Equities have made good progress. The Dow and Dax may rise towards 36500-37325 and 16400 respectively while the Nikkei may test 31000 on the upside. Shanghai needs to hold above crucial support in order to progress towards 3550 and above. Nifty and Sensex look bullish in the short term from current levels. The big picture is bullish for the next few sessions.
The Dow (36327.95, +203.72, + 0.56%) surprised us by breaking our expected resistance at 36100. The index can now target 36,500 or even 37,325 on the upside now. The big picture is bullish in the short term.
The DAX (16,054.36, +24.71, + 0.15%) also broke the 16000 level, and although above 16000 the view remains bullish to see a test of 16400 to the upside which is the next critical resistance to watch.
Nikkei (29,590.57, -21.00, -0.071%) fell slightly. The view remains bullish to see a test of 30,000/31000 while above 29500. A fall below 29500 if seen can push the index down towards 28000, negating our bullish view. In the medium term 31,000 is an important and crucial resistance which can hold.
Shanghai (3493.63, +2.06, + 0.059%) rebounded after testing support at 3475/50. Our view is bullish to see a rise towards 3550 in the next few sessions. However, if the index falls below the support area of ââ3475-3450, a fall to 3400/3375 cannot be reversed. Look at the price action near 3450/75 in the very short term.
Nifty (17,916.80, +87.60, + 0.49%) rose on November 4, holding above support at 17600 and reducing the odds of a possible dip to 17,400 now. While 17600 holds, Nifty may rise around 17800-18000 on the upside. There is a better chance of breaking above 18,000, which could then aim for 18,500.
Sensex (60,067.62, +295.70, + 0.49%) is bullish while above 60,000 to see a rise towards 61000/62000 eventually.
Commodities have rebounded well and could trade higher. Gold is bullish around 1835/50 while silver can rise to 24.65-25. Copper can rise to around 4.50 / 60. Brent and WTI can stay in the 80-85 and 78-85 / 86 regions for a few days.
Brent (83.78) and WTI (82.29) rose as OPEC + agreed on Thursday to stick to its plan to boost oil production by 400,000 barrels per day from of December. Brent fell to 80.26 last week. We expect resistance at 84/85 to hold for now and a range of 80-85 for a few days. The WTI can stay in the 78-85 / 86 region for a while.
Gold (1,819.40) and silver (24.30) surprisingly rose last week, stronger than expected. We now expect a possible rise to 1835/50 on gold on a break above 1820 and a possible rise to 24.65 / 25 on silver.
Copper (4.3625) has also rebounded and may rise to around 4.50 / 60.
Currencies look mixed at the moment as most of them have fallen and have some support ahead that could hold in the near term. The Dollar Index can trade between 93.50 and 94.70-95.00 in the short term before breaking either side as the Euro looks bearish as it is below 1.16 for a test of 1 , 15 to 1.1490 initially lower. The general trend appears to be bearish for the euro. EURJPY has rebounded from 130.83 and could hold a few sessions before picking up from there. The British Pound and Aussie look bearish after a brief sideways consolidation early on. The USDCNY may fall between 6.3750 and 6.42 while the USDINR may drop to 74.20 / 74.00 in the short term.
The Dollar Index (94.305) has immediate resistance near 94.70 and while this holds we can expect an initial rise to 94.70 before falling back to 94-93.50 on the downside. The overall range of 94.50-94.70 / 95.00.00 is expected to hold over the near term. Unless a break on either side of the range was observed, it would be difficult to see further movement beyond the range mentioned.
The euro (1.1558) tested 1.1513 yesterday before rebounding slightly from there. Any rebound from 1.15 or near is likely to be limited to 1.16 for now before a steeper drop to 1.15-1.1493 / 90 is observed first and eventually. a drop to 1.14 in the coming weeks. The overall trend remains bearish for the euro in the short term.
EURJPY (131.31) has rebounded from 130.83 and as long as this holds, a rise towards 131.50-131.80 looks likely before falling back to 131-130 in the medium term.
The Aussie (0.7392) has rebounded strongly from 0.7350 but could move between 0.7350 and 0.7450 in the very short term before possibly breaking lower.
The pound (1.3476) fell sharply last week following the surprise decision by the Bank of England not to hike interest rates but that could be the case in the coming months. The mentioned support near 1.3550 has been sharply broken and as the pound continues lower we can expect a test of 1.3320 before a reversal occurs. But a corrective rebound also seems possible from 1.34 in the near term. For now, the bears appear stronger and dominate the price, which could keep the pressure on the downside.
The dollar-yen (113.60) has fallen sharply from 114.28 over the past two days and now appears to be in a narrow range of 113.0 / 25-114.13 / 25. Any pause on either side would then give more clarity on the direction to follow from here. The narrow range mentioned is within the wider range of 113-115 mentioned last week. Look at the price action on a drop to 113.
The USDCNY (6.3982) continues to be between 6.3750 / 38-6.42 in the short term.
The USDINR (74.46) fell below 74.50 last week before the close for the Diwali holiday and had closed at 74.46 in the onshore market, but as the nation celebrated Diwali, the USDINR on the NDF has fallen and is currently at 74.19. These lockdowns may indicate an opening down for the dollar-rupee today in onshore markets and see a possible dip to 74 on the downside.
US Treasury yields fell sharply from tenor to tenor last week. It is possible to dive further to test their short term supports from which a corrective rebound is possible. The broader view remains bearish to break term supports and see a deeper decline in the medium term. German rates are falling as expected and keeping our bearish outlook intact. Yields could fall further in the coming days. The GoI 10Yr and 5Yr can oscillate in a side range for a little longer.
The yields on 2-year (0.41%), 5-year (1.07%), 10-year (1.47%) and 30-year (1.90%) US Treasuries have appreciated strongly between deadlines Friday. The 10Yr has plunged below 1.5% and can now test 1.4% -1.35% on the downside while it remains below 1.5%. The 30Yr, on the other hand, may test 1.8% -1.75% on a further decline below 1.9% from here.
The German 2-year (-0.75%), the 5-year (-0.59%), the 10-year (-0.28%) and the 30-year (0.06%) fell sharply towards the end of last week. The 10-year has fallen below -0.2% as expected and can now head towards -0.3% and -0.4%. The 30Yr went down to 0.05% in line with our expectations. A rebound of the region from 0.05% to 0% to 0.1% is possible before the 30-year finally falls below 0%.
India’s 10-year GoI (6.3577%) may stay in the 6.3% to 6.4% range for some time to come. We reiterate that 6.43% to 6.45% will be a bullish cap and a drop to 6.2% and below should be seen in the medium term. A break below 6.3% will pave the way for this fall.
The 5-year GoI (5.7271%) is stuck between 5.7% and 5.78%. We will have to wait for a breakout of this range to see clearly if the 5yr can move up to 5.82% -5.85% or fall to 5.66% and below.