Market Morning Briefing: Aussie Is Likely To Trade Within 0.7550-0.77 In The Near Term

STOCKS

Dow remains stable below 33500 and has to fall below 33000 in order to strengthen the case of seeing the fall to 32000-31000 that we have been expecting. DAX seems to lack momentum and can come under pressure if it falls below 15000 from here which will negate the chances of seeing 15500-15700. Nikkei can fall within its 28000-31000 range. Shanghai has bounced but needs to break above 3500 in order to avoid the chances of falling back. While below 3500, the bias is bearish. Sensex and Nifty have immediate resistances ahead which if broken can take them higher towards the upper end of their range and then see a reversal.

Dow (33446.26, +16.02, +0.05%) is trading stable below 33500. We reiterate that a strong rise past 33550 is needed to boost the momentum and move up to 33700-34000.While below 33550, we see the chances are high for the Dow to see a corrective fall to 32000-31000. A break below 33000 can trigger this fall.

DAX (15176.36, −36.32, -0.24%) sustains above 15050 but seems to lack momentum. A fall below 15000 from here will negate the chances of seeing 15500-15700 on the upside that we had been mentioning over the last few days. Such a break will drag the DAX to 14800-14600 in the near-term.

Nikkei (29620.11, −110.68, -0.37%) remains lower below 30000. A fall below 29500 can drag it to 29000-28500 in the coming days. Overall, the 28000-30500/31000 range is intact and Nikkei can move down towards the lower end of this range while it remains below 30000.

Shanghai (3481.66, +2.03, +0.06%) seems to be getting support near 3450 and has bounced today. It will have to be seen if it can breach 3500 or not from here. While below 3500 we retain our bearish view of seeing 3400-3350 and 3250-3200 on the downside. The price action near 3500 will need a close watch now.

Sensex (49661.76, +460.37, +0.94%) and Nifty (14819.05, +135.55, +0.92%) are attempting to move up. A break above 50000 (Sensex) and 14900 (Nifty) will pave way for 51000-51500 (Sensex) and 15000-15200 (Nifty) in the near-term. Thereafter the indices can reverse lower again. Broadly, we see 48000-51000/52000 and 14200-15200 as the range for Sensex and Nifty respectively within which they can oscillate for some more time.

COMMODITIES

Commodities trade lower today but may remain within a range for the near term. Crude may trade within (66-60 Brent) and 57-63 (WTI) while Copper could be ranged within 4.15-3.90 in the near to medium term. Silver has held below 25.30 as expected and it may fall towards 24.70 initially followed by lower levels of 24-23 in the medium term. Gold is broadly ranged and may test 1760 on the upside but failure to rise above 1740 immediately may restrict further upside and produce a decline from current levels itself.

Brent (62.69) and WTI (59.33) both continue to trade within narrow ranges and unless a break on either side is seen, we may expect the range to continue. For Brent we may expect 60-66 while WTI may trade within 57-63 region.

Gold (1736) has been stable over the last few sessions. We may see a slow and steady rise towards 1760 over the medium term. Failure to rise above 1740 could produce aq decline from current levels itself.

Silver (25.08) has dipped from 25.25 levels as expected and while below 25.30, we may be bearish on Silver towards 24-23 in the longer run. A break below 25 is needed initially to confirm further fall.

Copper (4.0495) seems to be holding below 4.10 just now and if the dip sustains, we may have to consider a fall to 4.00-3.90 before seeing a bounce back towards 4.10/15 again in the medium term. Immediate view is ranged within the broad 4.10/15-4.00/3.90 region.

FOREX

Dollar Index looks ranged just now but Euro has fallen sharply from levels near 1.1915 tested yesterday. While above 1.1850, the rise to 1.19+ levels can be seen again. EURJPY may test 131 on the upside while Aussie and Pound look bearish for the next few sessions. USDCNY may rise towards 6.57/58 while USDINR needs to close below 74.25 this week to indicate that a near term top is in place and see a decline early sessions of next week; else we may have to consider a rally to 76.0-76.50 over the coming weeks. Dollar Yen is trading lower but we keep alive bullish possibilities while above 109.50.

Dollar Index (92.40) has scope to test 92.65/70 on the upside before again falling towards 92 in the near term. Overall view is bearish while below 92.65/70.

Euro (1.1869) has risen to test 1.1915 before falling back sharply from there. While above 1.1850, we may expect to see another bounce to 1.19+ levels which could be likely to sustain in the medium term.

EURJPY (130.26) continues to remain stable and could test 131 before falling back to 129.50-129 again in the medium term.

Dollar-Yen (109.74) looks stable just now and the pair needs to break below 109.50 to head lower and confirm that the near term top is in place and a decline can set in over the next couple of weeks. But while above 109.50, we may keep open the chances of a bounce back to 110.50-111.

Aussie (0.7615) is likely to trade within 0.7550-0.77 in the near term. There is lack of directional clarity just now for the near term.

Pound (1.3756) has fallen back sharply over the last couple of sessions. A test of 1.3670-1.3600 looks possible in the near term before a bounce is seen back towards 1.37-1.38.

USDCNY (6.5480) has bounced slightly and could head towards 6.57-6.58 again in the near term.

USDINR (74.5550) rose well after the RBI announced G-SAP 1.0 yesterday, a secondary market government acquisition programme whose first purchase of Rs 25000 crore is to be conducted on 15th April. We closely watch 74.25 over today and tomorrow. If the pair manages to fall back immediately today to levels below 74 then we may expect a close below 74.25 for this week that may reduce any sharp rally early next week. But if the RBI manages to take the USDINR closing for the week above 74.25, we may have to allow for an eventual rise to 76.0-76.50 in the coming weeks. Watch price action closely over today and tomorrow to get more clarity. We would be in wait and watch mode for now.

INTEREST RATES

The US Treasury yields remain stable. As long as the yields sustain above their crucial supports, the trend will continue to remain up with chances of seeing a fresh rise. German yields are consolidating within their overall uptrend and are likely to break it on the upside and move up before reversing lower. The 10Yr GoI has broken below 6.10% as expected and keeps our bearish view of seeing 6%-5.9% on the downside intact. The break was triggered by the outcome of the RBI’s monetary policy meeting. The central bank announced a secondary market government securities acquisition program (G-SAP 1.0) for a quantum of Rs 1 lakh crore for the first quarter of this fiscal.

The US 2Yr (0.16%), 5Yr (0.86%), 10Yr (1.67%) and 30Yr (2.35%) Treasury yields remain stable after having dipped for two days. Our view remains the same. A strong break below the crucial supports at 1.55% (10Yr) and 2.2% (30Yr) is needed to indicate a top in place and confirm a trend reversal. While above these supports the yields can consolidate in the range of 1.55%-1.8% (10Yr) and 2.2%-2.5% (30Yr) with a bullish bias to see further rise breaking the range on the upside before reversing lower.

The German 2Yr (-0.71%), 5Yr (-0.66), 10Yr (-0.33%) and the 30Yr (0.23%) continue to trade stable and consolidate within its uptrend. Only a strong break below -0.40% (10Yr) and 0.20% (30Yr) will negate the bullish view of seeing -0.20%/-0.15% (10Yr) and 0.35% (30Yr) on the upside from here.

The outcome of the RBI meeting yesterday has triggered the long-awaited break below 6.10% on the 10Yr GoI (6.0815%) . This keeps our bearish view intact of seeing 6% and 5.90% on the downside. A bounce-back above 6.10% can face resistance in the 6.12%-6.14% region.