Market Morning Briefing: USDCNY Rose To 6.3833 Before Falling Off From There

STOCKS

Dow has room to fall down to 35000 before we see a rise again while Dax can bounce from 15500 towards 15900. Nikkei has come down sharply today and is bearish to see a fall towards 27000. Shanghai can test 3550-3500 in the coming sessions. Nifty can dip further to test 16800 before we see a bounce from there. If sensex manages to bounce from crucial support at 57000 then the view is bullish towards 58000,else a fall to 56000 can be seen.

Dow (35365.44, -532.20, -1.48%) fell very sharply on Friday. The index has room to fall towards 35000 before we see a rise above 36000 again.

DAX (15531.69, -104.71, -0.67%) too came down on Friday but is trading above the crucial support at 15500. While above 15500, a rise towards 15900 can be seen again.

Nikkei (28055.28, -490.40, -1.72%) has fallen sharply today. The view is bearish to see a fall towards 27500 while Shanghai (3605.21, -27.16, -0.75%) has come down below the support at 3625 and looks bearish to see a dip towards 3550-3500 in the coming sessions.

Nifty (16985.20, -263.20, -1.53%) fell sharply on Friday. The index has room to come down further towards 16800 before we see a bounce again. A fall below 16800 if seen can be highly bearish for Nifty (looks less likely).

Sensex (57011.74, -889.40, -1.54%) came down sharply on Friday and has closed just above the crucial support at 57000. If the index manages to bounce back from 57000 then a rise towards 58000 is possible. Else, a dip towards 56000 can be seen.

COMMODITIES

Most commodities have fallen and trades lower. Gold and Silver have dipped and while below resistances near 1820 and 23, the prices can move down a bit before again rising higher. Crude prices have been falling and can dip some more in the next couple of sessions before a rise back to higher levels are seen. Copper may hold within 4.20-4.35 in the near term.

Brent (71.83) is holding below 75 and can dip towards 72-70 before again rising from there. WTI (69.00) on the other hand can be raged within 73-69 region. Any break below 69 can drag it lower towards 67 again in the medium term. Watch price action near 69 in the near term.

Gold (1802.10) tested 1814 but came down sharply from there instead of sustaining to test resistance at 1820 or attempting to break higher. While below 1820, we may expect a fall back towards 1780 possible in the near term. Else the price will have to attempt a rise above 1820 to move higher towards 1850-1880 in the medium term. For now, we may continue to look at the 1820-1760 region to hold.

Silver (22.42) rose to 22.69 but came off from there along with a fall in Gold. While below interim resistance at 23, we may look for a dip to 22-21 before rising higher towards 23 or higher again in the medium term.

Copper (4.2795) is holding below resistance at 4.35 and while below that, it can decline to test 4.25-4.20 again in the near term. We may continue to look at the range of 4.25/20-4.35 for the near term.

FOREX

Most pair mentioned below are in a sideways range that could possibly hold for a few more sessions before we see a break on either side that could trigger a sharp movement. Dollar Index and Euro can trade within 95.50-97.00 and 1.12-1.1350 region while EURJPY can trade within 129.50-127.50. Aussie and Pound may remain within 0.7250-0.7090 and 1.3160-1.34 respectively. USDJPY, USDCNY and USDINR look bearish for the near term.

Dollar Index (96.03) holds within 95.50-97 region. We would wait to see a break on either side of the range in the coming sessions.

Euro (1.1249) is likely to hold within 1.12-1.1350 region. Any break on either side would trigger a sharp movement that could last for the medium term.

EURJPY (127.72) has fallen sharply after testing 129.50 last week. The 129.50-127.50 range may hold for now. Any break on either side would trigger a sharp movement in the near term. Would like to wait and watch for now.

Aussie (0.7119) may range in the 0.7250-0.7090 region for the near term.

Pound (1.3230) tested a high of 1.3374 before falling sharply from there. A fall to 1.3160 looks possible before again rising back towards 1.34 in the medium term.

Dollar-Yen (113.56) has immediate support at 113.10 which if holds can produce a bounce towards 114.50 or higher again. Only a break below 113.10 if seen can reinforce a fall towards 112.50.

USDCNY (6.3781) rose to 6.3833 before falling off from there, A rise to 6.3950 is possible within the current move before a fall is seen again towards 6.36.

{USDINR (76.09) came off from 76.25 on Friday and needs to break below 76 to head towards 75.80/60 on the downside. Such a fall could a be a possibility today as the NDF currently quotes 75.98 indicating a possible break below 76 on the OTC markets. However, we would watch if the rate again attempts to move back to 76.25+ levels in the very near term.

INTEREST RATES

The US Treasury yields have declined further and can move down towards the lower end of their respective ranges in the near-term. We expect the sideways range to hold and the yields to rise back within it going forwards. The German yields continue to move down thereby keeping our broader bearish view intact. The 10Yr and 5Yr have risen sharply on Friday and will have room to move up further in the near-term. The 10Yr has a crucial trend resistance coming up at 6.45% which will need a close watch.

The US 2Yr (0.62%) Treasury yield remains stable while the 5Yr (1.14%), 10Yr (1.37%) and the 30Yr (1.79%) have declined sharply. The 10Yr and 30Yr can dip further to 1.3% and 1.7% while they sustain below 1.4% and 1.8% respectively. As mentioned on Friday, broadly, we expect the yields to trade in the range of 1.3%-1.65% (10Yr) and 1.7%-2% (30Yr).

The German 2Yr (-0.73%), 5Yr (-0.62%), 10Yr (-0.39%) and 30Yr (-0.04%) have dipped across tenors. The bearish view is intact. We expect the yields to test -0.45% / -0.5% (10Yr) and -0.1% / -0.2% (30Yr) on the downside in the coming weeks. Resistances are at -0.25% (10Yr) and 0.05% (30Yr),

The Indian 10Yr (6.4102%) and 5Yr (5.7243%) GoI have risen sharply. The 10Yr has broken above 6.4% and has room to test 6.43%-6.45%. The 5Yr can test 5.75% and even 5.78% in the near-term. The level of 6.45% on the 10Yr is a very crucial resistance which will need a close watch. A pull-back from there can drag it back to 6.35% and even lower.