Kshitij Consultancy Services
Morning Briefing Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
03 Apr 20. 0855 IST or 0325 GMT or 2325 EST
GOOD MORNING!
STOCKS

Global equity indices look mixed. Dow will need a close watch to see if it can sustain above 21000 or not. Following the weak jobless claims data yesterday, the non-farm payroll (NFP) and unemployment numbers to be released today will be very important that can weigh high on the Dow. Similarly, DAX needs to hold above 9500 to avoid a fall again. Nikkei has room to fall in the near-term as it has broken below 18500. Shanghai looks relatively better among the lot as it is holding well above 2725 but need to rise past 2815 to become bullish. Sensex and Nifty look weak and can fall in the coming days as the increasing number of corona virus cases could keep the indices under pressure.

Dow (21413.44, +469.93, +2.24%) is getting support near 20700 over the last couple of days and is managing to hold above 21000. As we had mentioned earlier, 21000 will be a very crucial levels which needs to hold in order to avoid another fall to 19000 levels. A strong rise past 22500 will be needed now to reduce the danger of falling below 21000 and also to take the index higher to 24200-24500 eventually.

DAX (9570.82, +26.07, +0.27%) broke the 9500-10150 range on the downside but has bounce-back into the range after making a low of 9337. The near-term outlook is mixed. We will have to wait and watch the movement for a few days to get some clarity. The break above 10150 that we had been expecting seems to be not happening, atleast immediately.

Contrary to our expectation Nikkei (17882.49, +63.77, +0.36%) has declined breaking the 18500-19500 range on the downside. While below 18500, the outlook is bearish to revisit 17000 and 16500 levels in the coming days. 16500-19500 can be a possible broad range within which the Nikkei can oscillate for a couple of weeks.

The support at 2725 mentioned earlier is holding well on the Shanghai (2774.11, −6.53, -0.23%) as expected. While above 2725, the chances are high for the index to break the 2800-2815 resistance zone and a rise to 2850-2900 is possible. In case of a break below 2725, the Shanghai can fall to 2670-2650 and can retain the sideways range of 2650-2815.

Nifty (8253.80, -343.95, -4%) and Sensex (28265.31, -1203.18, -4.08%) can fall to test 8000 and 27000 respectively. It will have to be seen if they manage to bounce thereafter or extend their fall targeting 7700-7500 (Nifty) and 26000 (Sensex) going forward.

COMMODITIES

Some slight recovery seen in the commodity sector. Crude prices have risen well from recent lows but need to sustain and continue to move up from here to turn further bullish. Gold and Silver are also likely to move up from here. Copper is stuck below immediate resistance and may trade in a sideways range for some more sessions.

Brent (29.28) and Nymex WTI (24.34) have both risen sharply but is yet to indicate signs of bullish reversal from current levels. This could have fair scope of seeing yet another dip in the near term back to recent lows. Brent needs to break above $30 and sustain to see a rise to 35-37 region while WTI has to sustain the rise above $29 to continue its upmove. Near term looks slightly bullish but we would have to keep a watch for any possible dip again from here.

Gold (1634.70) is trading higher. The support near 1560-15680 has held well as expected and while that holds, we may expect a rise back towards 1650-1680 in the near term. Immediate view is bullish.

Silver (14.62) is likely to continue in its range of 14-15 for the next few sessions within which it may attempt to test 15 before a possible dip is seen. To turn bullish for the medium term, Silver needs to break above 15.

Copper (2.2095) is holding below near term resistance of 2.25 and while that holds, we may expect movement in the 2.25-2.10 region to remain intact.

FOREX

Currencies are mixed. Dollar Index continues to trade higher and has scope to move up further from here in the near term. Euro may test 1.0780 before bouncing back from there. Dollar-Yen may move up from current levels. Aussie and Pound are likely to be ranged within specifies near term levels. Yuan is likely to trade weak in the near term. USDINR is likely to open with a gap up today but will need a close watch near crucial resistance levels.
Important data releases to watch today would be the US Non-farm payroll and the US Unemployment data.

