HomeContributorsTechnical AnalysisMarket Morning Briefing: The Dollar Index Failed To Rise To 94.00 Yesterday

Market Morning Briefing: The Dollar Index Failed To Rise To 94.00 Yesterday

STOCKS

Dow (22381.20, +0.18%) has been stable above 22200 since the last 3-sessions and while that holds, some chances of a rise towards 22400 or higher cannot be negated. A break below 22200 could take it lower to 22000; else a rise above 22400 could take it towards 22600 in the near term. Equal chances of either direction is possible just now with slight preference for an upmove.

Dax (12704.65, +0.37%) has broken above 12675 contrary to our expectation of a rejection from these levels. While above 12675-12700 levels, the index could move up towards previous highs of 12900-12951 seen in June’17. Also note a decent resistance near 12800 which if holds could prevent a further rise towards 12900 and push the index back towards 12700-12600 in the near term.

Nikkei (20294.11, -0.34%) is trapped within 20500-20200 levels and is unable to decide which way to go just now. If Dollar Yen remains below 113.30 and moves lower towards 112, Nikkei could come down too; else some more sideways consolidation is possible until there is more clarity on near term direction. We may also look at the US-Japan 10YR differential for directional indication as the differential is testing resistance near current levels. If the resistance holds and the differential comes down, it could pull off both Nikkei and Dollar Yen to lower levels.

Shanghai (3349.33, +0.29%) could remain within 3360-3325 region in the coming sessions. No major movement expected just now.

Nifty (9768.95, +0.34%) bounced back yesterday from 9687, in line with our expectation of a pause near 9680/85 mentioned in the earlier edition. Nifty is expected to remain in the recovery mode today also and could move up towards 9850. Levels near 9680 is not expected to break just now.

COMMODITIES

Gold (1284.20) is stable above the immediate support at 1280. While that holds, there could be some sideways consolidation and an attempt to move back towards 1300. But a break below 1280, if seen would be an important indication of bearishness for the coming weeks.

Silver (16.8150) is likely to remain below 17. There is some possibility of testing 16.50 in the coming sessions.

Brent (57.65) is trading above immediate support near 56.65 and is likely to trade sideways for a few sessions. WTI (51.56) on the other hand looks bearish and could fall towards 50.50 in the near term.

Copper (2.9715) rose sharply yesterday but may not sustain above 3 in the near term. Some range-bound movement within 3.0-2.9 region is expected in the coming sessions.

FOREX

The Dollar Index (93.23) failed to rise to 94.00 yesterday, dipping from a high of 93.67. Today might be quiet between 93.00-93.50. Similarly, the Euro (1.1780), which saw a high near 1.1804 yesterday, may range between 1.1740-1820 today. For a few days the market will debate whether it wants to push the Euro lower to 1.1665 or not.

Dollar-Yen (112.67) came off well from an intra-day high of 113.21 yesterday, which might establish 113.50 as a decent Range Resistance. An intra-day fall and Close below 112.40-30 will encourage this possibility.

The Euro-Yen (132.70) has consolidated yesterday as expected. We continue to look for a fall towards 131 next week.

As expected, the Pound (1.3410) ran into some selling when it rallied to 1.3455 yesterday. Today is likely to be quiet between 1.3440-3365. In the bigger picture, the upmove since 1.1985 (Jan ’17) may have ended.

The Aussie (0.7841) saw a low of 0.7800 yesterday, but did not carry on further down to our target of 0.7750. Like the other currencies, today might be quiet between 0.7875-15.

Dollar-Yuan (6.6760) has continued to rise but may find some Resistance/ run into profit-taking near 6.70. Dollar-Rupee (65.5050) came of well yesterday and may be ranged between 65.30-70 today, with accent on the downside.

INTEREST RATES

US Yields stabilised a bit yesterday, but may have potential to climb higher, especially at the farther end of the Curve. The 10Yr (2.32%) may rise towards 2.50%, while the 30Yr (2.87%) may rise towards 3.00%, as mentioned yesterday.

Further Curve steepening likely in US yields, also mentioned yesterday.

Good Resistance near current levels on the US-Japan 10Yr Yield Spread (2.24%), which is likely to hold and help push Dollar-Yen (112.67) lower. At the same time, the Japanese 10Yr (0.067%) itself seems to have Resistance near current level and near 0.10%. So, this is a bit of a conundrum, which has to be watched over the next couple of days.

KBC Bank
KBC Bankhttps://www.kbc.be/dealingroom
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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