GOOD MORNING!
FOREX
The Dollar index has risen and has scope to test 101.60/80 or even 102 in the near term but thereafter it is to be seen whether the index declines back or manages to rise above 102. Similarly, Euro is holding above crucial support at 1.13 which if breaks would indicate an initial bearish breakout signal for a deeper decline in the medium to long term. USDJPY and EURJPY have fallen sharply and can test 155 and 176/175 before pausing for a rebound. EURINR is bearish below 109. USDCNY is headed towards 6.70/69 while USDINR saw selling by the RBI near 96.15 and declined to close below 96 yesterday but the decline may not sustain for long and we may expect an initial test of 95.80/60 before rebounding back to 96+ levels. Aussie can dip to 0.69 while Pound may hold above crucial support at 1.32.
Dollar Index (101.39) has scope to test 101.60-101.80 or even 102 on the upside but thereafter, it could decline back from there. A decisive breakout above 102 is necessary for the index to sustain and indicate strong bulls for the longer run.
EURUSD (1.1335) trades above the crucial support at 1.13. Above this level. Euro has scope to bounce back towards 1.14 or higher. But a failure to bounce from 1.13, if seen and sustains could be an initial signal of a long term bearish breakout.
Dollar-Yen (156.75) and EURJPY (177.65) have declined sharply, contrary to our expectations of seeing a rise instead. While the decline continues, we may have to allow for a test of 155 on USDJPY and 176/175 on EURJPY.
EURINR (108.7981) has broken below the initial support at 109 and of the decline sustains, we may have to allow for a decline to 108-107.50 before a rebound is seen from there in the medium term. View is bearish while below 109.
USDCNY (6.7047) has dipped as expected and can continue its fall towards 6.70/69.
Aussie (0.6962) has dipped below 0.70 and could dip to 0.69 before attempting to rise back from there towards 0.70/71 again in the medium term.
Pound (1.3229) is likely to remain stuck in the narrow range of 1.32-1.33 for the near term unless a decisive breakout is seen on either side.
USDINR (95.9850) broke above 96 as expected to test 96.1475 before closing below 96 as the RBI intervened to sell near 96.15. Now, while below 96, there could be scope for a dip to 95.80-95.60 in the near term. But a rise to 96.25-96.50 is not fully negated and we may son see another attempt to rise higher in the coming 1-2 weeks.
INTEREST RATES
The US Treasury Yields sustain higher. The bullish view is intact. They have room to rise further. The US PCE data release today will need a close watch. The German Yields have dipped. This is likely to be short-lived. They can rise back and go further higher. The outlook remains bullish. The 10Yr GoI has come down slightly. This could just be a corrective dip. Support is there to limit the downside. The 10Yr GoI has potential to go further higher.
The US 10Yr (5.24%) and 30Yr (5.57%) yields are holding higher. The bullish view is intact. The yields can rise to 5.3%-5.35% (10Yr) and 5.65%-5.7% (30Yr). Support is at 5.1%-5% (10Yr) and 5.4%-5.35% (30Yr).
The German 10Yr (3.62%) and 30Yr (3.95%) Yields have dipped slightly. They are likely to rise back and go up to 3.7% (10Yr) and 4%-4.1% (30Yr). The bullish view remains intact.
The 10Yr GoI (7.1628%) has dipped. But support at 7,15% and 7.1% can limit the downside. The upside remains open to see 7.25%-7.3%.
STOCKS
Dow can decline towards 51500-51000 in the near term. DAX needs to hold 25350 to maintain its 25350-26000 range. Nifty can bounce towards 22800-23000 while above 22500. Nikkei remains vulnerable towards 65000-64000 below 67000. Shanghai has held 3800 support and can rise towards 3850-3900.
Dow (51807, +0.20%) can decline towards 51500-51000 in the near term.
DAX (25662, +0.50%) has pulled back, contrary to our expectations. It needs to hold above 25350 to keep the earlier mentioned 25350-26000 range intact. Otherwise, a break below 25350 would drag it further down towards 25000 or lower.
Nifty (22,590.65, -0.83%) tested a low of 22587 before closing higher. It can bounce back and rise towards 22800-23000 in the near term while above 22500.
Nikkei (66570, +0.32%) has bounced back, but our view remains intact for a decline towards 65000-64000 while below the resistance near 67000.
Shanghai (3830.47, +0.18%) has held the support near 3800, as mentioned earlier. While above this level, a bounce towards 3850-3900 can be seen.
COMMODITIES
Crude prices are testing key support levels as steady oil flows through Hormuz ease supply concerns. Gold has bounced from $4100 and can rise towards $4300-$4400 while above support. Silver can rise towards $63-$65 while above $60. Copper remains weak towards $6.60-$6.50. Natural Gas can test $3.00, with a break below opening $2.80-$2.60.
Brent ($96.30) and WTI ($89.47) sank on Tuesday amid signs of steady crude flows through the Strait of Hormuz. This has eased concerns over supply disruptions. They are testing their respective support levels, which need to hold for a bounce and avoid further decline.
Gold ($4204.80) has bounced back from the mentioned support near $4100. This support needs to hold for a further rise towards $4300-$4400.
Silver ($61.44) has bounced back from a low of $60.63. While above $60, a rise towards $63-$65 can be seen in the near term. Otherwise, a break below $60 would trigger further bearishness.
Copper ($6.65) can decline towards $6.60-$6.50.
Natural Gas ($3.0230) has fallen in line with our expectations and can test $3.00 in the near term. A break below $3.00 would drag the price further down towards $2.80-$2.60.
DATA TODAY
1:45 07:15 CN PMI
...Expected 51.7 ...Previous51.5 ...Acctual 52.1
6:00 11:30 UK GDP
...Expected 0.4 % ...Previous 0.6%
12:30 18:00 US Personal Income
...Kshitij Exp. 0.1 % ...Expected 0.5% ...Previous 0.4 %
12:30 18:00 US PCE Price Index M/M
...Kshitij Expn. 0.2 % ...Expected 1.0 % ...Previous 0.2 %
12:30 18:00 US Core PCE
...Kkshitij Expn. 0.2 % ...Expected 1.0 % ...Previous 0.2 %
12:30 18:00 US GDP
...Expected 1.5 % ...Previous 1.5 %
DATA YESTERDAY:-
----------------
RBA Meeting
...Expected 4.60 % ...Previous 4.35 % ...Actual 4.60 %
EU Biz Climate
...Expected 99.0 ...Previous 98.4...Actual 97.9
CA GDP
...Expected 0.0 % ...Previous 0.4 % ...Actual 0.0%
US Case Schiller
...Kshitij Expn. 2.2 % ...Expected 2.2 %...Previous 2.1 % ...Actual 2.5%
US Cons Conf
...kshitij Expn.91.9 ...Expected 89.2 % ...Previous 88.6 % ...Actual 81.9%
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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