GOOD MORNING!
FOREX
The Dollar Index is trading below the crucial level of 98.50/60, which needs to hold to produce a decline to 97.50/97 in the near term. Euro has support at 1.17, a bounce from where can open up chances of testing 1.18+ levels. The EURJPY can rise to 186-188 while above 184, while the EURINR may fall to 111.50 while below resistance at 112.50. USDJPY needs to break above 158 to slowly move higher towards 159-160, else a rejection from 158 can drag it down to 157/156 in the next few sessions. Watch price action near 158. USDCNY is bearish to 6.78/75. Pound may range between 1.3650-1.3450 while Aussie can test 0.73 before facing any rejection from there. USDINR may test crucial resistance region of 95.90-96 before facing rejection that can take the price down towards 95.
Dollar Index (98.484) is trading just below the immediate resistance at 98.50/60 which if holds can lead to a decline back towards 97.50/97 in the near term. Watch price action near 98.50/60.
EURUSD (1.1711) has come down to test support at 1.17, above which there is scope for a rise towards 1.18-1.19 in the near to medium term. Immediate view is bullish above 1.17.
EURINR (112.0922) may dip towards 111.50 while below 112.50.
EURJPY (184.98) continues to trade right in the middle of the very broad range of 182-188. Now, while above 184, there is scope for a rise towards 186-188 soon.
Dollar-Yen (157.94) has been rising well. Now, we would need a sustained break above 158 for the price to move up further towards 159-160 again; else a rejection from 158 can drag it lower towards 156-155. Watch price action near 158.
USDCNY (6.7883) is bearish towards 6.78/75 in the medium term. The pair has been falling as expected, trading below 6.79 today.
Aussie (0.7246) has scope to face resistance in the 0.7250-0.73 region which may hold and lead to a dip towards 0.72-0.71. But if the Dollar Index weakens as expected, Aussie could continue to trade higher, pushing beyond 0.73 in the near term. Watch price action near 0.73.
Pound (1.3524) is likely to remain ranged within 1.3450-1.3650 unless we see a decisive breakout on either side of the range.
USDINR (95.71) tested 95.80 before dipping to close at 95.71. Note that 95.90-96.00 is a crucial resistance zone and may hold well to produce a rejection that may take USDINR down towards 95 or even lower in the coming sessions. Watch price action near 96.
INTEREST RATES
The US Treasury Yields have come off from their highs. A near-term dip looks likely before the yields reverse higher and resume their broader upmove. The German Yields remain higher but stable. The outlook remains bullish and there is room to rise more. The 10Yr GoI is holding higher. The price action leaves the bias positive. That keeps the door open to see more rise in the coming days.
The US 10Yr (4.46%) and 30Yr (5.03%) Treasury yields have come down from their high of 4.5% and 5.06% respectively. A dip to 4.4% (10Yr) and 4.95% (30Yr) is a possibility before they reverse higher and target 4.55%-4.6% (10Yr) and 5.15%-5.2% (30Yr).
The German 10Yr (3.10%) and 30Yr (3.63%) yields remain higher but stable. We retain our bullish view of the yields rising to 3.3% (10Yr) and 3.7% (30Yr).
The 10Yr GoI (7.0493) is hovering around 705%. The price action leaves the bias positive for the 10Yr GoI to rise to 7.1%-7.15%. A fall below 7% is needed to drag it down to 6.95%-6.9%.
STOCKS
Dow can continue to trade within the 50000-49000 range while below 50000. DAX has bounced back and needs to sustain above 24000 to avoid a deeper fall towards 23500-23000 and move higher towards 24500. Nifty failed to hold higher levels and remains vulnerable to a decline towards 23,200-23,000. Nikkei remains bullish above 62000 and can rise towards 64500-65000 after breaking above 64000. Shanghai has reversed sharply from 4255, and while below 4250, a further decline towards 4175-4150 remains likely.
Dow (49903, +0.22%) can sustain within the mentioned 50000-49000 range for some time while remaining below 50000.
DAX (24275, +0.48%) has bounced back and needs to sustain above 24000 to move higher towards 24500 and avoid turning bearish towards 23500-23000.
Nifty (23,412.60, +0.14%) rose to a high of 23,582.95 but could not sustain at higher levels and fell back to close near 23,400 yesterday. The index remains vulnerable to a fall towards 23,200-23,000 in the near term.
Nikkei (63475.20, +0.06%) has bounced back as expected and while above 62000, the index can break higher above 64000 and rise towards 64500-65000.
Shanghai (4208.45, -0.81%) opened near 4255 in line with our expectations but has fallen back sharply from there to current levels. While below 4250, a further decline towards 4175-4150 remains likely.
COMMODITIES
Brent and WTI have dipped slightly but the broader bullish outlook remains intact within their respective $95-$115 and $90-$110 ranges. Gold continues to trade below the key $4800 resistance and needs a sustained break higher to target $4900-$5000, else a fall towards $4600-$4500 remains possible. Silver outlook stays positive for a rise towards $90-$95. Copper has corrected lower, but while above $6.40, the broader bullish view towards $7 remains intact. Natural Gas can continue to trade within the broader $2.50-$3 range while staying below $3.
Brent ($105.86) has dipped but can still test the upper end of the mentioned $95-$115 range in the near term.
WTI ($101.33) has dipped but can rise within the mentioned $90-$110 range.
Gold ($4689.30) needs a sustained break above $4800 to move higher towards $4900-$5000 in the near term. Otherwise, it risks falling back towards $4600-$4500.
Silver ($87.57) outlook remains intact for a rise towards $90-$95 in the near term.
Copper ($6.58) has fallen back, but while it holds above $6.40, we retain our view of a rise towards $7 in the near term.
Natural Gas ($2.86) can trade within a broad range of $2.50-$3 while remaining below $3.
DATA TODAY
GMT 6:00 IST 11:30 UK Trade Bal
...Market -20.10 ...Previous -18.79
GMT 6:00 IST 11:30 UK GDP
...Market 0.6 ...Previous 0.1
GMT 6:30 IST 12:00 IN WPI
...Kshitij 4.68 ...Market 4.40 ...Previous 3.88
GMT 12:30 IST 18:00 US Retail Sales (MoM)
...Kshitij 0.5 ...Market 0.6 ...Previous 1.9
DATA YESTERDAY
==============
GMT 9:00 IST 14:30 EU Ind Prodn (MoM)
...Kshitij 0.64 ...Market 0.30 ...Previous 0.41 ...Actual 0.2
GMT 12:30 IST 18:00 US PPI
...Kshitij 0.20 ...Market 0.50 ...Previous 0.51 ...Actual 1.4%
GMT 12:30 IST 18:00 US Core PPI (MoM)
...Kshitij 0.1 ...Market 0.3 ...Previous 0.1 ...Actual 1%
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.
WARNING !!
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