Market Morning Briefing: Aussie Looks Bearish While Below Resistance Near 0.77

STOCKS


Equities sustain higher but looks mixed and seem to lack momentum. There is room to move further up from current levels. Dow can test 31000 while above 30500 and DAX can test 14000 and 14200 or even 14500. Nikkei has to sustain above 28500 to move up to 29000. Else a fall can happen from here itself. Shanghai has turned down from its intermediate resistance and can move down further in the coming days to test its long-term support. Sensex and Nifty retain their bullish view of testing 15000 and 51000 on the upside after which a reversal is possible. Overall, the equities hold higher but are not convincingly looking more bullish to see a sharp rally from here. The upside could be limited and we would remain cautious.


Dow (30723.60, +36.12, +0.12%) is managing to hold above 30500 and has inched further up and remains bullish in the near-term. A test of 31000 is possible while above 30500. A break above 31000 can see an extended rise to 31500. Thereafter a corrective fall is possible.


DAX (13933.63, +98.47, +0.71%) has risen further to test 14000 as expected. 14200 and 14500 are important resistances that can cap the upside for now. DAX is likely to reverse lower anywhere from the broad 14000-14500 region and see a sharp corrective fall to 13400-13200 over the medium-term.


Nikkei (28516, −130.50, -0.46%) seems to lack momentum although it is managing to hold above 28500. A fall below 28500 can drag it to 28000 which in turn will negate the chances of seeing 28850-29000 on the upside mentioned yesterday. Also as mentioned yesterday, a strong break above 29000 is very much needed to become more bullish. While below 29000 the broader picture is in favor of seeing a corrective fall to 27000-26500 eventually.


Shanghai (3498.99, −18.32, -0.52%) has turned down after testing 3550 in line with our expectations. A dip to 3470-3450 can be seen again and there is room for the fall to extend up to 3400 even. However, from a long-term perspective, 3400 is strong support that is likely to hold and keep the broader uptrend intact.


Sensex (50255.75, +458.03, +0.92%) and Nifty (14789.95, +142.10, +0.97%) continue to move up and keep the bullish view intact. Nifty has tested 14800 and can extend the rise to 15000 after which a reversal is possible. Sensex can head towards 51000 as expected. It will have to be seen if it can extend the rise breaking above 51000 up to 51500 and then reverse lower or is turning down from 51000 itself.


COMMODITIES


The latest assessment by the OPEC+ stated that oil stockpiles may decline below the 5yr average by June’21 which indicates that the producer's output cuts were helping to bring back markets into a balance, helping to normalize the surplus inventory over 2021. This is positive for the crude prices and could boost the further rise in the near to medium term. Crude prices are bullish from current levels. Watch immediate resistance near 60 on Brent from where a short corrective fall is possible before a strong rise is seen on the upside again. On the WTI, however, the resistance near 55 is broken and a rally to 65 over the medium term looks likely. Gold and Silver look ranged within a broad zone for now. Gold could test 1820-1800 a break below which will trigger a fall towards 1760 while Silver may fall to test 25 in the next couple of sessions. Copper has managed to sustain above 3.50 and may move up slowly towards 3.65 before again seeing a dip. A broad range of 3.50-3.65 may hold just now.


Brent (58.81) and WTI (56.08) trade higher today and look bullish for the near term. A short corrective fall may be expected from 60 on Brent while the resistance near 55 on the WTI has been broken and a gradual rally towards 65 looks more likely. Any corrective dip from 60 on Brent could lead to a pullback in WTI prices too in the very near term but the overall trend looks bullish.


Gold (1825.60) has dropped back to support near 1820 and while that holds we keep intact a range of 1820-1880 for the near term. On the 3-day and weekly charts, a break below 1820 looks more likely in the near term preparing for a fall towards 1800-1760 on the downside. Watch price action near 1820-1800 for now.


Silver (26.67) has fallen sharply lower and could re-test 25 on the downside which is immediate support. A break below 25 also if seen would make it vulnerable to a sharp fall over the next couple of weeks. Watch price action near 25.


Copper (3.57) has managed to hold above 3.50 keeping the 3.50-3.65 range intact for now. But overall medium-term view looks bearish for an eventual break below 3.50 soon.


FOREX


Dollar Index trades above 91 but has failed to drag down Euro to levels below 1.20. Aussie, Pound, and EURJPY look ranged for now while Dollar Yen needs to sustain below 105.20 just now to see a dip back to 104.50; else the rally may continue towards 105.50-106. USDCNY may test 6.44 before bouncing from there. USDINR may test 72.75on the downside but may broadly remain within the 72.75-73.15 region. Unless a break below 72.75 is seen, we are unable to go further bearish on the pair.


Dollar Index (91.166) has clearly broken above 91 and could test 91.50 or even 92 on the upside before again falling back to lower levels.


Euro (1.2028) remains above 1.20 even though the Dollar index has moved up. If it breaks below 1.2010, we may have to look for an eventual fall to 1.19 over the medium term. Watch price action near 1.20-1.2010 today.


EURJPY (126.37) has dipped slightly but could test support at 126 before bouncing back towards 127.50 again in the near term. The overall range of 127.50-126 is likely to hold for some more time.


Dollar-Yen (105.05) trades above 105 and needs to hold below 105.20 to see a corrective dip towards 104.75/50 before the further rally is seen. Failure to dip from 105.20 could take the pair higher towards 105.50-105.75 in the near term. Watch price action near 105.20 just now.

Aussie (0.7614) looks bearish while below resistance near 0.77. We may expect a test of 0.7550 before a bounce is seen again towards 0.7650-0.77.


Pound (1.3632) is likely to remain ranged within 1.38-1.36 in the near term both being immediate resistance and support levels.


USDCNY (6.4579) has dipped slightly but the pair may bounce back from 6.44 and head higher towards 6.48/50 again in the near term. Watch price action near 6.44.


USDINR (72.96) was ranged from 73.00-72.90 yesterday. We may expect a range of 73.15-72.75 to hold for now. Any break below 72.75, if seen could take the pair lower to 72.50 in the medium term.


INTEREST RATES


The US Treasury yields continue to move up and keep intact our near-term bullish view to test their resistances. We expect the yields to reverse lower thereafter. The German yields have inched further higher thereby negating our earlier bearish view. The outlook has turned bullish and the yields can move further up. The 10Yr GoI has come-off sharply yesterday and has room to dip further before resuming the upmove. The Reserve Bank of India’s monetary policy meeting outcome is due tomorrow which will need a close watch to see how it can impact the yield movement.


The US 2Yr (0.12%), 5Yr (0.47%), 10Yr (1.14%), and 30Yr (1.93%) Treasury yields have risen further in line with our expectation. Our near-term bullish view of testing the key resistance at 1.20% (10Yr) and 1.95%-2% (30Yr) on the upside remains intact. As mentioned yesterday we expect the yields to reverse lower from this resistance going forward.


The German 2Yr (-0.72%), 5Yr (-0.70%), 10Yr (-0.47%) and 30Yr (-0.01%) yields have moved up further. The near-term outlook is now bullish and our earlier bearish view is getting negated as mentioned yesterday. The 10Yr is sustaining above -0.50% and can now test -0.40% on the upside. The 30Yr has come close to 0% as expected and can extend the rise to 0.05%.


The 10Yr GoI (6.1010%)has come-off sharply yesterday. A break below 6.10% can take it further lower to 6.06%-6.05% – an important support zone. However, the outlook is bullish and the 10Yr GoI is likely to reverse higher from the 6.06%-6.05% support zone and target 6.25%-6.28% on the upside over the medium-term.



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