Market Morning Briefing: Aussie Has Been Rising Boosted By A Strong Copper

STOCKS

Dow has surged to test 32000 as expected. 32000-32200 will be an important resistance zone to watch now to see if a reversal is happening or not. A break above 32200 will negate our view of seeing a reversal. DAX sustains above 13800 and can consolidate between 13800-14000/14200 for some time. Nikkei has risen back above 30000 and can gain strength if it manages to rise past 30500 from here. Shanghai has tested 3550 as expected and has bounced. A further rise is possible in the coming days if this bounce sustains. Sensex and Nifty has surged yesterday and can extend their upmove if they get a strong follow-through rise above 51000 and 15000 respectively. Overall the equities can move up further and there is still no sign of a top in place.

Dow (31961.86, +424.51, +1.35%) had surged yesterday and the test of 32000 has happened as expected. 32000-32200 will be an important resistance zone to watch now. Inability to breach 32200 can trigger a reversal towards 31000 initially. A further break below 31000 can then trigger a deeper correction. This view will get negated if the Dow breaks above 32200 in which case an extended rise to 32800-33000 is also possible before the expected reversal happens. The price action in the coming days will need a close watch.

DAX (13976, +111.19, +0.80%) sustains above 13800 and has moved up slightly. A break above 14000 can take it back to 14200. For now the 13800-14200 range remains intact. Bias is to see a break below 13800 and a fall to 13400-13200. In case if DAX manages to breach 14200, an extended rise to 14500-14600 can be seen before the above mentioned fall happens.

Nikkei (30164.65, +492.95, +1.66%) has risen back sharply above 30000 today after making a strong close below this crucial level yesterday. A strong rise past 30500 from here will boost the bullish momentum to target 33000-34000 on the upside. The price action in the coming sessions will need a close watch to see if Nikkei is sustaining well above 30000 and gaining strength or not.

Shanghai (3611.32, −25.04, -0.69%) extended the fall to test 3550 as expected and has risen back today. While this bounce sustains, a further rise to 3650-3675 can be seen in the coming days. 3550-3525 will be a good near-term support that can limit the downside for now.

Sensex (50781.69, +1030.28, +2.07%) and Nifty (14982, +274.20, +1.86%) have surged yesterday and closed just below their key intermediate resistance levels of 51000 and 15000 respectively. A strong follow-through rise today breaking above these hurdles will bring back the bullishness to target 52000-52500 (Sensex) and 15400-15500. It will also negate the fall to 48000 (Sensex) and 14400-14200 (Nifty) that we had been expecting over the last few days.

COMMODITIES

Crude prices may rally towards resistance levels of 68-70 (Brent) and 65-67 (WTI) before facing rejection from there. Gold ahs dipper from resistance at 1820 and has scope for a fall to 1780/60 before bouncing back from there in the medium term although Silver has continued to rise and could soon target 29.50-30 on the upside. Copper too looks very strong and could test our target of 4.50/60 sooner than expected.

Brent (67.38) and WTI (63.49) have risen well after an initial dip over the last couple of sessions. Our upper targets of 68-70 on Brent and 65-67 on WTI looks closer now and could be tested before a corrective fall from there is seen. Watch price action near mentioned resistances.

Gold (1797.80) fell back as resistance near 1820 has held well. While below 1800, we may expect a test of 1780/60 again in the near term. Gold is bearish while below 1820.

Silver (28.11) has risen well despite weakness in Gold. While above 26.50, there is scope for a test of 29.50-30 soon on the upside. Very broad range of 30-26.50 may hold for a couple of weeks.

Copper (4.3725) has been rallying and looks very strong just now. There is sharp increase in the buying as demand looks strong too. We may expect our target of 4.50/60 to be tested soon before falling from there.

FOREX

Dollar Index is unable to sustain a break below 90 and could remain within 90-91 for some more time. Euro is stable too but may soon rise towards 1.22. View is bullish. Aussie and Pound have immediate resistances of 0.80 and 1.42 which may hold just now but while Copper rises, Aussie may break above 0.80 to extend higher in the near term. USDJPY is bullish towards 106.50 while USDINR may remain ranged within 72.25-72.50/55 for now.

Dollar Index (90.113) has not been able to sustain a break below 89 and has entered back into the 90-91 zone. While the index is bearish below 91, it needs to sustain a fall below 90 to move lower. For now watch the index stabilize within 90-91 again as we wait for a sustained break below 90 in the medium term.

Euro (1.2160) is holding stable as it is unable to move up sharply and may chose to inch up slowly towards 1.22 or higher. Watch price action near current levels.

EURJPY (128.93) has risen well and could be headed towards 130 if 129 breaks on the upside over the next couple of sessions.

Dollar-Yen (106.01) has risen above 106 again and could be headed towards our target of 106.50 in the near term before dipping from there.

Aussie (0.7954) has been rising boosted by a strong Copper. A break above 0.80 will be needed to take it further up towards 0.82. For now watch price action near 0.80. While Copper is headed higher, Aussie too looks bullish.

Pound (1.4135) has dipped from levels near 1.4240 seen yesterday. While this may hold, a short dip is possible in the near term towards 1.4030 before resuming the rally.

USDCNY (6.4554) is ranged within a very small zone of 6.44-6.47 and may continue to trade so for sometime now. Immediate view is ranged and stable.

USDINR (72.3250) is holding above 72.25 for now. A test of 72.50/55 looks possible while above 72.25 but could be followed by a decline back to 72.25 and lower to eventually test 72.15/00 in the medium term. Immediate view is ranged while between 72.25-72.50/55.

INTEREST RATES

The US Treasury yields have surged across tenors and are keeping intact our bullish view. The yields have room to move up further in the coming days. The US Federal Reserve Chairman Jerome Powell had reiterated yesterday that inflation is still low and will take time to reach its goal and the interest rates are likely to remain low. The comments from Powell seem not to be impacting the yields for now. The German yields remain stable and higher. The outlook is bullish and the yields can continue to move up. The 10Yr GoI is witnessing a corrective fall as expected. There is room to dip further before the upmove resumes.

The US 2Yr (0.13%), 5Yr (0.62%), 10Yr (1.40%), 30Yr (2.26%)have surged across tenors. Our bullish view remains intact. The 30Yr has risen past 2.20% and can now target 2.40% on the upside while this break sustains. The 10Yr is heading up towards 1.45% in line with our expectation. The chances of this rise in the 10Yr extending to 1.55% cannot be ruled out.

The German 2Yr (-0.70%) and 5Yr (-0.61%), 10Yr (-0.31%) and 30Yr (0.20%) remains higher and stable. Outlook remains bullish. The 10Yr can rise to -0.25% while it sustains above -0.40%. The 30Yr on the other hand has strong support at 0.15% while above which a rise to 0.40% is possible in the coming weeks.

The 10Yr GoI (6.1473%) has come down towards 6.15% in line with our expectation. A further dip to test 6.12% is possible in the near-term. We expect the 10Yr GoI to bounce from 6.12% towards 6.20% and higher levels again. A break below 6.12% will negate the above mentioned bounce and will drag the yield lower to 6.10%-6.08%. The price action at 6.12% will need a close watch now.