Sat, Oct 23, 2021 @ 11:11 GMT
HomeContributorsTechnical AnalysisMarket Morning Briefing: Aussie Is Holding Below 0.7350

Market Morning Briefing: Aussie Is Holding Below 0.7350

STOCKS

Dow Jones have risen well and could be headed towards 35500 while Dax has fallen from interim resistance near 15800 and could see some ranged trade between 15800 and 15400 region for a few sessions. Nikkei and shanghai have dipped a bit and is likely to test 30000 and 3600-3575 before a bounce is seen in the medium term. Nifty and Sensex have risen well and look bullish for the near term.

Dow (34814.39, +236.82, +0.68%) has bounced sharply after testing 34522 on the downside. The bounce can take the index higher to 35250-35500 in the near term which needs to break too in order to take the index further up towards 36000 in the medium term.

DAX (15616, -106.99, -0.68%) has fallen from immediate resistance at 15800 and while that holds, a dip back towards 154600/800 cannot be negated. A range of 15800-15400 can hold for the near term.

Nikkei (30332.64, -179.07, -0.59 %) has dipped sharply from 30750. View is bearish as the corrective fall can extend towards 30000 before again bouncing back from there. Only if a break below 30000 is seen, we may look for a further dip towards 28500-28000.

Shanghai (3626.04, -30.19, -0.83%) has fallen sharply and could test a maximum of 3575 on the downside before rising back from there. View is bearish while below 3650.

Nifty (17519.45, +139.45, +0.80%) has made a strong close above 17500 yesterday in line with our expectations. While above 17500, view is bullish to see a test of 17800-850 in the coming sessions. Else an immediate pull back from current levels can delay the expected rise and initiate a corrective dip from here.

Sensex (58723.20, +476.11, +0.82%) has also risen yesterday and is heading towards 59000. A strong break above 59000 will be further bullish else a consolidation between 58000-59000 can be seen for some sessions.

COMMODITIES

Crude prices rose sharply after the API (American Petroleum Institute) reported a larger than expected crude draw of 5.437mln barrels for week ended 10th Sep’21. It exceeded analyst expectations of 3.903mln barrels. Gold has fallen below 1800 and could be headed towards 1780/65 if it does not bounce back immediately. Silver holds above 23 and can rise towards 24-25. Copper is likely to remain stable within 4.20-4.40

Brent (75.60) and WTI (72.71) have risen sharply on larger than expected crude inventory draws. Brent has broken above our expected 74/75 levels and can rise to test 77/78 or even 80 before a decline is seen from there. WTI on the other hand has risen above our expected 72 and can rise to 75 in the near term.

Gold (1796.70) has fallen back below the level of 1800.While below 1800 the view is bearish to see a test of 1780 and 1765 eventually.

Silver (23.97) sustains above 23.50 and while the price trades higher, view is bullish to see a test of 24 and eventually 25 in the coming sessions. A strong break below 23.50 would be needed for the price to fall towards 23-22.

Copper (4.3790) has come up sharply after testing the low of 4.2915. View is to see sideways consolidation between 4.20-4.40 in the coming sessions

FOREX

Dollar index trades lower but can bounce from 92-92.20 in the near term. On the other hand, Euro is facing difficulty to rise above 1.1830/50 and failure to break above 1.1850 can turn bearish for the medium term. Aussie and Pound are stable but has scope for a fall in the medium term. USDJPY is falling sharply and can test 109. Failure to bounce from 109 would make it more bearish in the longer run. USDCNY has been falling sharply and can fall to 6.40/3750 soon. USDINR too can test 73.20/10 on a break below 73.40.

Dollar Index (92.47) fell sharply from 92.80/90 over the past couple of sessions and while the index trades lower, a fall towards 92 is possible before a bounce is seen. Immediate view is bearish but we need to see if this impacts the Euro positively.

Euro (1.1817) faces immediate resistance near 1.1850 making it difficult to rise past 1.1830/50. While below these levels, it would be difficult for Euro push itself upwards and can eventually give way for a sharp decline. Else it may remain stable and ranged until the FOMC next week. Wait and watch for a broad range of 1.1775/50-1.1.1830/50 to hold for the near term.

EURJPY (129.14) has fallen further and can continue to fall towards 128.50-128.00 in the near term while below 129. Immediate view is bearish.

Dollar-Yen (109.29) has fallen sharply and while below 109.50, we may expect a further fall towards 109 or even lower eventually. For now watch a test of 109 and see if it manages to produce a bounce back.

Aussie (0.7328) is holding below 0.7350 and can fall towards 0.7250 if it sustains to fall further from here.

Pound (1.3839) seems to be fluctuating within 1.39 and 1.3750 and could remain sideways for a few sessions. Thereafter a break on either side will be needed to determine further directional movement.

USDCNY (6.4316) has fallen and looks bearish for a test of 6.40/3750 in the near term. View is strongly bearish while below 6.45.

USDINR (73.4950) may test 73.40 and if it holds, can bounce back towards 73.70/80 again on the upside. But on the very near term charts, there is scope for a fall to 73.20/10 before a bounce takes place. Watch price action near 73.40 today.

INTEREST RATES

The US Treasury yields remain stable. A strong bounce from here is needed from here to avoid a further fall and move up to test their resistances. From a bigger picture, the upside in the yields are likely to be capped with strong resistances ahead and any sharp rise from here is likely to be short-lived for now. It will have to be seen as what the US retail sales data release today and the FOMC meeting outcome next week have in plate for the Treasury yields. The German yields have come closer to their crucial resistances. We can expect the yields to reverse lower and resume the broader downtrend in the coming days. The 5Yr and 10Yr GoI have come down sharply yesterday after testing their key resistances. The view is bearish to fall further.

The US 2Yr (0.21%), 5Yr (0.80%), 10Yr (1.29%) and the 30Yr (1.86%) Treasury yields remain stable. The 10Yr has to rise past 1.3% to move up to 1.4% again and negate the fall to 1.2%-1.18% from here. From a big picture 1.4%-1.45% will be an important support zone while below which the broader view will remain bearish. The 30Yr on the other hand has to breach 1.9% to move up to 2% in the near-term. Else a dip to 1.8% cannot be ruled out.

The German 2Yr (-0.71), 5Yr (-0.63%), 10Yr (-0.31%) and 30Yr (0.19%) yields have risen across tenors. The 10Yr and 30Yr have come closer to our targets of -0.30%/-0.25% and 0.20% respectively. The price action in the coming days will need a close watch for a reversal and the resumption of the overall downtrend.

The Indian 10Yr GoI (6.1630%)fell sharply yesterday. Failure to breach 6.2% keeps intact our bearish view of seeing 6.12-6.1%. From a medium-term perspective 6.05%-6% can also be targeted.

The resistance at 5.64% has held very well and the 5Yr GoI (5.5987%) has come down sharply. This keeps alive our bearish view of seeing 5.55%-5.5% on the downside.

Kshitij Consultancy Servicehttp://www.kshitij.com
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

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