Thu, Oct 06, 2022 @ 10:35 GMT
HomeContributorsTechnical AnalysisMarket Morning Briefing: Aussie Is Now Trading Just Above 0.7100

Market Morning Briefing: Aussie Is Now Trading Just Above 0.7100

STOCKS

Most global indices amongst the ones mentioned below have risen sharply over 1% except the Shanghai which rose by 0.71% today. The strongest movement among them is seen in Dax with a 2.82% rise seen yesterday. We may expect the indices to remain strong for this week followed by another leg of decline soon. Watch important resistances above current levels.

Dow (35719.43, +492.40, +1.40%%) has broken above the resistance at 35500. Now a break above 35750, if seen and sustained would be bullish for a rise towards 36500-37000.

DAX (15813.94, +433.15, +2.82%) has risen sharply breaking above our expected 15800 mentioned yesterday. If the index sustains above 15800, it can test 15900-16100 before we see a dip again.

Nikkei (28774.05, +318.45, +1.12%) has risen sharply today, breaking the resistance at 28500. The view is bullish to see a rise towards 29000/29500. If the index fails to rise above 29000/29500 then a fall towards 28000 can be seen again.

Shanghai (3619.66, +25.36, +0.71%) trades above 3600. The resistance at 3625 can hold well. Our view is bearish while below 3625 to see a dip towards 3550-3500. A strong break above 3600 on the other hand would confirm a rise towards 3700.

Nifty (17176.70, +264.45, +1.56%) recovered yesterday. The previously established range of 16800-17400 is holding well. Any break on either side can take the index either towards 16200 or towards 17600/800.

Sensex (57633.65, +886.51, +1.56%) rose yesterday. The index needs to break above 58000 to be bullish towards 59000.

COMMODITIES

Crude prices have risen as fears on the new Covid variant subsides. We may look for a reversal in Brent from 75-77 region and from 73 on the WTI. Gold needs to break above 1790-1800 to move up else can remain stuck within 1760-1800 region for now. Copper is stuck too within 4.25-4.45 and needs to break on either side to either head towards 4.00 or towards 4.80. Silver is trading near the lower end of the 22-24 range and a break on the downside, if seen can allow a test of 21 before a reversal is seen in the medium term.

Brent (75.23) has been rising sharply over the past few sessions. On the 3-day candles, immediate resistance is seen near 75-77 region which if holds can produce a decline in the near term back towards 70 or lower. Failure to decline from 75-77 region will open up possibility of a rise towards 79-80 before the expected fall is seen from there.

WTI (71.90) has immediate resistance near 73 which can hold and produce a decline from there in the near term.

Gold (1791.20) trades near the resistance level. While below 1800-1790, Gold has scope to fall towards 1760. Only a sustained break above 1800 can take it higher towards 1820 again.

Silver (22.58) trades above support at 22 and needs to bounce to remain within 22-24 range. Else a fall towards 21 cannot be negated soon.

Copper (4.3430) is stuck within 4.25-4.40/45 zone. On a fall below 4.25, there could be scope to test deeper and crucial support at 4.00 while there would be enough room on the upside towards 4.80 if the price manages to break above 4.45/50.

FOREX

Currency pairs are mixed today. Dollar Index can fall to 95.50 while below 97-96.50 while Euro needs to break above 1.13 and sustain to head towards 1.14-1.1450. Dollar Yen is ranged within 112-114 and a break on either side would indicate next course of movement. USDCNY has fallen sharply and if does not bounce from 6.35, can be dragged towards 6.30. USDINR needs a close watch near 75.75/50 today. EURJPY is ranged while Pound and Aussie see some corrective bounce.

Dollar Index (96.1460) tested 96.59 yesterday before coming off from there. We may continue to look at the range of 95.50-96.50/97 to hold for the near term unless a break on either side is seen.

Euro (1.1291) dipped to 1.1227 overnight before rising back from there. A break above 1.13 if seen would take it higher towards 1.14-1.1450 before a reversal is seen in the medium term.

EURJPY (128.12) is holding above 127.50 and trades within 127.50-128.50/129 and may remain within this range for some more time before a break on either side is seen to give more clarity on further direction.

Aussie (0.7140) is now trading just above 0.7100, throwing a challenge to the downtrend since 0.7555 (28-Oct). We need to keep a close watch to see if the current ongoing rally in the Aussie from 0.6990 (04-Dec) would sustain to rise towards 0.72 and higher or fall back from 0.72 in the near term.

Pound (1.3259) trades within 1.32-1.33 region and may continue for a few more sessions before seeing a bounce.

Dollar-Yen (113.45) has risen within the 114-112.50 range. Unless the price breaks on either side, we may expect it to hold for a few more sessions.

USDCNY (6.3529) fell sharply below 6.36 and can be headed towards 6.35 before a bounce is seen. Failure to hold above 6.35 can take the index towards 6.30. View is bearish.

{USDINR (75.4450) is ranged within 75.50-75.20/25 and a break on the upside can lead to a rise to 75.75 soon before a final reversal takes place. Watch price action near 75.50/75 today.

INTEREST RATES

The US Treasury yields have risen across tenors. The bounce in the 10Yr and 30Yr seems to be sustaining well for now and the yields may move further up in the coming days within their broad expected sideways range. The German yields remain stable and lower. The bearish view is intact to see a further fall from here. The 10Yr and 5Yr GoI have risen sharply yesterday and can rise further in the near-term to test their next key resistances and then come down again. The Reserve Bank of India’s monetary policy outcome is due today.

The US 2Yr (0.69%) and the 5Yr (1.25%) Treasury yields have risen sharply while the 10 Yr (1.46%) and the 30Yr (1.79%) have inched further up slightly. While above 1.4%, the 10Yr can test 1.5%-1.55%. Similarly, the 30Yr can rise to 1.85% while it sustains above 1.7%. Overall, the yields are likely to move up within their expected broad range of 1.35%-1.65% (10Yr) and 1.7%-2% (30Yr)

The German 2Yr (-0.72%) and the 5Yr (-0.61%) yields have bounced up slightly while the 10Yr (-0.38%) and 30Yr (-0.10%) continue to remain lower and stable. Our bearish view of seeing a fall to -0.45% / -0.5% on the 10Yr and -0.1% / -0.2% on the 30Yr remains intact.

Contrary to our expectation, the Indian 10Yr (6.3909%) has risen above 6.38%. While this break sustains, a further rise to 6.43%-6.45% is possible. The region between 6.43%-6.45% is a strong resistance which is likely to hold and trigger a reversal towards 6.38% and lower again. The price action in the 6.43%-6.45% will need a close watch.

The 5Yr (5.7199%) has risen well above 5.7% but has resistance at 5.74% which can cap the upside. The 5Yr is likely to fall-back from 5.74% towards 5.68%.

 

Kshitij Consultancy Service
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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