Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
EQUITIES
The Dow (16412.71, -0.96%) came down from 16600 after a slightly disappointing payroll data. For any immediate bullishness to survive, it must bounce from 16350-300, otherwise the possibility of a retesting of 16000 comes into play.
The Dax (9695.77, +0.70%) is stalling near our interim resistance zone of 9600-9700 before it can reach 9900. A failure to firmly break above 9700 may generate weakness and it may return 9400-9350 levels.
The Shanghai (2058.83, +0.74%) remains in a consolidation mode. Weakness will be confirmed below 2030-20 and strength will be confirmed above 2080-85 only.
Nikkei (14861.73, -1.34%) has returned below 15000 contrary to our expectations and now, clues for the next direction will be available from the price action at the support band of 14800-600.
Nifty (6694.35, -0.62%) has ended last week on a tired note but it is yet to confirm the weakness. We are waiting for a break below 6675-60 as the sign for confirming a fall which can take Nifty down to 6580-60 levels.
COMMODITIES
Gold (1302.98) has risen sharply from support near 1285 and is currently trading above 1300. If this sustains above this level, it may target 1325. Overall it is ranged sideways since May’13.
Silver (19.904) is stable and ranged above crucial support near 19.6. Unless a break below this, it may continue to remain ranged or rise up towards 20.5. Bearish indication may only come if it breaks below 19.6. The Gold-Silver ratio (65.398) is highly fluctuating in the 65.5-64.1 region and may fall to 63.9 before bouncing off from there. But we cannot negate the possibility of a rise to 66-66.50 just now.
Copper (3. 0060) has fallen to 3 making an intraday low of 2.9765. Bears are still on the cards and may continue to dominate the prices in the near term. While that happen movements could range in the 2.95-3.05 in the near term.
Brent (105.95) has fallen from a high of 107.04 made on Friday. It is in downtrend since 3rd March 2014 and while below 108 its movement may range in the 108-105 regions. 108 seems to be the target for near term.
Nymex WTI (100.84) is trading lower as the resistance near 102.08 seems to hold well for now. It needs to break this resistance to move up higher to 103. Till then it may trade in the 99-102 region.
CURRENCIES
Dollar Index (80.42) broke above the range of 79.90-80.35 to reach our initial target of 80.50 and now, holding above 80.30-25, may reach 80.75 and even 81.
The Euro (1.3700) is testing the support of 1.37-1.3675, below which the bearish momentum may increase. The next important support comes at 1.3600.
Dollar-Yen (103.25) slipped after facing selling pressure from the upper end of the 10-week long range of 101-104. Further upward possibilities survive till 102.70 but from a broader perspective, the sideways consolidation continues.
The Euro-Yen Cross (141.46) has returned below 142 contrary to our expectation and may test the major support band of 140.50-139.50 now before any bounce comes.
Pound (1.6572) is in a corrective mode after achieving our initial target of 1.6650. Now a further rise to 1.67-1.6750 may be expected holding above the major support at 1.6520-1.6500.
Aussie (0.9285) has hit a 5-month high at 0.9307 and looks well on course towards our medium term target of 0.9380-0.94. Any correction now should be limited to 0.9150-0.91.
For Dollar-Rupee (60.08), there are two possible scenarios now – (a) either Dollar Rupee breaks below 59.60-50 to reach 59.00-58.80 or (b) it finds buying again at the lower levels of 59.70-60, keeping it range-bound in 59.50-60.50 for a few sessions. Now both the possibilities suggest selling at the higher levels keeping with our medium term bearish stance.
INTEREST RATES
The US 10 Yr (2.72%) and 5Yr (1.70%) fell after a lower than expected NFP data flattening the yield curve yet again. A further rise towards 2.90% and 1.85% can only be expected on a break above 2.75% and 1.75% respectively.
The German-US 10yr spread (-1.17%) and the 2Yr spread (-0.26%) remained stable and the 2Yr spread is testing support at current levels as the Euro (1.3700) dropped further. The German 10Yr (1.55%) also saw a drop and can target 1.50% while below 1.60%.
The US-Japan 10Yr spread (2.10%) fell towards the support near 2.05%-2.10% with a drop in the Dollar -Yen (103.25). The Japan 10Yr (0.62%) has come off a bit from our resistance zone of 0.65%-0.67% before the BOJ Meeting tomorrow. The 10-5Yr yield differential (0.43%) remained stable and is testing support near current levels.
The India-US 10Yr spread (6.34%) has broken above the resistance near 6.25% with the sudden fall in the US yields. The 10Yr GOI (9.07%) saw a sharp rise and is trading near our target of 9.10%. A further rise beyond 9.10% can be expected with the widening of the India-US 10YR spread.
DATA TODAY
No major data release today.
FRIDAY'S DATA
US NFP
...Expected 196 K ...Previous 197 K ...Actual 192 K
US Unemployment Rate
...Expected 7.00 % ...Previous 7.00 % ...Actual 6.70 %
CA Labour Force
...Expected 25.30 K ...Previous -7.0 K ...Actual 42.90 K
CA PMI
...Expected 58.30 ...Previous 57.20 ...Actual 55.20
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The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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