Market Morning Briefing: Aussie Looks Stable

STOCKS

Dow is struggling to get a strong follow-through rise above 33000 and looks vulnerable for a fall from here itself without seeing an extended rise. It will have to be seen how the market reacts to the proposed increase in the US corporate tax announced along with the $ 2 trillion infrastructure recovery package unveiled yesterday. DAX is at the key resistance level of 15000 and is expected to reverse lower from here. Nikkei can move up within its sideways range. Shanghai is at its upper end of its range and needs to be seen if it can break it on the upside. Sensex and Nifty have come-off from their resistances as expected and can fall in the coming days as expected. Any bounce is likely to be capped at 50000-50250 (Sensex) and 14900 (Nifty).

Dow (32981.55, −85.41, -0.26%) is not getting a strong follow-through rise above 33000. A further fall from here will reduce the chances of seeing the extended rise to 33450-33500 that we had been mentioning over the last few days. In turn the expected fall to 32000-31000 can happen from here itself.

DAX (15008.34, −0.27, -0.002%) remained stable around 15000 yesterday. We retain our view of seeing a corrective fall from here to 14400 initially and then to 14000-13800 eventually in the coming weeks. As mentioned yesterday, the above mentioned fall will get negated if DAX breaks above 15050 decisively in which case we may have to allow for an extended rise to 15500-15700.

Nikkei (29531.88, +353.08, +1.21%) has risen back above 29500 and needs to see if it can sustain. We reiterate that Nikkei can remain sideways between 28000 and 30500/31000 for some time. Within this range while above 29000, a move towards the upper end of the range is possible in the near-term.

Shanghai (3456.65 +14.74, +0.43%) is hovering at the upper end of its 3330-3470 range. A pull-back from here will keep the sideways range intact. If Shanghai manages to breach 3470, a rise to 3500 is possible. However, a strong follow-through rise past 3500 is necessarily needed to completely negate the bearish view of seeing 3250-3200 on the downside.

Sensex (49509.15, −627.43, -1.25%) has come-off sharply yesterday failing to sustain above 50000. This keeps our bearish view of seeing a fall to 48000-47000 on the downside. The chances of the fall extending even upto 46000 cannot be ruled out. But thereafter we can expect a fresh rally.

The resistance at 14900 has held very well as expected and Nifty (14690.70, −154.40, -1.04%) has come-off sharply yesterday. A further fall to 14400-14200 is possible on a break below 14400. Our broader bearish view of seeing 14000-13800 remains intact. The fall can extend even up to 13600 before we get a strong bounce.

COMMODITIES

Commodities see some corrective upmoves today. Crude prices have risen a bit but overall look ranged for the near term within 65-60 on Brent and 57-63 on WTI. Gold ahs bounced well from support at 1680/70 and may test 1740/60 on the upside. Silver has bounced too but the rise looks corrective as it may fall back to 23-22 in the medium term. Copper is stable just now and may test 3.90/80 before bouncing back from there.

Brent (62.98) and WTI (59.43) look ranged for now within 65-60 and 57-63 respectively. Only a break on either side of the range would give more clarity on further direction.

Gold (1710.10) managed to bounce back from important supports near 1680/70 and could soon rise towards1740-1760 in the medium term. For bullish sentiment to establish, we need a break above 1760. Immediate view is bullish.

Silver (24.36) has bounced back from 23.74 itself but there is scope for a test of 22 on the downside in the medium term while below 25. Watch for a possible corrective upmove followed by another decline towards 22.

Copper (3.9830) has bounced a bit but while below 4, we may expect a test of 3.90-3.80 before a sharp bounce is seen.

FOREX

Dollar Index has dipped slightly but while above 93, we do not negate chances of a possible test of 94.50 on the upside. Euro has bounced a bit but we need to see if the rise sustains in the coming sessions. EURJPY is bullish towards 131. Aussie and Pound looks stable. USDCNY may see a corrective dip towards 6.54/55 before rising back again. Dollar Yen may dip too but the fall could be short lived. USDINR is closed for rest of the sessions this week. We may expect a fall towards support near 72.80 in the coming week.

Dollar Index (93.22) has dipped well but we would keep a close watch to see any signs of rising back from 93. We do not negate a rise to 94.50 while the index trades above 93.

Euro (1.1723) has bounced from 1.17 and while the rise sustains we may expect a rise to 1.1760-1.18 in the near term. But we would keep a close watch to see if the rise is short lived and the currency starts to fall back tomorrow or not. While below 1.18, we do not negate a possible fall to 1.16 in the longer run.

EURJPY (129.71) is stable and could re-test resistance near 131. Immediate view is bullish.

Dollar-Yen (110.62) has dipped a bit after a test of 110.97 yesterday. The fall could be corrective and could bounce back from 110.50/30 to resume its uptrend. While above 109.50, view is bullish for Dollar Yen towards eventual rise to 111.75-112.

Aussie (0.7575) looks stable. Near term could be ranged within 0.7545-0.7660.

Pound (1.3781) looks bearish while below 1.3850 and could fall towards 1.37-1.36 in the medium term.

USDCNY (6.5650) is ranged yesterday and we reiterate from yesterdays comments of seeing a short lived corrective dip to 6.54/55 before again resuming the uptrend. Immediate view is likely to be ranged within 6.54-6.58.

USDINR (73.11) fell sharply yesterday from 73.5850 to test 73.05 and close near the lower end of the session range. Note that 72.80 is now a crucial support which needs to hold to keep the upward momentum intact. Today and tomorrow the currency is closed. Trade for USDINR is to resume on Monday (5th April)

INTEREST RATES

The US Treasury yields have inched up. The yields have room to move further up from here and test their long-term resistances before reversing lower sharply. German yields sustain higher and are keeping our bullish view intact. The 10Yr GoI is moving up towards the upper end of its range. We expect the range to remain intact for some time and to be broken on the downside eventually going forward.

The US 2Yr (0.16%), 5Yr (0.94%), 10Yr (1.75%) and 30Yr (2.42%) Treasury yields have inched up slightly. View remains bullish for now. 1.8% on 10Yr and 2.5%-2.6% on the 30Yr are important near-term resistances. A break above these resistances can take the yields up to 2% (10Yr) and 2.9%-3% (30Yr) in the coming weeks. Thereafter a fresh fall is possible. The yields have to fall below 1.5% (10Yr) and 2.2% (30Yr) to indicate a reversal and negate the rise to 2% (10Yr) and 3% (30Yr).

The German 2Yr (-0.70%), 5Yr (-0.63), 10Yr (-0.29%) and the 30Yr (0.25%) remain stable. While above -0.40% (10Yr) and 0.20% (30Yr) our bullish view is intact of seeing -0.20%/-0.15% (10Yr) and 0.35% (30Yr) on the upside. A strong fall below -0.40% (10Yr) and 0.20% (30Yr) is needed to turn bearish and negate the above mentioned rise.

The 10Yr GoI (6.1768%) is moving up within the 6.10%-6.20% range. A test of 6.20% is likely in the coming sessions and a reversal thereafter will keep the range intact. We retain our view of seeing a break eventually below 6.10% and a fall to 6%-5.9% over the medium-term. But, if the GoI breaks above 6.20%, an extended rise to 6.24%-6.26% is possible and the expected fall below 6.10% will get delayed.