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Market Morning Briefing: Aussie Has Risen Well From 0.7650 Over The Last 2-3 Sessions

STOCKS

Equities remain stable and are positive overall. Dow can rise to 35000 – the upper end of its 33500-35000 range while it sustains above 34500. DAX can rise to 15800-16000 while above 15600. Nikkei can rise to 29500-30000 with immediate support at 28500. Shanghai is consolidating between 3550 and 3625/3650 range within its overall uptrend. Sensex and Nifty continue to remain much stronger among the lot and have room to rise further in the coming days.

Dow (34630.24, −126.15, -0.36%) fell yesterday but remains above 34500. While above 34500, a test of 35000 – the upper end of the 33500-35000 range, is possible in the near-term. Also with support at 34000 and 33500 the broader picture is bullish to see a break above 35000 and a rise to 36000 eventually in the coming weeks.

DAX (15677.15, −15.75, -0.10%) is holding above the immediate support level of 15600 and keeps intact the bullish view of seeing 15800 and 16000-16100 on the upside. 15400 is an important support which has to be broken to negate the rise and turn the view bearish.

Nikkei (28988.45, −30.79, -0.11%) is hovering around 29000 but seems to be lacking momentum. While above 28500, the rise to 29500-30000 is still possible. Such a rise will reduce the danger of seeing 27000-26000 on the downside that we had cautioned earlier.

Shanghai (3587.70, −11.84, -0.33%) has come-off sharply from the high of 3621.52. This keeps the expected range of 3550-3625/3650 intact. Shanghai can continue to trade in this range for some time and then break above 3650 to target 3800 over the long-term.

Nifty (15751.65, +81.40, +0.52%) and Sensex (52328.51, +228.46, +0.44%) continue to move up and keep our broader bullish view intact of seeing 16200-16500 and 53000-54000 respectively. The immediate supports at 15600 (Nifty) and 52000 (Sensex) are holding well. Deeper supports are at 15450-15400 (Nifty) and 51500-51150 (Sensex).

COMMODITIES

Crude prices have dipped a bit and while WTI holds below immediate resistance at $70, Brent could trade within 68-72 in the near term. Gold and Silver have managed to rise a bit on Dollar weakness. Gold needs to sustain above 1900 to continue moving up towards 1920-1940 while Silver has scope to move towards resistance at 28.50. Copper can rise towards 4.65 while above 4.45.

Brent (70.91) and WTI (68.68) have dipped slightly. WTI seems to be holding below immediate resistance at $70 which can keep the price ranged within 68/65-70 for the near term before a successive rise above 70 is seen in the medium to longer term. While WTI trades below 70, Brent will find difficulty to rise above 72 and could also remain ranged within the narrow 68-72 region for the near term.

Gold (1900.80) has risen yet again on Dollar weakness. The price needs to break and sustain above 1900 in order to move up further towards 1920-1940. Watch price action near current levels to see if it continues to move up from here.

Silver (27.97) has scope to rise towards immediate resistance at 28.50 from where a rejection can be seen in the medium term.

Copper (4.5095) can trade within the narrow 4.65-4.45 region in the near term before attempting to rise above 4.65. Failure to hold above 4.45 could be vulnerable to a sharp fall in the longer run towards 4.20. For now, we expect 4.45 to hold and produce a bounce.

FOREX

Currencies look mixed just now. Aussie and Pound could be ranged while Dollar Index can rise to 90.20 before again falling off from there. Euro can remain within 1.22-1.21 for now keeping EURJPY ranged within 133-134 too. USDCNY has fallen below 6.40 and may trade within 6.38-6.41 in the very near term. USDINR has immediate support at 72.70 which needs to hold in order to produce a bounce to 73 or higher in the near term. Failure to sustain above 72.70 could drag it lower towards 72.50.

Dollar Index (90.03) can remain ranged for the near term within 90.20-89.80. Thereafter watch price action on a break on either side of the mentioned range.

Euro (1.2183) needs to watch price action near 1.22 if it manages to hold and break on the upside or faces sharp rejection to fall back to 1.2150 and lower in the near term. Overall 1.22-1.21 could be the immediate trade range.

EURJPY (133.28) is stable near levels seen yesterday and as mentioned, we may expect 133-134 to be the trade range for the very near term.

Dollar-Yen (109.36) continues to dip and as mentioned yesterday, the pair could fall to 109.00-108.80 in the near term before seeing any bounce from there towards 110. Note important resistance is now seen at 110 and support near 108.35.

Aussie (0.7749) has risen well from 0.7650 over the last 2-3 sessions. A further rise could be restricted to 0.78 which if holds could keep Aussie ranged within 0.78-0.7650 for the near to medium term.

Pound (1.4167) looks stable and can be ranged for now 1.4085-1.42.

USDCNY (6.3922) is hovering around 6.40 and could be ranged within 6.41-6.38 in the near term.

USDINR (72.8050) fell yesterday to test 72.7350, breaking our mentioned 72.80. While 72.70 holds, we may expect a bounce back to 73.00 or higher. On the contrary a break below 72.70, if seen can take the pair down towards 72.50 in the near term. The pair is likely to hover around support of 72.70/80 today as it can be supported by strength in the Chinese Yuan and Euro.

INTEREST RATES

The US Treasury yields remain lower and stable. Inability to rise from current levels can drag them lower towards the lower end of their broader range in the coming days. The German yields have room to fall within its current correction and then can resume the uptrend. The 10Yr GoI can rise in the near-term and then can reverse lower again to keep the broader downtrend intact.

The US 2Yr (0.15%), 5Yr (0.79%), 10Yr (1.56%) and 30Yr (2.24%) Treasury yields remain lower and stable. While below 1.57%, the 10Yr can dip gradually to 1.50%-1.45%. Similarly, the 30Yr can test 2.15% while below 2.25%. 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) are the broad range of trade within which the yields can come down now

The German 2Yr (-0.67%), 5Yr (-0.59%), 10Yr (-0.20%) and the 30Yr (0.35%) yields remain stable within its corrective fall. We retain our view of seeing a test of 0.30%-0.25 (30Yr) and -0.30% (10Yr) on the downside in the coming days. Thereafter a fresh rise is possible to keep the broader uptrend intact and target 0% (10Yr) and 0.55% (30Yr) over the medium-term.

The 10Yr GoI (6.0227%) oscillated around 6.02% yesterday. A test of 6.04%-6.06% on the upside is likely before the yield reverses lower again. The broader trend is down and we will be looking for the yield to break 6% and fall to 5.95% and 5.9% in the coming week.

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