Market Morning Briefing: Aussie Is Now Trading Just Above 0.7100

STOCKS

Most global indices among the ones mentioned below have risen sharply above 1% except Shanghai, which has risen by 0.71% today. The strongest movement among them is seen in Dax with a 2.82% increase seen yesterday. We may expect the indexes to remain strong for this week followed by another decline soon. Look at major resistances above current levels.

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

DAX (15813.94, +433.15, + 2.82%) rose sharply above our expected 15800 mentioned yesterday. If the index holds above 15800, it may test 15900-16100 before we see a dive again.

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

Shanghai (3619.66, + 25.36, + 0.71%) is trading above 3600. The resistance at 3625 may hold up well. Our view is bearish while below 3625 to see a decline to 3550-3500. A strong break above 3600 on the other hand would confirm an increase to 3700.

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

Sensex (57633.65, +886.51, + 1.56%) was up yesterday. The index must break above 58000 to be bullish to 59000.

Goods

Crude prices have risen while fears of the new Covid variety are waning. We can look for a reversal in Brent of 75-77 region and of 73 on the WTI. Gold must break above 1790-1800 to ascend otherwise it may remain blocked within 1760-1800 region at present. Copper is also blocked within 4.25-4.45 and must break on both sides to make way for 4.00 or 4.80. Silver trades near the lower end of the 22-24 range and a break at the lower side if seen may allow a test of 21 before a reversal is seen in the middle.

Brent (75.23) has risen sharply in recent sessions. On the 3-day candlesticks, immediate resistance is seen near 75-77 region, which if held can produce a decline soon back to 70 or lower. A failure to decline from 75-77 region will open a possibility of an increase to 79-80 before the expected fall is seen from there.

WTI (71.90) has an immediate resistance near 73, which may hold and produce a decline from there soon.

Gold (1791.20) is trading near the resistance level. While under 1800-1790, Gold has scope to fall to 1760. Only a lasting break above 1800 can take it higher to 1820 again.

Silver (22.58) is trading above support at 22 and needs to bounce back to stay within 22-24 range. Otherwise a drop to 21 cannot be denied any time soon.

Copper (4.3430) is blocked within 4.25-4.40 / 45 zone. While falling below 4.25, there could be scope to test deeper and decisive support at 4.00 while there would be enough room on the top to 4.80 if the price manages to break above 4.45 / 50.

FOREX

Currency pairs are mixed today. Dollar Index may fall to 95.50 while below 97-96.50 while Euro needs to break above 1.13 and continue to move towards 1.14-1.1450. Dollar Yen is range within 112-114 and a break on both sides would indicate the next course of movement. USDCNY has fallen sharply and if it does not rebound from 6.35, it may be dragged to 6.30. USDINR needs a close clock near 75.75 / 50 today. EURJPY is varied while Pound and Aussie are seeing some correct rebound.

Dollar Index (96.1460) tested 96.59 yesterday before getting out of there. We can continue to look at the range of 95.50-96.50 / 97 to hold short unless we see a break on both sides.

The euro (1.1291) dipped to 1.1227 overnight before rising from there. A break above 1.13 if seen would take it higher to 1.14-1.1450 before a reversal is seen in the middle.

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

Aussie (0.7140) is now trading just above 0.7100, casting a challenge to the low since 0.7555 (28-Oct). We need to look closely to see if the current sustained rally in Australia from 0.6990 (04-Dec) would continue to rise to 0.72 and higher or decrease from 0.72 soon.

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

Dollar Yen (113.45) rose within the 114-112.50 range. Unless the price breaks on both sides, we may expect it to last a few more sessions.

USDCNY (6.3529) has fallen sharply below 6.36 and may be headed to 6.35 before seeing a rebound. Failure to hold above 6.35 may take the index to 6.30. Vista is bearish.

{USDINR (75.4450) is range within 75.50-75.20 / 25 and a break on the top may lead to a rise to 75.75 shortly before a final reversal occurs. Watch price action near 75.50 / 75 today.

INTEREST ACCOUNTS

U.S. Treasury yields have risen through tenors. The rebound in the 10Yr and 30Yr seems to be well underway at the moment and yields may move further upwards in the coming days within its wide expected side range. German yields remain stable and lower. The bearish view is intact to see a further fall from here. The 10Yr and 5Yr GoI rose sharply yesterday and may rise soon to test its next key resistances and then go down again. The monetary policy result of the Reserve Bank of India is due today.

US Treasury profits rose 2Yr (0.69%) and 5Yr (1.25%) sharply while 10Yr (1.46%) and 30Yr (1.79%) rose slightly. While above 1.4%, the 10Yr can test 1.5% -1.55%. Similarly, the 30Yr may rise to 1.85% while maintaining above 1.7%. Overall, yields are likely to rise in their expected wide range of 1.35% -1.65% (10Yr) and 1.7% -2% (30Yr)

The German 2Yr (-0.72%) and the 5Yr (-0.61%) yield rebounded slightly while the 10Yr (-0.38%) and 30Yr (-0.10%) remain lower and stable. Our bearish view to see a fall to -0.45% / -0.5% on the 10Yr and -0.1% / -0.2% on the 30Yr remains intact.

Contrary to our expectations, the Indian 10Yr (6.3909%) rose above 6.38%. As this break continues, a further rise to 6.43% -6.45% is possible. The region between 6.43% -6.45% is a strong resistance that is likely to hold and trigger a reversal to 6.38% and fall again. The price action in the 6.43% -6.45% will need a close look.

The 5Yr (5.7199%) has risen well above 5.7% but has resistance at 5.74%, which may limit the top. The 5Yr is likely to fall from 5.74% to 5.68%.