Market Morning Briefing: Aussie Has Bounced Well From 0.77

STOCKS

Dow can move up within its 33500-35000 range. DAX is struggling to gain strength to breach 15500. It can fall if it breaks below 15400 and keep the 14800-15500 range intact. Nikkei has to sustain above 28500 to avoid a deeper fall from here. Shanghai is hovering near an intermediate resistance and can see a corrective dip before resuming the uptrend. Sensex and Nifty look strong among the lot and remain bullish to see further rise from here.

Dow (34529.45) was closed yesterday. It is likely to move up towards the upper end of its 33500-35000 range this week while it sustains above 34500.

DAX (15421.13, −98.85, -0.64%) seems to lack strong follow-through buyers above 15500. This keeps the chances high of the index falling within its 14800-15500 range. A break below 15400 can accelerate the fall. That in turn will delay the expected rise to 15700-15800 that we have been expecting.

Nikkei (28693.97, −166.11, 0.58%) is struggling to sustain above 29000. A fall below 28500 will bring back the danger of falling towards 27000-26000 into the picture. Nikkei has to sustain above 28500 to move upto 29500-30000.

Shanghai (3597.04, −18.44, -0.51%) has been oscillating around 3600 over the last few days. 3625-3650 is an immediate resistance. While below this resistance zone, a corrective dip to 3550 is possible in the near-term. Our long-term view however, remains bullish to see 3800 on the upside.

Nifty (15582.80, +147.15, +0.95%) has surged breaking above 15450 yesterday. This keeps our bullish view intact of seeing 16200-16500 on the upside. 15450-15400 can be a good near-term support.

Sensex (51937.44, +514.56, +1%) on the other hand is just below the crucial level of 52000. A strong rise past 52000 (more likely considering the bullishness in Nifty) can take it further higher to 53000-54000 in the coming weeks.

COMMODITIES

Crude prices have risen above immediate resistances of $70 and $67 on Brent and WTI respectively and they could be headed towards $75-77 and $70 in the medium term. Gold and Silver look bullish towards 1920/50 and 29-30 while Copper needs to break above 4.70 to head towards 4.80/90 in the coming sessions.

Brent (70.23) and WTI (67.63) have finally broken above immediate resistances and could head higher. Brent may test $72-73 initially but we would bkeep a possible upside of $75-77 intact. WTI may rise towards $70 on the upside. While Brent and WTI are above $70 and $67 respectively, view is bullish for the near to medium term.

Gold (1913.70) trades higher and could rise towards 1920-1950 eventually. View is bullish on gold while above 1880-1900.

Silver (28.34) has risen too and could be headed towards the upper target of 29-30. Near term view is bullish.

Copper (4.6905) has risen and could test 4.80/90 if it breaks above 4.70. Watch price action near current levels in the near term to see if it manages to break above 4.70. Failure to rise above 4.70 can drag it down towards 4.60/55 again in the medium term.

FOREX

Dollar Index trades lower and we need to watch price action near 89.50/30 which if breaks could be bearish towards 88-86 in the longer run indicating strength for other global currencies. Pound and Aussie look bullish while EURJPY could face series of near term resistances in the 134-135 zone from where a fall looks possible. Euro may be headed towards 1.23/1.2320 in the near term. USDCNY has fallen again and could trade within 6.35-6.38 region for now. Any break below 6.35 would take it down to 6.30. USDINR may come down to 72.40. Overall range of 72.30-72.75/80 may hold for the near term.

Dollar Index (89.7760) has fallen further from levels seen yesterday. A break below 89.30 will be keenly watched for that would indicate a possible test of 88-86 in the medium term giving some hope for strengthening of other global currencies against the Dollar. Watch price action near 89.50/30.

Euro (1.2229) has bounced from near term trend support at 1.218350 and could rise towards 1.2266 initially followed by a further rise towards 1.2320 before coming off from there.

EURJPY (133.80) has a series of resistances in the 134-135 region and could face a short corrective fall from anywhere between 134-135 before again attempting to rise higher in the longer run.

Dollar-Yen (109.42) has dipped a bit too and holds well below 110 tested a couple of sessions ago. While below 110, the pair may continue to fall towards 109.20-109 or even to 108.60/40 before a bounce is seen again. Immediate view is bearish while below 110. Fall in the Dollar Index could pull down Dollar-Yen faster.

Aussie (0.7762) has bounced well from 0.77 and could be headed towards 0.78-0.7850 in the near term.

Pound (1.4237) has risen well above 1.42 and is soon headed towards 1.43. The bullish momentum may continue longer and Pound could be headed towards 1.45 in the longer run. View is bullish for medium to long term.

USDCNY (6.3657) has dipped back after showing a short rise above 6.37 yesterday evening. We may expect ranged movement within 6.35-6.38 region for a few sessions but a break below 6.35 would drag it down to 6.30 on the downside. Watch price action near current levels.

USDINR (72.6150) is likely to hold below 72.75/80 and come down towards 72.40/30 again. A broad sideways range of 72.75/80-72.30 looks possible in the near term. A break on either side thereafter would decide on further direction, preferably on the upside towards 73 or higher.

INTEREST RATES

The US Treasury yields have moved up at the far end. The narrow range of 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) is holding well for now within their broad range. The German yields continue to dip and have room to fall further before resuming the uptrend. The 10Yr GoI can see a corrective bounce in the near-term and then reverse lower to keep the overall downtrend intact.

The US 2Yr (0.14%) and 5Yr (0.81%) Treasury yields remain stable while the 10Yr (1.62%) and 30Yr (2.30%) have moved up slightly from levels seen in early Asian trades yesterday. The support at 1.57% is continuing to hold and the 10Yr can remain in the range of 1.57%-1.7% for some more time within its broad 1.45%-1.8% range. The 30Yr on the other hand can remain in a range of 2.25%-2.4% within its broad 2.15%-2.5% range.

The German 2Yr (-0.67%), 5Yr (-0.57%), 10Yr (-0.19%) and the 30Yr (0.36%) yields continue to move down. As mentioned yesterday, the recent correction can extend up to 0.30%-0.25 (30Yr) and -0.30% (10Yr). Thereafter a fresh rise is possible targeting 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.

The 10Yr GoI (6.0219%) opened with a wide gap-up above 6% yesterday and made a high of 6.0318%. A test of 6.04%-6.06% is possible now while above 6.02% before the overall downtrend resumes targeting 5.9% on the downside.