Euro below 1.12.
Dollar-Yen (108.68) has risen above 108.5. The trend is down. But while above 108.40, an intermediate upmove to 109 looks likely first before the downtrend resumes towards 108 and 107.
Euro-Yen (121.95) fell below 122 but has bounced-back from the low of 121.5. The near-term view has turned negative. While above 121.75, an intermediate bounce to 122.25 can be seen after which a fresh fall to 121 is possible.
Aussie (0.6880) remains bearish. The resistance at 0.6900 can cap the upside in the current bounce-back move. Aussie can then reverse lower again targeting 0.6830-0.6800 on the downside.
Pound (1.2594) has broken the 1.2650-1.2750 sideways range on the downside. The bias is turning negative. A crucial support is at 1.2550 which if broken can accelerate the downmove to 1.2500 or even 1.2400 in the coming days.
USDCNY (6.9195) can inch higher, but at a slower pace towards 6.93-6.94 in the coming days. It can trade sideways between 6.90-6.94 for some time with the bias being bullish for it to breach 6.94 and rally to 6.98 and 7.0
USDINR (69.8050) can test the immediate resistance at 69.90 and see an intermediate pull-back move to 69.75. There is room for the pair to test 70.10 or even 70.25 this week while it remains above 69.50.
INTEREST RATES
All eyes will be on the outcome of the US Federal Reserve meeting on Wednesday. A change in stance from the Fed to decrease rates this year has been largely priced in the market already. But it will be important see the possible number of rate cuts that the Fed hints for this year.
The US yields have bounced slightly. Though the broader trend is down, the 30Yr (2.61%), 10Yr (2.11%) and 5Yr (1.86%) have room to test 2.65%-2.70%, 2.15% and 1.92% respectively on the upside before resuming the overall downtrend.
The German yields have dipped slightly. The 30Yr (0.32%), 10Yr (-0.26%) and 5Yr (-0.61%) may negate the bullish view if they fail to bounce from current levels. In that case they can fall to 0.25% (30Yr), -0.50% (10Yr) and -0.75% in the short term.
The 10Yr GOI (7.0665%) fell sharply on Friday after the weak WPI inflation data release. The broader downtrend is intact. A break below 7.05% can drag the yield further lower to 7.00% and 6.95% in the coming days.
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