GOOD MORNING!
FOREX
The Dollar index has pulled itself up despite the softer CPI release yesterday, indicating near-term bullishness on a break above 100. That said, the Euro, EURJPY, Aussie, and Pound could decline towards 1.15 and lower, 183/182, 0.70/69 and 1.33, respectively, in the near term. USDJPY can aim for 160-161 while above 159. EURINR is holding below resistance near 110.30 and can soon fall towards 109-108. Aussie and Pound can test 0.71 and 1.3550 before being rejected. USDCNY can target 6.70 in the medium term. USDINR could trade below resistance at 95.50 for now. A range trade between 95.50 and 95.10 looks likely.
Dollar Index (99.972) dipped to 99.613 yesterday but is back up today, trading just below 100. The index looks poised to rise further in the near term, targeting 100.50-101 soon despite the softer CPI release yesterday.
EURUSD (1.1524) tested 1.1563 yesterday before falling off from there, holding well within the 1.16-1.15 region for the near term. A break below 1.15 is needed for the Euro to turn bearish for the medium term.
Dollar-Yen (159.39) briefly tested 158.57 yesterday before resuming its rise to current levels. A slow rise towards 160-161 looks likely while above 159.
EURINR (109.9387) has dipped while below the near term resistance at 110.30. A decisive fall from here is needed for the pair to fall towards 109-108 in the coming days. Else the cross may try to break above 110.30.
EURJPY (183.68) trades below crucial resistance at 184. A break above or decline from current levels will pave the way for further directional clarity from here either towards 183/182 or to 185/186.
USDCNY (6.7430) continues to slowly drag itself down day by day, targeting 6.70.
Aussie (0.7053) looks stable above 0.70 after testing 0.7091 yesterday. While below 0.71, Aussie may slowly decline back towards 0.69.
Having tested 1.3545 yesterday, Pound (1.3490) has dipped below 1.35. With the US Dollar expected to strengthen soon, the Pound could decline towards 1.33 again.
USDINR (95.32) is likely to trade within the 95.50-95.10 region for the near term, with 95.50 holding well as immediate resistance. Unless that breaks to the upside, USDINR can remain stable.
INTEREST RATES
The US Treasury Yields remain lower. They have room to test their support and then resume their broader uptrend eventually. Data release yesterday showed that the US Headline CPI has come down sharply to 3.3% (YoY) in July from 3.46% in June. The German Yields have bounced back from their lows. Supports are there to limit their downside. Outlook remains bullish, and the yields can rise more. The 10Yr GoI has come back into the narrow range. We retain our bearish view to see a downside break of this range.
The US 10Yr (4.68%) and 30Yr (5.24%) yields remain lower. They can test 4.65%-4.6% (10Yr) and 5.2%-5.15% (30Yr). Thereafter the uptrend can resume and keep the upside open to see 4.8% (10Yr) and 5.35%-5.4% (30Yr)
The German 10Yr (3.16%) and 30Yr (3.66%) Yields have bounced back from their respective lows of 3.13% and 3.63%. Support at 3.1% (10Yr) and 3.6% (30Yr) can limit the downside. Outlook remains bullish to see a rise to 3.3%-3.35% (10Yr) and 3.8% (30Yr).
The 10Yr GoI (6.7776%) has come back into its 6.75%-6.8% range. Bias is negative to see a break below 6.75% and a fall to 6.7% first and then to 6.6%.
STOCKS
Global equities remain mixed. Dow is drifting lower towards 53000 while continuing to trade within the broader 53000-55000 range. DAX remains constructive and can rise towards 27000-27500 despite struggling to sustain above 26500. Nifty has shown a good recovery from recent lows and can move higher towards 24500 and above while support near 24350-24300 holds. Nikkei has turned strongly bullish after breaking above 68000 and can extend its rally towards 70000. Shanghai remains near key resistance around 3970, with a break higher opening the way towards 4050, while failure to break above could lead to a pullback towards 3900-3850.
Dow (53820.11, -0.09%) is drifting lower and can decline towards 53000, while the broad range of 53000-55000 remains intact for some time.
DAX (26443.77, +0.12%) has again failed to sustain above 26500 after testing a high of 26665 yesterday. The possibility of a rise towards 27000-27500 remains likely in the near term.
Nifty (24,435.95, -0.15%) recovered well after testing a low of 24266 and closed higher yesterday. While the support zone at 24350-24300 holds, a recovery towards 24500 and higher can be seen in the coming weeks.
Nikkei (68435.69, -0.16%) has risen sharply above 68000 in line with our expectations and can soon move higher towards 70000 in the near term.
Shanghai (3965.28, +0.46%) has bounced back but needs to break above the resistance near 3970 to rise towards our earlier mentioned target of 4050. Otherwise, if this resistance holds, a decline towards 3900-3850 cannot be ruled out.
COMMODITIES
Commodities remain mixed, with crude prices consolidating within broad ranges of $80-$95 for Brent and $75-$90 for WTI. Gold remains bullish and can break above $4500 to rise towards $4600-$4650, while Silver can extend its gains towards $70-$75. Copper remains weak and can decline further towards $6.50-$6.45. Natural Gas continues to strengthen and can rise towards $2.80-$3.00 while holding above the key support near $2.60.
Brent ($88.01) and WTI ($82.26) have dipped but are likely to remain broadly range-bound between $80-$95 and $75-$90 respectively for some time.
Gold ($4479.90) can break above $4500 and rise further towards $4600-$4650 in the near term.
Silver ($65.83) can advance further towards $70-$75 in the coming sessions.
Copper ($6.57) has fallen in line with our expectations and can decline further towards $6.50-$6.45 in the coming sessions.
Natural Gas ($2.7889) has risen in line with our expectations and can rise further towards $2.80-$3.00 in the near term while it holds above the support at $2.60.
DATA TODAY
6:00 11:30 UK Trade Bal
...Expected-20.3 GBP(Bln) ...Previous -18.7GBP(Bln)
6:00 11:30 UK GDP
...Expected -0.1 % ...Previous 0.1 %
9:00 14:30 EU Ind Prodn (MoM)
...Expected 0.0 % ...Previous -0.2 %
12:30 18:00 US PPI
...Kshitij Expn. 0.3 ...Expected 0.2 ...Previous-0.3
12:30 18:00 US PPI ex Food & Energy (MoM)
...Expected 0.3 ...Previous 0.2
DATA YESTERDAY:-
---------------
IN CPI
...Kshitij Expn 4.3 ...Expeccted 4.5 ...Previous 4.38 ...Actual 4.45
US CPI (MoM)
...Kshitij Expn 0.0 ...Expected 0.1 ...Prevvious-0.4...Actual 0.1
US Core CPI (MoM)
...Kshitij Expnn 0.0 % ...Expected 0.2 % ...Previous 0.0 % ...Actual 0.2%
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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