GOOD MORNING!
FOREX
Most currencies look stable and lack directional clarity just now as the US-Iran conflict intensifies but fails to induce volatility into forex markets. Crucial resistances and supports need close watch to get some cues in the near term. Dollar Index holds steady below 99.50/100 and needs a break above these levels on the upside to turn bullish while Euro holds between 1.1550-1.16 for now. EURJPY is bullish towards 185/186 while above support at 184; USDJPY looks positive for a slow rise towards 160 while above 159. USDCNY is likely to hold above 6.74 for some time before resuming its downtrend. Aussie could trade between 0.70-0.71 for a few sessions before a break on either side is seen for further directional clarity. Pound can target 1.36/37 while above support at 1.35. EURINR will have to sustain a break above 111 to move up further. View is bullish. USDINR is trading at crucial levels. A decline or break above 95.75 would indicate the further near-term direction for the Rupee.
Dollar Index (99.633) holds steady below immediate resistance near 99.80 and upper resistance near 100.06. Unless a move on either side of 99.50-99.80/100.06 is seen it would be difficult to come to further directional clarity. That said, EURUSD (1.1575) is also stuck within 1.1550-1.16 region and needs a decisive break above 1.16 or below 1.15 for medium term directional clarity.
Dollar-Yen (159.48) holds steady below 160. A rejection from here can take it down towards 159 or slightly lower initially before resuming its slow rise towards 160 and higher.
EURINR (110.8506) has crucial support near 110.20 above which the cross pair looks bullish in the coming 1-2 weeks towards 111.50-112.50.
EURJPY (184.60) has been rising slowly towards 185-186 while support at 184 holds well. Unless a decline back below 184 is seen, view remains bullish for EURJPY.
USDCNY (6.7425) holds steady above 6.74 and could rise towards 6.7460/7480 before resuming its decline towards 6.74 and lower.
Aussie (0.7076) has dipped over the last 2-sessions and could head towards 0.7050/7040 in the next 1-2 sessions. Thereafter, it would be crucial to see if Aussie declines to levels below 0.70 or manages to trade within 0.70-0.71 for sometime.
Pound (1.3533) looks bullish towards 1.36/37 while above support at 1.35.
USDINR (95.6850) traded in a narrow 5paise range of 95.64-95.69 yesterday. There is important resistance near 95.75; a break or decline from there would give more clarity on further direction from here. A decisive break above 95.75 would pave the way for 96; otherwise, a decline from 95.75 can take it down to 95.50 or lower in the coming days.
INTEREST RATES
The US Treasury Yields have come down slightly from their highs. There is room to rise more to test their resistance. As mentioned yesterday, we need to see if we are going to get a correction after that or an extended rise. The German Yields continue to move up. The bullish view is intact. They can rise more from here. The 10Yr GoI has come off from its high. The chance of an extended rise is still alive. Thereafter we can expect it to resume the downtrend.
The US 10Yr (4.71%) and 30Yr (5.29%) yields have come down from their respective highs of 4.75% and 5.34%. The view remains bullish and the upside is open to see 4.8% (10Yr) and 5.35%-5.4% (30Yr). As mentioned yesterday, we need to see if an intermediate correction is happening thereafter or the upmove is extending further.
The German 10Yr (3.26%) and 30Yr (3.77%) Yields are moving up towards 3.3%-3.35% (10Yr) and 3.8% (30Yr) in line with our expectation.
The 10Yr GoI (6.8269%) touched 6.85% as expected and has come off slightly. The chances of an extended rise to 6.9% or even 6.95% remains open. However, only a sustained rise above 6.95% will negate our bearish view of seeing 6.7%-6.6%.
STOCKS
Global equities remain weak, with major indices under pressure amid the ongoing sell-off in technology stocks. Dow and DAX can decline further towards 53000 and 26000 respectively, while Nifty could fall towards 24000 after a gap-down opening. Nikkei has weakened sharply and can decline towards 65000-64000. Shanghai has also turned lower and could remain range-bound within 3900-4000 before further directional clarity emerges.
Dow (53368.25, -0.07%) continues to trend lower and can decline towards 53000 in the near term, while the broad range of 53000-55000 remains intact for some time.
DAX (26186.39, -0.11%) has declined in line with our expectations and can fall further towards 26000 in the coming sessions.
Nifty (24,154.90, -0.55%) could see a gap-down opening below 24100 and decline further towards 24000.
Nikkei (65740.28, -0.84%) plunged to a low of 66075 yesterday, falling 4.05% as it tracked a sharp sell-off in technology shares on Wall Street overnight. A further decline towards 65000-64000 can be seen.
Shanghai (3925.29, -1.62%) has seen a gap-down opening near 3950 today after closing higher at 3990 yesterday. A range of 3900-4000 could hold for some time before further directional clarity emerges.
COMMODITIES
Brent and WTI are likely to stay range-bound within $80-$95 and $75-$90 respectively until a breakout provides further direction. Gold continues to consolidate within $4350-$4500 but remains bullish above $4200, with a break above $4500 opening the way towards $4600 and higher. Silver has dipped but can still rise towards $70-$75. Copper remains under pressure but could rebound towards $6.65-$6.75 if support near $6.35-$6.30 holds. Natural Gas has strengthened above $2.75 and can rise further towards $2.80.
Brent ($91.82) and WTI ($84.88) are inching higher and are likely to remain broadly range-bound between $80-$95 and $75-$90 respectively for some time. A break above the mentioned ranges would trigger further bullishness.
Gold ($4410.50) has been trading within a narrow range of $4350-$4500 over the last few sessions. It is likely to break above $4500 and rise towards $4600 and higher in the coming weeks while it holds above $4200.
Silver ($63.06) has dipped, but our view remains intact for a rise towards $70-$75 in the near term.
Copper ($6.45) plunged to a low of $6.37 and closed at $6.49 yesterday. Immediate support is seen near $6.35-$6.30. If this holds, a bounce back towards $6.65-$6.75 can be seen.
Natural Gas ($2.7750) has risen above $2.75 in line with our expectations and can move further higher towards $2.80 in the coming sessions.
DATA TODAY
6:00 11:30 UK CPI Y/Y
...Expected 2.9 % ...Previous 2.6 %
9:00 14:30 EU Final CPI (YoY)
...Expected 2.9 % ...Previous 2.9 %
DATA YESTERDAY:-
--------------
UK Unemp
...Kshitij Expn 4.9 % ...Expected 4.8 % ...Previous 4.9 % ...Actual 4.9 %
US Housing Starts
...Kshitij Expn. 1362 K ...Expected 1350 K ...Previous 1427 K ...Actual 1239K
US Industrial Production
...Kshitij Expn 0.2 % ...Expected 0.3 % ...Previous 0.3 % ...Actual 0.2%
US Capacity Utilization
...Kshitij Expn 76.0 % ...Expected 76.3 % ...Previous 76.2 % ...Actual 76.3 %
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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