Market Morning Briefing: Aussie Fell Sharply From 0.75-0.7480

STOCKS

Dow has fallen sharply breaking below our expected support at 35250 and can test lower support near 35000 before bouncing from there. Dax may bounce from 15800 or 15600 and looks bearish for the very near term. Nifty and sensex can consolidate between 17000\17250-17500 and 58000-59000 respectively for some time before we see an eventual break on the upside.Nikkei can now target 30500-3700 on the upside.Shanghai has potential to rise towards 3700-3800 while above 3600 in the coming sessions.

Dow (35100.00, -269.09, -0.76%) has fallen sharply breaking below support at 35250. We may expect a fall to 35000-34750 before a bounce is seen in the medium term.

DAX (15843.09, -89.03, -0.56%) fell sharply and needs to rise from support near 15800 to rise back to 16000 or higher. A break below 15800 if seen can drag the index down towards 15600 in the near term before attempting to bounce again.

Nikkei(30161.85, +245.71, 0.82%) has broken the resistance at 30,000.The view is now bullish to see a test of 30600/700.A break above the level of 30600/700 can take the index towards 31000 in the coming sessions.

Shanghai(3673.77, -2.81, -0.077%) has risen sharply again.A test of 3700 and even 3800 is possible in the coming days while above 3600.

Nifty(17362.10, -15.70, -0.090%) rose to test the level of 17436.50 with an intraday low of 18287.The immediate resistance mentioned at 17500 is holding well.A consolidation between 17000/250-17500 is possible in the coming sessions.

Sensex(58279.48, -17.43, -0.030%) has also come down after making a high of 58553.07.A consolidation between 58000-59000 is possible in the coming days.

COMMODITIES

Commodities have fallen sharply on sharp rise in Dollar Index. Crude prices can fall in the near term while below resistances near 74 (Brent) and 70 (WTI). Gold has fallen sharply below 1800 and can test 1780/65 before bouncing back from there. Silver has held below 25 and can trade within 23.50-25 for the near term. Copper may test 4.20-4.00 before bouncing back in the medium term.

Brent (71.683) and WTI (68.59) have fallen and looks bearish for the near term for a possible fall towards 67.50 and 65 respectively while immediate respective resistances at 74 and 70 hold.

Gold (1799.16) fell sharply from 1833 instead of rising above 1840 proving 1840 to be an immediate and decent resistance. While below 1800 now, we may have to allow for a further fall towards 1780/65 before a bounce is seen again.

Silver (24.33) has held below resistance at 25, negating an immediate possibility of a rise to 26. A range of 23.50-25 may hold for the near to medium term.

Copper (4.2805) too fell sharply holding below 4.40. A test of 4.20 is possible in the next few sessions before a bounce is seen. Failure to bounce from 4.20 can drag it lower towards 4.00.

FOREX

Dollar Index has risen sharply dragging down Euro below 1.1850. If Euro sustains below 1.1850, it can fall towards 1.18. EURJPY has broken above 130.50 and if that sustains a rise to 131-132 cannot be negated. Aussie and Pound have fallen sharply and look bearish for the near term. USDJPY has rise above 110.20 and while it rises, a test of 110.60/80 can be seen. USDINR can test 73.60/80 or even 74 before a corrective fall is seen. This rise can be boosted by a weaker Euro and a weaker Chinese Yuan.

Dollar Index (92.546) has risen sharply from 92.10 and could be headed towards 92.80 or even 93 before falling again from there.

Euro (1.1841) has dipped below 1.1850 and if the fall sustains, it can fall further towards 1.1820-1.1800 in the near term.

EURJPY (130.61) has risen above 130.50 and needs to sustain higher to head towards 131-132 in the near to medium term.

Dollar-Yen (110.29) has risen above our expected resistance near 110.20/40. A break above 110.40, if seen can take the pair higher towards 110.60-110.80 before seeing a corrective dip from there.

Aussie (0.7383) fell sharply from 0.75-0.7480 and while the fall sustains, we may expect a dip to 0.7350 or even to 0.73 in the near to medium term.

Pound (1.3783) too fell sharply on Dollar strength and can fall further towards 1.3740-1.3725 before rising back in the medium term.

USDCNY (6.4662) has risen sharply as expected and can rise further towards 6.48 in the near term.

USDINR (73.44) rose as expected to test 73.44 on the upside. A further rise to 73.60/80 or even 74 is possible in the next few sessions before any corrective decline is seen. A fall in Dollar-Rupee can be boosted by weaker Chinese Yuan and Euro.

INTEREST RATES

The US Treasury yields continue to move up in line with our expectation. There is room to move up further from here to test their key resistances in the coming days. Thereafter we expect the Treasury yields to resume the broader downtrend. The German yields have risen sharply and are coming closer to their key resistances. It will have to be seen if the ECB meeting outcome tomorrow can provide a strong trigger to break above the upcoming resistances. The Indian 10Yr and 5Yr GoI have risen sharply for the second consecutive day. Key resistances are coming up which have to be broken for the yields to move up further and reduce the danger of falling back.

The US 2Yr (0.22%), 5Yr (0.81%), 10Yr (1.36%) and the 30Yr (1.98%) Treasury yields are moving up in line with our expectation. The 30Yr has come close to 2% as expected and can extend the rise to 2.1% on a break above it. The 10Yr has room to test 1.4%-1.45%. As mentioned yesterday, the price action thereafter will need a close watch to see for a reversal and the resumption of the long-term downtrend.

The German 2Yr (-0.71), 5Yr (-0.63%), 10Yr (-0.32%) and 30Yr (0.16%) yields have moved up sharply across tenors. The 10Yr is heading up towards -0.30%/-0.25% and the 30Yr to 0.20%. We expect the yields to reverse lower thereafter and resume the broader downtrend. We will have to wait and watch.

The Indian 10Yr GoI (6.1947%) and 5Yr GoI (5.6310%) have risen further sharply yesterday. The 10Yr has resistance at 6.22% and for the 5Yr at 5.64% and 5.66%. A strong break above these resistances will negate the chances of seeing 6.1%-6% (10Yr) and 5.5% (5Yr) that we have been mentioning for some time. The price action in the coming days will need a close watch.