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Market Morning Briefing: Dollar Yen Has Risen To Test 110 On The Upside As Expected

STOCKS

Indices like the Dow and India’s Sensex and Nifty 50 are bullish in the near term while the Nikkei and DAX are looks mixed.

Dow Jones (25,239.37, +175.48, +0.70%) has risen decisively above 25,000. While above 25.000, the outlook is bullish for a test of 25,400 and 25,500.

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DAX (11,176.58, -4.08, -0.04%) continues to trade mixed and was stuck in a narrow range on Monday. As being mentioned in this column over the last few days, the index can either dip to 11,000 or move higher towards 11,400.

Nikkei (20,869.48, -14.29, -0.07%), though inching closer to the key resistance level of 21,000 seems to be lacking strength. A pull-back from 21,000 can drag it lower to 20,500 and 20,400

The Indian benchmark indices made a sharp recover in late trades on Monday. The Sensex (36,582.74, +113.31, +0.31%) and the Nifty 50 (10,912.25, 18.60, 0.17%) can test their crucial resistance levels of 36,850 and 10,985 in the near term. A strong break above these resistances is needed for the indices to extend their upmove. While these resistances hold, a pull-back move to 10,800-10,700 on Nifty and 36,000-35,500 on the Sensex cannot be ruled out going forward.

COMMODITIES

Gold and Silver prices have declined in line with expectation and are heading closer to key supports. A bounce back is more likely in the coming days. Oil remains mixed in the near term and can trade in a sideways range. Copper has gained strength and looks more bullish among all.

Gold ($1,313) has key support in between $1,308 and $1,306. A bounce from this support region can take gold higher towards $1,320 again. The broader bullish outlook remains intact for a test of $1,350-$1,360 in the coming weeks.

Silver ($15.85) has bounced from the low of $15.70. Support around $15.60 can limit the downside. While this support holds, an eventual rally to $16.50-$16.55 is on the cards.

Copper ($2.80) dipped to test $2.75 as expected and has reversed sharply higher from there. The outlook is bullish for a the current rally to extend towards $2.83 and $2.85.

WTI ($54.6), Brent ($62.6) has come-off after making a high of $55.75 and $63.6 respectively. The near-term view is mixed. As being reiterated in this column over the last few days, a sideways range movement between $59 and $64 on the Brent and between $50 and $54 on WTI can be seen for some time. A breakout of this range will give a clear indication on the next trend.

FOREX

Stronger US Dollar could keep the major currencies weak. Aussie and Pound are coming off from crucial resistances and look weak; Dollar-Rupee and Dollar-Yen could be seen rising while the Chinese markets are closed for the week and could see fresh volatility next week.

Dollar Index (95.83) has risen slightly but looks bullish towards 96.10. Euro (1.1438) is down a bit and while below 1.15, it could come off to test 1.1350 in the near term.

Euro-Yen (125.80) has risen well. 126.0-126.8 (revised to 126.8 from 126.6 mentioned yesterday) region is an important resistance zone and could hold in the near term pushing the currency pair back towards 124.

Dollar Yen (109.98) has risen to test 110 on the upside as expected. 110.50 is an immediate resistance on the daily candles and while that holds, a dip back towards 108 could be seen. Failure to come off from 110.50 could open up chances of testing 111.50-112.00 in the near term. A break above 110.50 looks more likely just now..

Pound (1.3041) has been coming off from important trend resistance on the 3-day candles and while that holds, near term is bearish towards 1.29 or even lower. Near term trend is down below 1.32.

Like Pound, Aussie (0.7207) is also coming off from important resistance near 0.73 and while that holds, Aussie looks bearish towards 0.7150-0.7000 levels.

USD-CNY (6.7425) is stable. No movement expected this week as the Chinese Markets are closed. Volatility could trigger in, next week when the market opens after the week-long holiday.

Dollar-Rupee (71.80) closed sharply higher yesterday compared to the close at 71.25 seen on Friday. While the pair sustains above 71.80, the pair could move up towards 72 in the near term before facing a rejection from there. Note 72 is a crucial resistance, break on the upside could trigger further bullishness else a rejection could keep the pair intact and help to re-attempt lower levels of 71.40-71.20 in the medium term. For now, 72 is a possibility on the upside.

INTEREST RATES

The US yields have risen slightly. The 2Yr and 5YR yield are both up from 2.52% to 2.53%,while the 10yr and the 30Yr are up from 2.70% and 3.04% to 2.72% and 3.05 respectively. Some more rise in the yields look likely for the coming sessions.

The US-Japan 10YR yield (2.73%) has risen from support levels and look bullish for the near to medium term. While there is enough scope on the upside, we may see a rise towards 2.80%.

The UK yields are testing support levels and could soon see a bounce from here in the coming sessions. The 5Yr, 10Yr and 20Yr trades at 0.92%, 1.17% and 1.71% respectively and could rise towards 0.95%, 1.23% and 1.75%.

The Indian 10YR GOI (7.6720%) rose as expected and could target 7.70/71% in the near term from where a small dip is possible. Failure to fall from 7.71% could open up chances of further rise towards 7.80% or higher in the longer run.

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