Market Morning Briefing: Pound Fell Sharply From 1.39

STOCKS

Corrective dip is seen in Dow and Dax but overall seem to be ranged within the broad 35250-35500 and 15600/15550-16000 range respectively for the near term. Nikkei has risen very sharply today,a further rise towards 30000 is possible in the coming sessions.Shanghai has come down slightly after making a high of 3613.948.While above 3550,the view is bulish to see a test of 3700.Nifty and Sensex have risen well in line with our expectations.Immediate resistance can be seen at 17400 and 59000 which can cap the upside for now.

Dow (35369.09, -74.73, -0.21%) has dipped a bit but is stuck between 35250 and 35500 since the past few sessions. A break above 35500 is needed for a rise towards 35750 in the medium term. Else we may continue to look for a sideways range of 35250-35500 to hold for a few more sessions.

DAX (15781.20, -59.39, -0.37%) broke below 15800 and can test 15600 before bouncing back from there. Overall a broad range of 15600/15550-16000 can be seen in the near term.

Nikkei(29638.17, +510, +1.75%) has risen very sharply today and has broken the level of 29000.The view is bullish to see a test of 30000 in the coming sessions.

Shanghai(3611.51, +29.77, 0.83%) has come down slightly after making a high of 3613.948.While above 3550 the view is bullish to see a test of 3700-3750 in the coming sessions. If a fall below 3550 is seen the shanghai can revisit 3500 levels.

Sensex(58129.95, +277.41 , +0.48%) rose sharply on Friday. A rise towards 58500-59000 is possible in the coming sessions before we see a corrective dip.

Nifty(17323.60, +89.45, 0.52%) rose well on Friday and is heading towards our expected level of 17400 to be tested in this week.A corrective dip from 17400 can take the index down towards 17000and even 16850-16800 before the uptrend resumes.A strong break above 17400 can open doors for a fresh rally and new upside targets.

COMMODITIES

Crude prices have fallen from respective resistances and while they hold, we may expect a fall towards 70-67.50 in Brent and towards 67 in WTI in the near term. Gold has risen but needs to rise above 1840 to head higher. Else a fall back to 1830-1800 can be seen in the medium term. Silver needs to sustain above 25 to test 26 else a fall from 25 would be bearish for a fall to 24-23.50 in the near term.

Brent (71.84) and WTI (68.38) fell from 73.69 and 70.53 respectively and look bearish for the near term. Brent is likely to hold within the broad 74-67.50 region while WTI has fallen from immediate resistance near 70.50 and could fall further towards 68-67 in the near term. Immediate view is bearish for crude.

Gold (1829.90) has risen but we need to see if the price manages to rise above 1840 to head higher towards 1860/80 in the medium term. Any fall from 1830/40 can again bring Gold back to the 1800-1830 region.

Silver (24.81) has broken above 24.50 but unless the price breaks above 25 it would be difficult to continue with the upward momentum. Watch price action to see if it breaks above 25 or falls off from there towards 24-23.50 again. Break above 25, if seen would be bullish to see 26.

Copper (4.3240) has risen and could re-test 4.40/45 in the near term. Immediate view is bullish while above 4.25.

FOREX

Dollar Index has dipped but while above 91.75 it can rise back to 92.50. Euro has fallen from 1.19 but it is needed to see if it falls below 1.1850. EURJPY needs to break above 130.50 to head higher else a fall back to 129.50-129 is possible. Aussie and Pound may fall in the near term as immediate resistances can hold. USDCNY fell sharply to 6.43 but has bounced back from there. While above 6.45, it can rise back to 6.47/48 in the near term. USDINR can be ranged within 72.90-73.30 and unless a break on either side is seen, it is difficult to predict immediate clarity.

Dollar Index (92.159) tested 91.94 before bouncing back from there. As expected the index is holding above 91.75 and while that holds, a bounce back to 92.40/60 is possible. Watch immediate support at 91.75.

Euro (1.1877) tested 1.19 before falling back from there. It is needed to see if the exchange holds above 1.19 or sees a corrective fall to 1.1850.

EURJPY (130.29) is trading below 130.50 but has scope to rise again and head towards 131-132 eventually.

Dollar-Yen (109.81) has support at 109.60 and while that holds, a bounce back to 110-110.40 is possible. Any break below 109.60 if seen can take it down to 109 in the medium term.

Aussie (0.7439) has risen well over the past few days and tested resistance at 0.75. If resistance at 0.75 holds, Aussie can fall to 0.74-0.7350 in the near to medium term. Watch price action near 0.75 over the next few sessions.

Pound (1.3857) fell sharply from 1.39. While that holds, a dip to 1.38-1.37 is possible. A break above 1.39 can be further bullish for the medium term.

USDCNY (6.4538) fell sharply to 6.4336 before bouncing back from there. If the price sustains above 6.45, it can rise towards 6.47/48 in the near term.

USDINR (73.9820) seems to be in a corrective range of 72.90-73.20/30 and needs to break on either side to see which way the pair moves in the near term. A break above 73.30 can rise to 73.40/50 before a fall is seen

INTEREST RATES

The US Treasury yields have risen after the weak jobs data release on Friday. The US Non-Farm Payroll increased by 235K as against the market expectation to see an increase by 750K. As mentioned on Friday we see high chances of the yields moving up further before resuming the broader downtrend again. The German yields continue to move up and retain the corrective rally. There is room to move up further in the coming days. The 10Yr and 5Yr GoI have dipped further and keep our bearish view intact. The yields extend the fall this week as well.

The US 2Yr (0.21%) and the 5Yr (0.78%) Treasury yields remain stable while the 10Yr (1.32%) and the 30Yr (1.94%) have risen back again. The 30Yr keeps intact the chances of breaking above 2% and moving up to 2.1% in line with our expectation. The 10Yr has to sustain above 1.3% in order to move up towards 1.4%-1.45%. Thereafter we expect the yields to fall-back and keep the broader downtrend intact.

The German 2Yr (-0.73), 5Yr (-0.68%), 10Yr (-0.36%) and 30Yr (0.14%) yields have moved up further across tenors in line with our expectation. The 10Yr is heading upto -0.30%/-0.25% and the 30Yr to 0.20% as expected. The price action thereafter will need a close watch to see for a reversal and the resumption of the broader downtrend

The Indian 10Yr GoI (6.1569%) has declined further and can head down towards 6.1% as expected. The downside can extend even up to 6% over the medium-term. The 5Yr GOI (5.5786%) has also come down further and keeps our bearish view intact of seeing 5.5% in the coming days.