Wednesday, April 25, 2018
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Market Morning Briefing: Dollar Yen Saw A Low Of 108.05
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STOCKS

Dow (24190.90, +1.38%) may trade within 24500-23000 region and try to attempt levels above 24500 in the near term. Note support near 23200 on the 3-day candles which if holds, may take it higher towards 24800 in the coming sessions. .

Dax (12107.48, -1.25%) is sharply down and is likely to find some support in the 11900-11800 region from where a bounce could be expected in the coming sessions.

Nikkei (21382.62, -2.32%) is also likely to move up while support near 21000 holds for now. A bounce towards 22200 or higher looks possible.

Shanghai (3139.38, +0.30%) dropped sharply last week breaking below the channel support on the weekly charts. While it trades lower, a test of 3000 is possible. A break below 3000, if seen could be vulnerable for a sharper fall in the near to medium term. Watch price action near 3000.

Nifty (10454.95, -1.15%) and Sensex (34005.76, -1.18%) are likely to hold above current support levels near 10320 and 33500 respectively. While these supports hold in the coming sessions, a short term bounce is possible.

COMMODITIES

WTI (59.88) has moved up slightly from levels near 58. In case we see a dip below 58, WTI is likely to test 56-54 as visible on the 3-day charts before a bounce from there is seen.

Brent (63.43) on the other hand has been stable above 62-61 levels which seem to be a decent support for the medium term.

Brent-WTI Spread (3.53) has risen from support levels near 3. There is some scope of re-testing 3.00 in the near term before again starting to bounce back to higher levels.

Gold (1326.10) is likely to trade above 1300-1305 region and may inch up towards 1340-1360 levels in the coming sessions. Near term looks bullish.

Copper (3.0785) is trying to move above 3.0750 and if that happens, the price may again start moving up towards 3.15; else failure to move above 3.0750-3.0800 just now could push it down further towards 3.00-2.97 levels in the medium term.

FOREX

Dollar Index (90.176) is currently consolidating around 90.20 and could slowly move towards resistance near 90.5-90.75 on the daily candles .

Euro (1.2281) has seen some strengthening since Friday when it saw a low of 1.2206. It might again attempt a test of support near 1.220-1.225 on the daily candles this week.

Dollar Yen (108.70) saw a low of 108.05 on Friday, thereby breaking immediate support on daily candles near 108.5 and testing support on the 3 day candles near 108. As stated previously, 108.0-108.5 are strong support levels (which is reflected on the weekly line chart as well) and Dollar Yen could see a bounce from here towards resistance near 110.5-111.0 on the weekly line charts in the next 1-2 weeks.

Euro Yen (133.60) has gone back up above support near 133 on the daily candles. We see that there is decent support being provided by horizontal trend lines on the daily and 3 day candles near 131.5-132, which has held. We could see Euro Yen move up towards 134 in the coming sessions since the Yen could weaken relatively more against the Dollar as compared to the Euro in this week.

The Pound (1.3846) is again trending downwards after seeing 2 days of consolidation near 1.39. Infact it reached a low of 1.3765 on Friday and could test support on daily candles near 1.37 this week.

Dollar Rupee (64.4025) – is likely to trade below 64.50 while resistance near 64.50/40 may hold in the early sessions this week.

INTEREST RATES

US 10 Year Yield (2.8512), US 30 year Yield (3.1596), US 5 year yield (2.5433), US 2 year yield (2.0732) : US longer term yields moved up further 2 basis points on Friday while the nearer term yields both saw slight declines. There has been little volatility in the past 3-4 days as compared to the week prior. The short period of US govt shutdown on Friday also didn’t impact the yield movement much. We hence again repeat our expectation for the 4 yields to respect their long term resistance levels (2.85, 3.20 (changed from 3.15 previously), 2.7 (changed from 2.6 previously) and 2.2 respectively) in this month.

US 10-5 Year Yield Spread (0.31) is moving up fairly quickly towards the upside target at resistance near 0.35. However, there might be a dip in the coming days as the 10 Yr could move below current levels (near 2.85).

US CPI data release on Wednesday could be an important event for Bond yields. Higher inflation could increase the possibility of the next rate hike to happen in March.

German 10 Year bond yield (0.745) has dipped from resistance near 0.76 and the ranging between 0.7 and 0.76 could continue in this week.

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