Market Morning Briefing: Aussie Should Test Resistance Near 0.72 In This Week

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STOCKS

Dow (25250.55, -0.35%) is likely to trade sideways above support near 25000 for a few sessions before rising up towards 25750-26000. While above 25000, near to medium term looks bullish. Only if the index breaks below 25000, we would look at further downside.

Dax (11614.16, +0.78%) has important weekly support near 11400 which is likely to hold in the near term producing a bounce back towards 11700-11800 levels. As mentioned yesterday, Dax managed to close above 11600 and if the rise sustains, the index could attempt to move up in the next few sessions.

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Nikkei (22421.27, +0.67%) is stable today. Trading above support at 22000, Nikkei could see some ranged trade in the 22600-22000 region. A rise above 22600 is needed to bring back near term bulls into the picture. Else, while below 22600, the index continues to look bearish and could make fresh lows.

Shanghai (2577.99, +0.39%) is also ranged in the 2650-2500 region. Note 2450 on the downside is an important support level and we do not look at levels below 2450 in the medium term. The index could soon bounce back towards 2700 in the near term.

Nifty (10512.50, +0.38%) is trying to rise towards 10700-10800 levels. Interim corrective fall from there could be seen thereafter, falling back towards 10500.

COMMODITIES

Brent (81.07) could see an interim rise towards 82-84 levels before coming off from there. On the medium term, there is room on the downside towards 78-76 levels.

WTI (71.92) is stable and is trading above immediate support levels. 21MA and 13MA on the 3-day candles provide support as well. While these hold, near term looks bullish for WTI. Note that scope of falling to 68 is not fully negated just now.

Gold (1229.50) has been steadily rising and cold soon test 1250-1260 on the upside. In the longer term, there is scope for eventually rising towards 1300. View is bullish.

Copper (2.7830) will have to break out from the ranged movement within 2.85-2.75 region to determine further course of movement. For now, this week could see the range trade to continue.

FOREX

Watch support at 111.60-70 on Dollar Yen. Euro could rise to 1.1611 while above 1.154. USDINR needs to break below 73.60 for confirmation of a deeper correction.

Euro (1.1583) : While above 1.154, it could retest the 21 days MA at 1.1611 in today’s session. A break above that would increase chances of resistance near 1.17 being tested in Oct. Conversely, a break below 1.154 could negate the above mentioned upside possibility.

Dollar Index (95.05) should dip to support near 94.60-70 by tomorrow as the Euro possibly rises towards 1.1611. After that, a break beyond 1.1611 on the Euro would correspond with a further dip for the Dollar Index towards 94.2-94.1. This would be a crucial support to watch out in Oct-Nov.

Dollar Yen (111.97) tested crucial support near 111.60-70 yesterday and is currently staying above it. While below 112.2, it could break below the 111.60-70 support. Conversely, a breach above 112.2 would open up another test of 113-114. Yesterday, we had said that preference is for the support to hold – however, the preference has now shifted more towards a possible break of the support.

Euro-Yen (129.68) looks bearish towards 127 on 3 day and weekly candles – this level could be tested sometime in the next 2-3 weeks. In this week, while below 130, it could move further down towards 129.

Pound’s (1.3149) would need to break below 1.3086 (yesterday’s low) if 1.30 has to be tested in this week. Otherwise, it could now keep rising towards 1.325 (resistance on daily candles) and then come off from there later in the week.

Aussie (0.7138) should test resistance near 0.72 in this week or max by next week. A break above 0.72 and then above 0.7322 (21 weeks MA) would be required to negate the possibility of a downside below 0.705 in the next 1-2 months.

Dollar Rupee (73.835): Watch Support at 73.80-70 today. Can still produce a bounce to 74.00-25 if it holds. A break below 73.60 (at least) would be needed to suggest otherwise.

INTEREST RATES

India 10 year yield (7.92%) – As expected, it has moved down towards support near 7.90%. In case this support breaks, there is lower support near 7.80%-7.75%, which should hold in Oct-Nov. Conversely, a break below that would be very bearish.

The US 10 Year (3.16%) : Immediate support for the US 10 year seems to be near 3.15%. Only if it breaks below that, we can look at lower levels. While above this support, it could retest resistance near 3.25%.

Yesterday, US Retail Sales data showed that the growth in Sep (0.1%) was much lower than the expected 0.6%. This could have had a bearish impact on yields but increased supply of US treasury bonds seems to be keeping yields elevated. If further more data releases on the US economy disappoint in the next couple of weeks, the chances of a break below 3.15% on the US 10 year would increase. Watch out for the US Industrial Production data release today.

10 Year German-US spread (-2.66%) – There is immediate resistance near -2.60% to -2.65% and support near -2.725%. Medium term preference is for a break below -2.725% towards lower long term support near -2.80%. A break above -2.60% would however negate the medium term bearishness.
 
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