Market Morning Briefing: Dollar Yen Is Trading Slightly Lower

STOCKS

• This week is crucial. It will decide whether Resistances at 25000 (on the Dow)and 11300 (on the DAX) will hold or break.
• As hoped for, the Resistance at 25000 is holding on the Dow (24737.20, +183.96, +0.75%) despite a good rally on Friday. However, contrary to our expectation that Resistance at 11300 will hold, the DAX (11281.79, +151.61, +1.36%) saw a strong rise to a high of 11321.62 on Friday.
• In Asia, the Resistance at 21000 on the Nikkei (20708, -65, -0.31%) is holding so far today. The Shanghai (2619, +0.68%) trades strong again today, but the crucial Resistance at 2660 (21-MA on the Weekly chart) is holding as of now.
• The Sensex (36025, -169.56, -0.47%) and Nifty (10780.55, -69.24, -0.64%) succumbed to profit-taking on Friday and might dip further towards 35600 and 10670 respectively, which are Supports for the uptrend from October-2018.

COMMODITIES

• Unexpected and sharp weakness in US Dollar has boosted a sharp rise in the precious metals and Copper. Crude prices remain stable.
• Brent (61.42) and WTI (53.38) are slightly lower. Very narrow and stable movement is being seen just now. Immediate resistances are holding near 64 and 56 respectively. We could possibly see some dip in the Crude prices before a sharp break on the upside.
• Gold (1301.60) and Silver (15.78) rose up sharply on sharp weakness in the US Dollar contrary to our expectation of a fall towards 1270/60 and 15 respectively. The sharp rise breaking above 1300 could be an indication of further upside for Gold probably towards 1310/20 or higher while Silver could rise towards 16.0-16.50. Our expectation of strength in the US Dollar has been proved wrong and hence the strong near term bearish sentiment for the commodities could be negated just now.
• Copper (2.7145) has broken above 2.70 but we have to see whether the rise sustains.2.75 is an immediate resistance on the upside and could hold, pushing the Copper prices back towards 2.65.

FOREX

• US Government shutdown and the US-China meeting due this week is weighing negatively on the US Dollar just now and we could see some more of weakness over the next few sessions. Major currencies and EM currencies could strengthen a bit during this period.
• Dollar Index (95.77) came off sharply from 96.68. While the index trades lower, it could test support near 95 before bouncing back from there again. For the near term the negative sentiment could prevail with the government shutdown and the upcoming US-China meeting due this week.
• Euro (1.1413) also tested 1.1290 on the downside but bounced back from there sharply on dollar weakness. A re-attempt to test 1.15 or higher could be seen now.
• Dollar Yen (109.32) is trading slightly lower. 110 is holding well for now and the pair could remain stable for the near term within 108-110 region. Longer term view is bullish for USDJPY.
• Pound (1.3192) is up sharply and could head towards previous highs of 1.3250-1.33 seen in Sep-Oct’18. A corrective dip from 1.33 is a possibility for the medium term.
• Aussie (0.7194) is up sharply contrary to our expectation of a fall towards 0.70-0.69. Immediate resistance is seen near 0.7250 which if holds could push back the currency to 0.7150. Immediate view is bullish.
• USD-CNY (6.7359) has come off sharply making fresh lows in the current down move that started from Nov’18. While the US Dollar could see some more weakness in the near term, Yuan strength could continue for now.
• Dollar-Rupee (70.94) is likely to strengthen today as major currencies have strengthened on Dollar Weakness. A test of 70.70 could be a possibility.

INTEREST RATES

• The German-US 2Yr Spread (-3.16%) has 200-day MA Support near -3.25% while the German-US 10Yr Spread (-2.57%) broke below earlier support at -2.52% and is now testing the 200-day Support near current level. If these hold, we may see a bit of a bounce in both, which could be Euro-positive. As it is, the Euro (1.141) rose back strongly from 1.1300 on Friday.
• The 10Yr GOI (7.5455%) remains below 7.59% for now. Let us see if it manages to break below 7.55% or not. But, that might not be easy while the Brent (61.42) trades above 61 and 60.