Dollar Index (100.16) has risen above 100 and could rise further towards 101 before seeing another dip from there back towards 99.50. Immediate view is bullish with a possible dip by the late sessions next week.

Euro (1.0852) has scope for a fall towards 1.0778 in the near term. But note immediate resistance near 1.10-1.1020 is likely to hold for the medium term. While the Dollar Index rises above 100, we may expect a short dip in Euro from current levels.

Dollar-Yen (107.90) is trading slightly higher and we may expect to see a rise towards 108.50-109.00 or even 110 in the near term before a dip is seen from there. Overall medium term trend points to the downside.

EURJPY (117.13) could get some immediate support near 117 which if holds could produce a decent bounce to 118 or higher in the near term. Else there could be scope for a fall towards 116.50-116.

Aussie (0.6064) has fallen while Pound (1.2379) is stable at levels seen yesterday. Pound is likely to trade below 1.2487 and could be seen ranged between 1.2487 and 1.2240 just now. Aussie is also likely to range in the 0.60-0.6250 just now. We may expect a dip towards 0.60 before seeing a bounce from there.

USDCNY (7.0862) has immediate support at 7.08 and lower at 7.05 which look likely to hold just now. While above 7.08, we may expect a ranged movement in the 7.08-7.12 region. Overall while above 7.08, trend is to the upside for the near term.

USDINR (75.67) will open after a 2-day holiday and could see a gap up opening today as the NDF quotes 76.3950 just now. A rise back to levels above 76 could bring in resistance near 76.50 again into the picture to see a close watch today.

INTEREST RATES

The US Treasury yields continue to remain lower and keep our bearish view intact. The surge in the jobless claims data released yesterday keeps the yields under pressure. Today’s non-farm payroll data will now need a close watch. The German yields seem to lack strength to bounce strongly and looks vulnerable to fall in the coming days. The near-term outlook is bearish. The 10Yr GoI can fall in the near-term within the preferred sideways range. Eventually the 10Yr GoI is likely to break the range on the downside and fall in the coming days thereby keeping the overall downtrend intact.

The US 2Yr (0.22%) and 5Yr (0.37%) Treasury yields remain lower but stable while those at the far-end, the 10Yr (0.60%) and 30Yr (1.23%) have declined sharply over the last couple of days. Our bearish outlook remains intact. The 30Yr is heading towards 1.10% as expected. The 10Yr on the other hand can fall to 0.40%-0.30% in the coming days.

The German 2Yr (-0.69%), 5Yr (-0.61%), 10Yr (-0.44%) and 30Yr (-0.03%) yields remain lower and weak. The 10Yr looks vulnerable for a fall to -0.60% while it remains below -0.40%. The 30Yr seems to be lacking strength to rise past 0% decisively. As such it can fall to -0.20% while it remains below the 0%-0.1% resistance zone.

The 10Yr GoI (6.1382%) can dip to test 6% in the near-term. Broadly we expect the 10Yr GoI to remain in the range of 5.98%-6.40%/6.45%. The bias is negative for the yield to break this range below 5.98% and fall to 5.80% eventually.

DATA TODAY

9:00 14:30 EU Retail Sales
...Kshitij Expn -0.1 % ...Expected 0.1 % ...Previous 0.6 %

12:30 18:00 US NFP
...Kshitij Expn 82 K ...Expected -81 K ...Previous 273 K

12:30 18:00 US Unemployment Rate
...Expected 3.8 % ...Previous 3.5 %

12:30 18:00 US Avg Hrly Earnings
...Kshitij Expn 0.2 ...Expected 0.2 ...Previous 0.3

DATA YESTERDAY:-
--------------
IN Manufacturing PMI
...Kshitij Expn 52.8 ...Expected 50.3 ...Previous 54.5 ...Actual 51.8

CH CPI
...Kshitij Expn -0.5 ...Expected -0.1 ...Previous -0.5

US Trade Balance
...Kshitij Expn -42.7 $ bln ...Expected -40.6 $ bln ...Previous -45.5$ bln ...Actual-39.9 $ bln

DISCLAIMER
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

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