Market Morning Briefing: EURJPY Is Holding Above Support At 131.50

STOCKS

Dow and Dax have risen well and could head towards 36100 and 15900 where some profit taking can be seen before resuming the overall uptrend. Nikkei is bullish towards 30000/31000 before reversing from there. Shanghai is stuck within 3500-3600 for now and a decisive break on either side is needed for the index to indicate further direction. Nifty and Sensex too can rise towards 18000+ and 61000 before any profit taking is seen in the medium term.

Dow (35913.84, +94.28, +0.26%) rose to test 36009.74 yesterday but could see some profit taking near 36100 that may lead to a fall towards 35500/00 in the near term.

DAX (15806.29, +117.52, +0.75%) has risen sharply today. The range of 15900-15400 is still holding well. While below 15900, a dip towards 15400 can be seen in the coming sessions. Unless a sustained break above 15900 is seen, it would be difficult for Dax to indicate any fresh rally.

Nikkei (29580.49, -66.59, -0.22%) has come down slightly but is still above 29500.While above 29500 the view is bullish to see a rise towards 30000/31000 and negate the view of seeing 28500 on the downside. Watch price action near current levels.

Shanghai (3531.15, -13.33%) has come down slightly after rising yesterday. While above 3500, a rise towards 3600 is possible but if a break below 3500 is seen then a dip towards 3400 cannot be negated. For now watch levels of 3500-3600 to hold.

Nifty (17929.65, +258, +1.46%) rose sharply after testing 17697.10 on the downside. The index needs a strong break above 18000 to be bullish towards 18200/400 and negate the view of a fall towards 17400 else we retain our view of a possible fall to 17400 while below 18000.

Sensex (60138.46, +831.53, +1.40%) tested 59355.12 before bouncing back to close above 60000. While above 60000, a test of 61000/62000 is possible in the coming sessions from where some profit taking can be seen.

COMMODITIES

Crude prices are holding within 85-80 region and needs some catalyst to break on either side of the range, Preference is to see a fall below 80. Gold and silver could trade within 1780-1810/20 and 23.50-25 respectively. Copper is bullish while above 4.30.

Brent (84.93) and WTI (84.19) have risen well today and could trade below 86/85 levels to fall back towards 81/80 in the medium term. The spread between the two has narrowed but may not remain so for long. We may expect a decline in crude prices by next week.

Gold (1791.70) and Silver (24.02) have risen a bit but is likely to remain within the sideways range of 1780-1810/20 and 23.50-25 respectively for the near term. Only a break on either side can confirm on further direction.

Copper (4.3755) has support at 4.30 which if holds can produce a rise towards 4.50/55 in the near term. View is to see a rebound while above 4.30.

FOREX

Dollar Index fell sharply while below 94.50 and indicates a possible trade within 93.0-94.50 for the near term with a possible test of 95 on the upside. Euro too could spend time within 1.15-1.1650 while below resistance at 1.1750-1.1700 that may hold for the medium term. Aussie and Pound look bearish for the near term while below 0.7560 and 1.3850. USDCNY is likely to be ranged within 6.3750/38-6.42 for sometime while USDINR may spend time within 74.75/80-75.00/05.

Dollar Index (93.9220) fell from 94.30 yesterday. A range of 93.00-94.50 may hold for now while we expect a test of 95 eventually on the upside. Consolidative trade is possible while above 93. A very broad range of 93-95 may hold for the coming weeks.

Euro (1.1598) has bounced a bit but is likely to trade within 1.1500/50-1.1650 region for the near term within an overall downtrend. As Dollar Index sustains above 94, Euro bearishness could be intact.

EURJPY (132.17) is holding above support at 131.50 and can rise to 133-133.40 on the upside. Our earlier mentioned range of 131.50-133.50 can hold for the coming sessions.

Aussie (0.7520) has immediate resistance near 0.7550 which if holds can push the exchange down towards 0.7450 or lower in the coming sessions. A break above 0.7550, if seen would break above the immediate resistance indicating a rally towards 0.78 in the longer run, but that looks less likely for now.

Pound (1.3654) continues to fall sharply and could be headed towards 1.36-1.3550 on the downside in the near term. Immediate view is strongly bearish.

Dollar-Yen (113.95) is in a sideways range of 113-115 which is likely to hold for some more sessions before a break on either side is seen.

USDCNY (6.3996) has dipped a bit but while above support at 6.3750, we may expect 6.3750/38-6.42 range to hold for the medium term.

USDINR (74.87) continues to hold within 74.75/80-75.00/05 region and may remain so over today and tomorrow too. A maximum rise to 75.10 could be possible on the upside on a break above 74.90.

INTEREST RATES

US Treasury Yields at the far-end (10Yr and 30Yr) are attempting to bounce-back ahead of the Federal Reserve meeting tomorrow. The outcome of this meeting could bring in some volatility in the movement. Until then the yields can remain stable within their near-term supports and resistances. The German yields continue to look mixed. The 10Yr is range bound with a bearish bias and the 30Yr looks vulnerable to fall further from here. The 10Yr and 5Yr GoI are inching up slowly and are likely to rise in the near-term before reversing lower again.

The US 2Yr (0.51%) and the 5Yr (1.19%) Treasury yields continue to remain stable while the 10Yr (1.57%) and the 30Yr (1.97%) have risen back slightly. While below 1.6% (10Yr) and 2% (30Yr) a dip to 1.5% (10Yr) and 1.9%-1.85% (30Yr) is possible. If the yields manage to break above 1.6% (10Yr) and 2% (30Yr) a fresh rise to 1.7%-1.75% (10Yr) and 2.2% (30Yr) can be seen. It’s a wait and watch situation ahead of the US Federal Reserve meeting tomorrow.

The German 2Yr (-0.62%), 5Yr (-0.41%) yields have dipped slightly while the 10Yr (-0.11%) remains stable and the 30Yr (0.16%) has moved back up slightly. Our view remains the same. The 30Yr can dip to test 0.1%-0.05% in the coming days. The 10Yr is currently stuck in between -0.1% and -0.2%. The bias is negative to see a downside break below -0.2% and a fall to -0.3% and -0.4% going forward.

The India 10Yr GoI (6.3874%) continues to hover higher below the upper end of the expected 6.3%-6.4% range. While above the immediate support at 6.35%, the near-term bias is positive to break 6.4% and test 6.42%-6.43% on the upside. Thereafter a pull-back to 6.35% is possible.

The 5Yr (5.7587%) GoI keeps our bullish bias intact to break 5.76% and see a rise to 5.80%-5.82%. Supports are at 5.74% and 5.72%-5.71%.