Yesterday we said that the rally in Equities seems to be losing steam. But, the Dow, DAX and the Sensex-Nifty are potentially bullish in the medium term. The Shanghai is at a crucial can-go-either-way juncture while the Nikkei seems a little more bearish in the near term.
As expected, Nikkei (23305.71) came down to almost 23000 yesterday (low was 23062). There can be more downside towards 22800-600 over the next week while below 23500.
The Support at 2870-65 on the Shanghai (2914.70) mentioned yesterday may be tested next week. As mentioned this is a very crucial Support. NOTE also that there is a very important Resistance in the 3000-3050 region. Continued failure to break above that can increase the vulnerability on the downside. The China-US talks are now at a super-critical juncture. Seems like a bit a of make-or-break from here.
The crucial Support at 40000 on the Sensex (40286.48, +0.42%) mentioned yesterday has held well enough. We can again think of a longer term rally towards 41500 while deeper Support near 39800 holds Similarly, if the Support at 11800 continues to hold on the Nifty (11872), then we can think of fresh bullishness towards 12000-50 again.
The DAX (13180.23, -0.38%) remained stuck in its near-term narrow range of 13100-300 within an overall uptrend that has Support at 13000 and can target 13400+ over the next couple of weeks while the Support at 13000 holds.
While the Support at 27500 holds on the Dow (27781.96, -0.14%), the overall trend remains bullish for a rise towards 28000.
Brent (62.55) and Nymex WTI (57.05) have moved up sharply. Although Brent has held above support at 61, it has not been able to break above 63 since the last 1-week. Currently Brent is trading above 62.50 and if the rising momentum remains intact, we could see a rise towards 64-65 in the near term. WTI on the other hand also needs to break above 58 to head towards 59. Near term looks bullish.
Gold (1468.40) faced some rejection from 1480 and dipped a bit from there. While Gold trades below 1480, we may see some ranged movement in the 1440-1480 region.
Silver (16.98) is stuck around 17 since the past few sessions. It could have some scope of testing 17.50 on the upside before coming down from there.
Copper (2.62340) has come down towards the lower end of our expected 2.60-2.7250 region and may bounce from 2.60 in the near term.
Most of the currencies are at crucial near/ medium term Supports/ Resistances. We need to wait to see how the market behaves today before taking a directional view.
Dollar Index (98.14) has come off a bit after testing 98.42 yesterday. Current dip is likely to be limited to 98 while the near term uptrend remains intact.
Euro (1.1026) has seen some short-covering yesterday. We watch near-term Resistance in the 1.1030 region today. The overall picture remains bearish towards 1.0943-0900 while that holds. A rise past 1.1030 could lead to a few days of sideways consolidation between 1.1000-1050 before the fall resumes.
Weakness in the Nikkei is being reflected in the dip in Dollar-Yen (108.58), which has also come down as expected. It can threaten to break the uptrend from the August low of 104.45 unless there is a good bounce in the near term from 108.0-107.50.
EUR-JPY (119.74) can have room down to 119.00-118.50 in line with possible Euro bearishness towardsd 1.0943-0900.
Pound (1.2883) has moved up a bit and could test immediate resistance at 1.29 from where a fall is possible. A downside target of 1.27/26 remains intact for the next 1-2 weeks.
Aussie (0.6791) has dipped sharply. Weak Chinese IIP and fall in Australian employment are the main factors. The disappointing employment figure seems to raise expectation of a possible rate cut in RBA’s December policy meeting. A fall below 0.6769 if seen just now could drag Aussie towards 0.6725. On the charts, there is room for a test of 0.6675 before bouncing back from there.
Yesterday we mentioned a possible rise towards 7.0474 on the USDCNY (7.0059, but that might be a little ambitious and would come into play only on a rise past immediate Resistance near 7.03. While USDCNY trades below 7.03, it could again try to fall towards 7.00-6.98.
The Yuan-Rupee (10.2462) has been driven up to a crucial long-term Resistance near 10.29-30. We have to see if this holds. IN CASE the Resistance holds and the Yuan also strengthens towards 7.00-6.98, the Rupee might also appreciate again. The price action over the last two days has been confusing for us. Since Dollar-Rupee has dipped back below 72.00 and the other currencies are also at crucial Supports/ Resistances, we would like to stay out and watch how the market behaves today before taking another view on the market.
The US 2Yr (1.60%), 5Yr (1.65%), 10Yr (1.84%) and 30Yr (2.32%) are down by around 2bps. Yields have declined sharply across tenors. The 30Yr is heading towards our earlier mentioned levels of 2.30%-2.28% while below 2.35%. The 10Yr also has fallen and could dip towards 1.78% on the downside while it remains below 1.95%.
The German 2Yr (-0.64%), 5Yr (-0.59%), 10Yr (-0.35%) and 30Yr (0.16%) have fallen sharply across tenors as expected. The 30Yr is down to 0.16% as expected but could get some support near 0.14%. The 10Yr has room to fall towards -0.40%. .
The India 10Yr (07.26 GS 2029) GoI (6.7110%) is trading below 6.75% and while the yield trades lower, the near-term outlook is bearish towards 6.70% and even 6.67% in the coming sessions as mentioned yesterday.
The 10Yr (06.45 GS 2029) GoI (6.5196%) has broken below mentioned support near 6.53%-6.52% region. Failure to bounce back immediately would take it down to test 6.48% on the downside.
10:00 15:30 EU CPI (YoY)
...Kshitij Expn 0.9 % ...Expected 0.7 % ...Previous 0.8 %
10:00 15:30 EU Trade Bal
...Expected 18.7 EUR Bln ...Previous 20.3 EUR Bln
12:30 18:00 IN Trade bal
...Kshitij Expn -13.5 $ Bln ...Expected -12.1 $ Bln ...Previous -10.9 $ Bln
13:30 19:00 US Retail Sales (MoM)
...Kshitij Expn 0.7 % ...Expected 0.1 % ...Previous -0.3 %
14:15 19:45 US Industrial Production
...Kshitij Expn 0.1 % ...Expected -0.4 % ...Previous -0.4 %
14:15 19:45 US Capacity Utilization
...Kshitij Expn 77.9 % ...Expected 77.2 % ...Previous 77.5 %
...Expected 0.2% ...Previous 0.4% ...Actual 0.1 %
Australia Labour Force
...Kshitij Expn 31.2 K ...Expected 16.2 K ...Previous 12.5 K ...Actual -19.0 K
CN Retail Sales
...Expected 7.8 % ...Previous 7.8 % ...Actual 7.2 %
CN IIP (YoY)
...Expected 5.5 % ...Previous 5.8 % ...Actual 4.7 %
...Kshitij Expn -0.3 % ...Expected 0.90 % ...Previous 0.33 % ...Actual 0.16 %
...Expected 0.20 % ...Previous 0.19 % ...Actual 0.22 %
US PPI ex Food & Energy (MoM)
...Kshitij Expn 0.3 % ...Expected 0.2 % ...Previous -0.3 % ...Actual 0.3 %
...Kshitij Expn 0.3 % ...Expected 0.3 % ...Previous -0.3 % ...Actual 0.4 %