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Market Morning Briefing: Aussie Is Holding Below 0.7550

STOCKS

Dow and Dax have limited scope on the upside and could see some profit taking soon. Dow and Dax can fall from 36100 and 16000/400 respectively. Nikkei can test 30000 while Shanghai has already broken below 3500 which if sustains can drag the index to 3400 soon. Nifty ad Sensex are likely to be ranged within 17600-18000/200 and 60000-61000 respectively.

Dow (36052.63, +138.79, +0.39%) has broken the resistance at 36000 but could face some profit taking near 36100 and fall in the near term. View would turn bullish on a break above 36100, if seen.

DAX (15954.45, +148.16, +0.94%) has risen sharply today and has broken the resistance at 15900. While above 15900 a test of 16000/16400 is possible before we see a dip from there in the medium term. On Dax also some profit taking can be expected within 16000-16400 range.

Nikkei (29520.90, -126.18, -0.43%) is closed today for cultural day. While above 29500, the view remains bullish to see a rise towards 30000/31000 eventually.

Shanghai (3491.04, -14.58, -0.42%) has fallen finally breaking below 3500 contrary to our expectation. While below 3500, view is bearish for a fall towards 3400 if an immediate rise is not seen.

Nifty (17888.95, -40.70, -0.23%) went up to test 18012.25 before falling down from there; the index can consolidate between 17600-18000 before we see a rise above 18000.

Sensex (60029.06, -109.40, -0.18%) closed above 60000 yesterday. While above 60000 the view remains bullish to see 61000/62000 on the upside if the index does not fall back below 60000 immediately.

COMMODITIES

Markets await the US API weekly crude inventory report today and OPEC meeting due tomorrow to see how the crude prices move. Gold has fallen and could remain within 1810-1760 while Silver can fall to 23 or 22.50 if it does not bounce back immediately. A broader range of 22.50/23-25 may hold for the coming weeks. Copper is bullish while above crucial support at 4.30.

Brent (83.38) and WTI (82.36) have dipped ahead of the OPEC meeting due tomorrow. The OPEC has rejected Biden’s call to raise oil production faster and help reduce gasoline prices which are at multi-year highs of $3.70 per gallon. The OPEC members and allies are not in favour of this and instead would want a gradual increase in oil production as they think markets are well balanced. Oil prices also trade lower as analysts expect a rise in API weekly inventory report by 1.6mln barrels. We need to see if the oil prices falls below 83 after the OPEC meet tomorrow or continues to hold higher.

Gold (1782.90) and Silver (23.47) have fallen sharply on rise in US Dollar. While Gold could possibly trade within a broad range of 1810-1760, Silver has broken below 23.50 and if it does not bounces back immediately, it may fall to 23 or even to 22.50 before a bounce is seen from there.

Copper (4.3560) has fallen to test support at 4.30 which if holds can produce a bounce towards 4.50/55 in the near term. View is bulish to see a rebound while above 4.30.

FOREX

Dollar Index trades higher but needs to rise beyond 94.30/60 to become more bullish for the near term. Euro can fall eventually to 1.15-1.14 in the next few weeks. EURJPY is ranged within 133.50-131.50 while Aussie and Pound are bearish for a fall towards 0.7399/75 and 1.3550 respectively. Dollar Yen can remain within 113-115 region while USDINR can fall towards 74.50/40 while below 74.75/70. Markets await FOMC meeting tonight and US NFP data on Friday.

Dollar Index (94.06) has risen but needs to break above 94.3-94.60 in order to turn further bullish on the upside. While below 94.60, we may expect a range of 94.60-93 to hold.

Euro (1.1583) rose slightly to 1.1614 yesterday but has fallen again below 1.16. View is bearish for a fall to 1.15-1.14 over the next few weeks.

EURJPY (131.82) is holding within 131.50 and 133.50 and unless a break on either side is seen, it would be difficult to say which way it would move in the longer run. Watch price action within the mentioned range.

Aussie (0.7428) is holding below 0.7550 and has fallen sharply. A further fall towards 0.7399-0.7375 looks possible in the near term.

Pound (1.3626) needs to hold above 1.36 to bounce back to 1.37 in the near term. 1.36-1.3550 is an immediate support below current levels from where a corrective bounce looks likely.

Dollar-Yen (113.84) 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) may remain ranged within 6.3750/38-6.42 for the near term.

USDINR (74.6825) has broken below 74.75/70 and while that sustains, there is scope for a fall towards 74.50/40 before any rebound is seen from there. View is bearish just now while below 74.75/70. On the upside, 75.00/25 is a strong resistance.

INTEREST RATES

US Treasury Yields have come-off sharply at the near-end (2Yr and 5Yr) while those at the far-end (10Yr and 30Yr) remain stable ahead of the US Federal Reserve meeting outcome tonight. For now, a broad range of trade looks possible and will have to see on which side the yields breakout. The German Yields are coming down across tenors as expected except the 30Yr which is also likely to fall in the coming days as it has a key resistance ahead. The 10Yr and 5Yr GoI have come down within their range. The sideways consolidation is likely to continue for some more time.

The US 2Yr (0.45%) and the 5Yr (1.15%) Treasury yields have come down sharply while the 10Yr (1.55%) and the 30Yr (1.95%) remain stable ahead of the US Federal Reserve meeting outcome tonight. 1.55%-1.5% on the 10Yr and 1.9%-1.85% on the 30Yr are key support which have to be broken to mark a reversal and see a fresh fall. On the upside, 1.7%-1.75% (10Yr) and 2.2% (30Yr) are the resistances that have to be broken to see a strong rally.

The German 2Yr (-0.68%), 5Yr (-0.48%) and the 10Yr (-0.17%) yields have declined sharply while the 30Yr (0.17%) remains stable and higher. The 10Yr is coming down towards the lower end of its -0.1%/-0.2% range. We expect it to break below -0.2% and fall to -0.3% and -0.4% in the coming weeks. The 30Yr has resistance at 0.2% which is likely to hold and trigger a pull-back towards 0.1%-0.05% in the coming weeks.

The India 10Yr GoI (6.3599%) has come-off yesterday and can oscillate within the 6.3%-6.4% range for some mor time. From a bigger picture 6.43%-6.45% will be a crucial resistance. While that holds, a fall to 6.2% and lower levels over the medium-term will be on the cards. A break below 6.3% will pave way for that fall.

The 5Yr (5.7296%) GoI has stuck in between 5.7% and 5.78%. A breakout on either side of this range will give a clear cue on whether the yield can move up to 5.82%-5.85% or fall to 5.66% and lower.

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