GOOD MORNING!
FOREX
The DXY tested 98 before coming off from there. Failure to hold and rise back above 98 could drag the index down towards 97-96.50. Euro on the other hand is holding well above 1.17 and has fair scope for a rise to 1.1850/1.19 while above 1.1750. EURINR is slowly rising towards 108-108.50 while above 107. EURJPY has immediate resistance at 185-185.35 while USDJPY has already tested 156.823, breaking above our mentioned resistance at 186 but has declined back today. If EURJPY and USDJPY holds below their respective resistances, a fall towards 183 & 154/152 can be possible. USDCNY has broken below the crucial support at 6.85 and if the fall sustains, it can soon test 6.80/70. The Aussie and Pound can rise towards 0.71-0.7150 and 1.36-1.3650 respectively. USDINR closed at 90.9525 yesterday. If it holds below 91, a dip back towards 90.50 can be possible else, a rise to 91.25/50 could come into the picture.
Dollar Index (97.538) tested 98 yesterday before coming off from there. Immediate support is seen at 97.50 which if holds can take the index to 98/98.75/99 in the near term. Else, a straight dip below 97.50 can drag the index towards 97-96.50.
EURUSD (1.1822) has held well above 1.17 and does not seem to be declining below it in the very near term. There is room for a rise to 1.1850-1.19 while above 1.1750.
EURINR (107.43) seems to be slowly inching up along the near term support trendline. With support at 107, the cross can rise towards 108-108.50 soon.
EURJPY (184.42) has immediate resistance at 185-185.35 which if holds can produce a decline towards 183 in the near term. An immediate range of 183-185.35 can hold for a few sessions before a break on either side of the range is seen, preferably to the upside targeting 188-190 in the longer run.
Dollar-Yen (155.92) tested 156.823 yesterday, breaking above our mentioned resistance at 156 but has declined back to current levels. If the dip sustains, the pair can fall further towards 154-152; else if the pair rises back above 156 in the next few sessions, it could rally towards 158-160 instead. Watch price action near 156 for now.
USDCNY (6.8463) has been steadily declining this week, now trading below the immediate support at 6.85 that we were looking for. Sustained decline below 6.85 can lead to further Yuan appreciation towards 6.80/70.
Aussie (0.7130) has moved to the upside to re-test 0.7150. While holding above 0.70, Aussie has scope to test 0.7150-0.72 before pausing for a reversal. This could be shifting near term bias to bullish for Aussie while above 0.71. In the longer run, a sustained rise above 0.71 would indicate a crucial upside breakout, opening doors for higher targets of 0.73/75.
Pound (1.3573) has been rising well over the last few sessions, holding well above 1.34. A rise to 1.36-1.3650 looks likely.
USDINR (90.9525) closed above 90.90 yesterday also. It is currently trading just below crucial resistance at 91 which if holds can push the pair towards 90.50 else, a break past 91 can take it higher towards 91.25/91.50.
INTEREST RATES
The US Treasury yields remain stable. It remains vulnerable to fall further from here before a reversal is seen. The German Yields remain lower and stable. They have room to fall further from here to test their support. The price action thereafter will need a close watch. The 10Yr GoI has good support which can limit the downside from here. We expect the yield to rise eventually after testing its support.
The US 10Yr (4.05%) and 30Yr (4.70%) Treasury yields remain stable. The downside remains open to see 3.95%-3.9% (10Yr) and 4.6% (30Yr) first before a reversal happens. Resistances are at 4.1% (10Yr) and 4.75% (30Yr).
The German 10Yr (2.71%) and 30Yr (3.37%) yields remain lower but stable. There is room for a fall to 2.65% (10Yr) and 3.35% (30Yr). The price action thereafter will need a watch for a reversal.
The 10Yr GoI (6.6777%) can test 6.65% at least if not 6.6% in the near term. Thereafter it can rise back to see 6.8% on the upside.
STOCKS
Dow has moved up but remains below 49,750, keeping the downside risk open towards 48,500–48,000. DAX has bounced back and is likely to stay range-bound between 25,400-25,000 for now. Nifty failed to sustain higher levels and, while below 25,800, can drift lower towards 25,000–24,900. Nikkei surged sharply but faced resistance near 60,000, though the broader rally can extend towards 60,500–61,000. Shanghai moved up as expected and the ongoing rally can extend further towards 4,185–4,200.
Dow (49,447, -0.18%) has moved up, but while it trades below 49,750, the earlier mentioned view of a fall towards 48,500–48,000 remains intact.
DAX (25,192, -0.08%) has bounced back, and a range of 25,400–25,000 can hold for some time.
Nifty (25,482.50, +0.23%) rose to a high of 25,652.60 but failed to sustain higher and declined to close at 25,482 yesterday. While it remains below 25,800, a decline towards 25,000–24,900 is possible in the coming weeks.
Nikkei (58,925, -1.13%) broke above 58,000 and surged sharply to a high of 60,080 yesterday, driven by strength in tech stocks and easing expectations of an imminent policy rate hike after new central bank board nominations. Immediate resistance near 60,000 has pushed prices lower, but the rally can extend towards 60,500–61,000.
Shanghai (4,132.71, -0.35%) rose to a high of 4,167 yesterday in line with expectations. The rally can extend further towards 4,185–4,200 in the coming sessions.
COMMODITIES
Brent and WTI are struggling and may test supports near $70–$69.50 and $65–$64.50 respectively. Both can later bounce back towards $74–$76 and $68–$70 in the coming sessions. Gold remains firm with upside intact towards $5,300–$5,400 in the near term. Silver is rising as expected and can edge higher towards $90. Copper has risen as expected with scope to extend gains towards $6.10–$6.20. Natural gas remains weak and may decline further towards $2.80–$2.60.
Brent ($71.13) is struggling to move higher, and a test of the immediate support near $70–$69.50 is likely in the near term before the earlier mentioned rise towards $74–$76 unfolds in the coming sessions.
WTI ($65.58) is slipping lower and can test the immediate support near $65–$64.50 in the near term before a bounce back towards $68–$70 is seen.
Gold ($5,198.40) remains firm, with the outlook intact for a rise towards $5,300–$5,400 in the near term.
Silver ($89.65) is moving up in line with expectations and can rise further towards $90 in the coming sessions.
Copper ($6.01) has moved up as expected and can extend the rise towards $6.10–$6.20.
Natural Gas ($2.8590) can decline further towards $2.80–$2.60 in the near term.
DATA TODAY
10:00 15:30 EU Biz Climate
...Expectations 99.8 ...Previous 99.4 -
DATA YESTERDAY
===============
GMT 10:00 IST 15:30 EU CPI (YoY)
...Expectations 1.8 ...Previous 2.0 ...Actual 1.7
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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