Market Morning Briefing: Aussie Has Risen Well And Could Test 0.7850 In The Very Near Term

STOCKS

The US Federal Reserve keeping its stance unchanged on the rate hike front and reiterating to continue supporting the recovery are keeping the equities higher. Dow has risen above 33000 but needs to get a strong follow-through rise above 33100 to avoid a fall-back and become more bullish for further rise. DAX can move up to test 14900-15000 and then reverse lower. Nikkei has risen above 30000 and looks bullish to move up further. Shanghai has to rise past 3500 to negate the chances of seeing a further fall. Sensex and Nifty can recover today within their respective range of 49000-52000 and 14600-15400.

Dow (33015.37, +189.42, +0.58%) has closed just above 33000. It has to be seen if it can get a strong follow-through buying that can take it past 33100. Such a rise is necessarily needed to negate our view of seeing a corrective fall to 32000-31000 from here and in turn to become more bullish to see further rise to 34000.

DAX (14596.61, +39.03, +0.27%) can break above 14600 and see an extended rise to 14900-15000 now. We retain our view of seeing a pull-back from the 14900-15000 region and corrective fall to 14000-13800. A sustained rise past 15000 will negate this view.

Nikkei (30402.46, +488.13, +1.63%) has risen sharply above 30000 and is now bullish to test 32000 on the upside. Our view of seeing a corrective fall to 27000 stands negated now.

Shanghai (3471.39, +25.84, +0.75%) has risen above 3450 and can move up to test 3500 now. As we have been mentioning for some time, a strong rise past 3500 is needed to negate a fall-back to 3250-3200. The price action near 3500 will need a close watch.

Sensex (49801.62, −562.34, -1.12%)and Nifty (14721.30, −189.15, -1.27%) can recover today and can move up towards 51000 and 15000 respectively. From a broader picture, the 49000-52000 (Sensex) and 14600-15400 (Nifty) range will continue to remain intact for some more time. A strong rise past 52000 on Sensex and 15400 on Nifty is necessarily needed to become bullish. Else we retain our bearish bias of seeing a downside break below 49000 (Sensex) and 14600 (Nifty) eventually.

COMMODITIES

Gold, Silver and copper have bounced from respective supports and look bullish in the near term but we would wait to watch f the bullish momentum is intact for now or the prices have move up after the FOMC statement and could cool off in the next few sessions. Only a sustained rise could be bullish for the medium term targeting 27-28 on Silver, 1780 on Gold and 4.20/30 on Copper. Watch price actions closely. Crude prices look bearish towards mentioned supports near 66-65 on Brent and 63-61 on WTI.

Brent (67.52) and WTI (64.22) have scope for a fall to 65-66 and 61-63 respectively as mentioned yesterday before bouncing back from there. Immediate view is bearish towards mentioned supports.

Gold (1752.70) has risen well on Dollar weakness but we would like to wait and watch if this continues in the near term. Failure for Dollar Index to fall below 91 just now could drag Gold prices back towards 1730/00 in the medium term. While Gold trades above 1750, it is bullish for a rise to 1780 in the near term.

Silver (26.69) has risen well and could be headed towards 27-28 on the upside while above 26.25/30. Only a decline back to levels below 26.25 would negate the bullish possibility again, Watch price action while above 26.25/30.

Copper (4.1240) bounced back sharply from support near 4 and could head towards 4.20/30 on the upside in the medium term. View is bullish while above 4.00.

FOREX

The FED kept rates unchanged and continues to project near-zero interest rates at least through 2023. Dollar Index may remain within 92-91 unless a break on either side is seen and sustains. That could keep Euro ranged within 1.19-1.20 in the very near term. EURJPY is bullish while above 130 and Aussie looks bullish towards 0.7850-0.79. Pound needs to rise above 1.40 to turn further bullish. USDCNY may test support near 6.48 before bouncing back from there. USDINR may trade within 72.40-72.80.

Dollar Index (91.49) fell sharply from 92 to test 91.37 on the downside but the index has bounced back slightly from the mentioned lows. We need to watch price action to see if the index could remain ranged within 92-91 in the near term or break on either side to give some clarity on further movement. We would wait and watch for a couple of sessions.

Euro (1.1968) rose sharply to 1.1985 after the dovish FED comments but has dipped back slightly just now. Euro needs to sustain a rise above 1.20 in order to turn bullish for the medium term towards 1.21/22. Failure to move above 120 can produce a fall back to 1.19 or lower. Watch price action near current levels.

EURJPY (130.52) has moved up on Euro strength and needs to sustain above 130 to head towards upper levels of 135; else a fall towards 128.50 cannot be negated before rising towards 135 in the longer run. View is bullish while above 130. Downside could be restricted to 128.50.

Dollar-Yen (109.07) has not been able to rise above 109.36 and while it remains below immediate resistance near 109.50-110, we may look for an eventual fall towards 108 or lower. At the same time we do not negate a possible attempt to test the resistance levels mentioned. Watch price action while below 109.50.

Aussie (0.7829) has risen well and could test 0.7850 in the very near term. A break above 0.7850 would make it further bullish towards 0.79. Immediate view is bullish while above 0.77.

Pound (1.3951) has risen a bit but needs to successively break above 1.40 in order to turn further bullish and move up to 1.41. Failure to rise past 1.40 could drag the currency lower to 1.38 again in the medium term. Watch price action near 1.40 just now.

USDCNY (6.4901) has dipped sharply possibly on dollar weakness seen after the FOMC statement yesterday. Immediate support is seen near 6.48 which if holds produce a bounce bak to 6.52/55 in the longer run. Overall view is bullish while above 6.48.

USDINR (72.5475) held within 72.50-72.60 region yesterday. We continue to look at a broader range of 72.40-72.80 to hold for now before any further move is seen. Any rejection from 72.80 would bring back USIDNR down towards 72.40 again or even lower towards 72.20/10.

INTEREST RATES

The US Treasury yields have risen sharply especially at the far-end. The US Federal Reserve left the interest rates and its asset purchases unchanged in its meeting yesterday. The growth and inflation outlook are revised higher. On the charts, the Treasury yields continue to remain bullish and there is room to rise further from now before a strong reversal is seen. The German yields keep our bullish view intact and are heading higher in line with our expectation. The 10Yr GoI will have to sustain above 6.18% and rise past 6.21% from here to keep the sideways range intact and also to avoid a fall.

The US 2Yr (0.13%) and 5Yr (0.83%) Treasury yields have dipped slightly while at the far-end the 10Yr (1.65%) and 30Yr (2.43%) yields have risen further. The 10Yr surged to a high of 1.68% yesterday. While it holds above 1.60%, the outlook is bullish to see 2% on the upside before we get a strong reversal. A sustained fall below 1.5% is needed from here itself to negate this rise to 2%. The 30Yr on the other hand retains our bullish view of seeing 2.5% on the upside from where a reversal is possible.

The German 2Yr (-0.69%) and 5Yr (-0.63%) yields remain stable while the 10Yr (-0.29%) and 30Yr (0.25%) have risen sharply yesterday. Our bullish view is intact. The 10Yr can rise to -0.20%/-0.15% and the 30Yr can target 0.35% on the upside. Thereafter the yields can reverse lower.

The 10Yr GoI (6.1857%) has risen back into the 618%-6.26% range after an intraday dip to 6.1642% yesterday. It will have to be seen if the yield sustains above 6.18% and rise past 6.21% from here to keep the sideways range intact. Inability to break above 6.21% from here can keep it under pressure to fall below 6.18% and test 6.14%-6.10% on the downside.