Market Morning Briefing: Aussie Has Bounced Back From 0.6769

STOCKS

Dow is gaining momentum and can move higher. DAX, Sensex and Nifty can consolidate before resuming their uptrend. Shanghai is weak and is coming near a very crucial support level. Nikkei has to break above a near-term resistance to avoid further corrective fall.

Dow (28004.89, +222.93, +0.80%) has risen towards 28000 as expected. The outlook remains bullish to test 28250 and 28400 this week from where a corrective fall is possible. Strong support is in the 27600-27500 region which needs to be broken to turn the outlook negative.

DAX (13241.75, +61.52, +0.47%) continues to consolidate within its uptrend in a narrow range of 13100-13300. The uptrend is likely to remain intact and DAX can break this range above 13300 and target 13400-13500 in the coming days.

Nikkei (23378.73, +75.41, +0.32%) has bounced well on Friday and is holding on to the gains today. It needs to be seen if it can surpass 23500 decisively from here which will be indicate the resumption of the uptrend. But while below 23500 a test of 22800-22600 is possible in the near-term before the uptrend resumes.

Shanghai (2891.50, +0.15, +0.01%) has to rise past 2920 decisively to ease the downside pressure. While below 2920, the index is weak and vulnerable to test the 2870-2865 support zone.

Nifty (11895.30, +23.20, +0.20%) has closed on a mixed note last week and can remain range bound between 11800 and 12050. We expect the Sensex to break this range above 40750 and target 41100 while it sustains above 40000.

COMMODITIES

Brent (63.34) and Nymex WTI (57.87) have shot up in line with our expectations and could be headed to test 64 and 58 in the near term. 3-day and Weekly Brent candles show immediate resistance near 64 which would be a crucial decider of further direction. A break above 64 can be bullish for the medium to long term while a rejection could push price back towards 56 levels.

WTI on the other hand has broken above resistance at 56 on the 3-day and weekly charts indicating bullishness for the near term. WTI has scope of rising towards 60 in the medium term but if Brent falls from 64, it could drag down WTI price also to levels below 56. Watch price action on Brent near 64.

Gold (1466.70) is holding above 1440 support on the daily candles and at the same time may find it difficult to rise above 1480 just now. We may expect a sideways range trade within 1440-1480 just now before our preferred fall towards 1400 is seen.

Silver (16.88) could limit itself to 17.35/40 on the upside while the medium term trend looks bearish. 16.5 could hold as immediate support. Overall broad 17.40-16.50 is likely to be the region of trade for the rest of the sessions this week.

Copper (2.6390) is also trading higher. 2.60 is immediate support and while that holds, Copper could rise towards 2.75/80 in the medium term. Copper is bullish while above 2.60.

FOREX

Dollar Index (97.93) came off from 98.50 after seeing range trade within 98.50-98.20 last week. If the resistance at 98.50 holds strong, it could potentially push down the index towards 97.50 on the downside before resuming a rise back towards 98.50 and higher. Overall long term looks bullish on the weekly candles but we may allow for a test of 97.50 in the near term.

Euro (1.1061) has risen well from 1.10 and could test 1.1094-1.1100 before coming off from there.

108.50 on Dollar-Yen (108.81) seems to be a decent support just now and while that holds, the currency pair is likely to move up towards 109.50-110 again in the near term. Nikkei has been rising higher and could be supportive of a rise in dollar Yen just now.

EUR-JPY (120.36) rose sharply from levels above 119. While support at 119 holds, we may expect a rise back towards 121-122 in the near term.

Pound (1.2927) is trading sideways in the broad 1.28-1.30 region and is finding difficulty in breaking on either side just now also our preferred view would be a fall towards 1.27/26. We may expect some more of range trade in the 1.30-1.28 region in the near term.

Aussie (0.6817) has bounced back from 0.6769. But while below 0.6850, the currency pair could fall towards 0.665 in the medium term.

USDCNY (7.0121) has support at 6.98/95 which is likely to hold in the near term possibly trading within 6.95-7.03/04 for some sessions.

ollar Rupee (71.79) could trade in the broad 71.55-72 region for the near term. Note that 71.55-71.65 is an important support zone.

INTEREST RATES

Treasury yields have declined sharply across tenors last week and have room to dip further. The German yields can dip to test their supports and then can resume their uptrend. The 10Yr GoI is coming near a key support which is likely to hold and take the yield higher again.

The US 2Yr (1.60%), 5Yr (1.64%), 10Yr (1.83%) and 30Yr (2.30%) have declined sharply across tenors last week. The 30Yr has support near current levels at 2.28% which needs a close watch. A break below it can drag the yield lower to 2.15% in the coming weeks. The 10Yr on the other hand has supports at 1.78% and 1.75% which can be tested in the coming sessions.

The German 2Yr (-0.65%), 5Yr (-0.59%), 10Yr (-0.34%) and 30Yr (0.18%) have also fallen across tenors last week. The 30Yr can fall to 0.10-0.05% on a break below the 0.16%-0.14% support zone. The 10Yr on the other hand has room to test -0.40% and -0.35% on the downside.

The 10yr GOI (07.26 GS 2029; 6.6948%) has a key support at 6.66% which is likely to limit the downside. A bounce from this support can take the yield higher towards 6.75% and 6.80% again.

The 10yr (06.45 GS 2029; 6.5237%) on the other hand is getting support in the 6.51%-6.50% region and is likely to rise towards 6.55%-6.56% while it remains above this support zone.