Market Morning Briefing: Dollar-Yen Has Paused Below 115

STOCKS

Dow and Dax have risen sharply today and can test 37000 and 16200 on the upside respectively. Nikkei and Shanghai have come down, but have supports at current levels which if holds can produce a bounce towards 29500 & 3650/3700 in the coming sessions, else a fall to 28000 & 3550 is possible respectively. Nifty needs to rise above 17400 to test 17800 else can fall back to 17000. Sensex can rise towards 58000-59000 in the coming sessions.

Dow (36398.20, +95.83, +0.26%) has risen again today. The index tested a high of 36527.26 before coming down. The view is bullish to see a test of 37000 on the upside while above 36000.

DAX (15963.70, +128.45, +0.81%) has risen again today. The index has room to rise towards 16200 before we see a fall down to 15200 is seen.

Nikkei (28809.86, -259.30, -0.89%) has come down after reaching a high of 29106.28. The index needs a sustained break above 29000 to test 29500. While below 29000 a fall back to 28500/28000 is possible.

Shanghai (3604.8, -25.53, -0.70%) has come down today. The index has a good support at 3600 which if broken can take the index down towards 3550-3500. A bounce from the support at 3600, if seen can take index up towards 3700 in the coming sessions.

Nifty (17233.25, +147.00, +0.86%) rose sharply yesterday. The 17400 level is a good resistance, which broken can take the index up towards 17800, else a fall to 17000 will be on the cards.

Sensex (57897.48, 477.24, +0.83%) has risen yesterday. The view is bullish to see s rise towards 58000 and 59000 eventually while the index holds well above 57000.

COMMODITIES

Crude prices continue to rise towards expected resistances before a decline is seen. Gold has also dipped while below 1820 keeping the 1820-1760 range intact for now. Silver needs to sustain above 23 to move up. Copper has scope to rise to 4.60/65 on a break above 4.45/50.

Brent (78.97) and WTI (75.92) continue to trade higher and could test 81-83 and 79-80 respectively before we see a fall in the medium term. Immediate view is bullish for the near term.

Gold (1805.60) has dipped further today not able to rise to test 1815/20 as expected indicating that the resistance is holding strong. While below 1820, we continue to look at a range of 1760-1820 to continue.

Silver (23.04) is stable near levels seen yesterday. The price needs to sustain above 23 to rise higher slowly towards 24-24.50 on the upside.

Copper (4.4235) has dipped slightly. While above 4.38/40, there is scope for a rise towards 4.50 which needs to break in order to head higher towards 4.60/65. Watch price action near 4.45/50 for now.

FOREX

Dollar index is trading along the trend support near 96, unable to decide which way to move to. A break below 96 can drag it lower to 95.50-95 before a rise is again seen. Euro is holding below 1.1350 and can test 1.1250-1.12 if 1.1350 holds strong. EURJPY trades below 130.50 and can fall to 129. Aussie and Pound are stable just now. USDINR can rise from 74.60 towards 75-75.20/25 else can fall to 74.20-74.00. Watch price action near 74.60 today. USDCNY and USDJPY are stable just now.

Dollar Index (96.158) is trading above 96 unable to break lower just now although it is trying to attempt over the last few sessions. While below 96.50, there can be scope of a an eventual break below 96 to head lower towards 95.50-95.00 before a sharp reversal is seen. Watch closely for a break below 96

Euro (1.1306) has fallen from levels seen yesterday indicating that the 1.1350 resistance seems to be holding for now. While below 1.1350, we may expect a dip back to 1.1250-1.12 on the downside.

EURJPY (129.88) has dipped from 130.22 and while the fall sustains, it can fall to 129.50-129.30 in the near term. Only a sustained break above 130.50 if seen will be bullish for the cross for the medium term. Till then a range of 129-130.50 may hold.

Aussie (0.7224) has dipped. We may expect immediate range of 0.72-0.7250/70 to hold for now.

Pound (1.3436) has risen well and can continue to rise towards 1.35-1.3550 on the upside before declining from there.

Dollar-Yen (114.83) has paused below 115 and may reamin in a sideways narrow range of 115-114.70/50 for the near term. A break above 115 is needed to trigger a possible rise towards 117/118 in the longer run. For now, watch price action near 115.

USDCNY (6.3712) is stable and may continue to trade within 6.3732-6.3646 region for the near term.

{USDINR (74.6450) can bounce from 74.60 to head towards 75.0-75.20/25 on the upside. Failure to hold above 74.60 can take it down towards 74.20-74.00 on the downside in the coming 2-4 weeks. Watch price action near 74.60 today.

INTEREST RATES

The US Treasury yields broadly remain stable across tenors. We expect the yields at the far-end to break above their near-term resistances and move up within their broad expected sideways range. The German yields sustain higher and remain stable. The view is bullish to see a further rise from here. The 10Yr has risen contrary to our expectation to see a fall. It has room to move up further and then come down again. The 5Yr GoI has also risen and can move up in the near-term before reversing lower again.

The US 2Yr (0.74%), 5Yr (1.24%) and the 10Yr (1.47%) Treasury yields remain stable while the 30Yr (1.90%) has inched up slightly. We expect the yields at the far-end can rise to 1.6%-1.65% (10Yr) and 2% (30Yr) in the coming weeks. A break above 1.53% (10Yr) and 1.93% (30Yr) can accelerate the rally. Overall, we reiterate that 1.3%-1.65% (10Yr) and 1. 7%-2% (30Yr) will be the range of trade for some time.

The German 2Yr (-0.66%), 5Yr (-0.50%), 10Yr (-0.24%) and 30Yr (0.10%) continues to remain higher and stable. We retain our bullish view of seeing a rise to -0.1%/-0.05% (10Yr) and 0.25% (30Yr) in the coming days.

The Indian 10Yr (6.4901%) GoI has risen breaking above 6.48%. This has negated the fall to 6.44%-6.4% that we have been mentioning over the last few days. The 10Yr GoI can now test 6.55% in the near-term and then reverse lower again to 6.5% and maybe even lower thereafter.

The 5Yr (5.8397%) GoI has also risen above 5.82% and can now test 5.85%-5.86% on the upside before reversing lower again. A fall below 5.8% will be needed to drag it down to 5.74%.