GOOD MORNING!
FOREX
The Dollar Index may test 102.10, while EURUSD could slip towards 1.11, below 1.12. Today's US NFP data release remains crucial. Dollar-Yen remains range-bound; EURJPY and EURINR may rebound above their respective supports. The Aussie could bounce from 0.69, while the Pound and USDCNY face downside risks. USDINR may test 94.20–94.00 before rebounding; a break below 94 would signal further weakness.
Dollar Index (101.619) has bounced back as expected, holding above 101. It is likely to test 102.10 in the next few sessions. Thereafter, it is to be seen if the index can manage to break higher and sustain a rise towards 103-104 else can continue to trade within 101-102 region for the next week as well.
EURUSD (1.1215) has fallen as expected and can trade within the broad 1.13-1.11 region for the next couple of weeks. A break below 1.12, if seen in the next could of sessions would open up 1.11 for the near term.
Dollar-Yen (157.87) has been fluctuating within the 159-1567 region and can continue to do so for the near term unless a decisive breakout is seen on either side of the range. EURJPY (177.03) could rise towards 178.50 while above 176.
EURINR (105.9247) is headed towards the lower end of the 106.80-105.70 range. While the range continues, the cross may attempt to bounce back while above 105.70.
USDCNY (6.6683) fell sharply from a high of 6.6880. Ifit dips below 6.66, it can again resume the downtrend towards 6.65 or lower in the medium term.
Aussie (0.6929) declined back sharply after the Dollar Index gained strength, but could have some scope to bounce back from 0.69 to prevent further decline, while Pound (1.3444) too has slipped from 1.3509 and, if it sustains, can dip towards 1.34 or slightly lower.
USDINR (94.48) has closed below 94.50 for the first time within the current downtrend over the last 10 sessions and can test 94.20-94.00 before rebounding towards 95 again in the medium term. But the crucial question is to see if 94 can break on the downside, which will be a major trigger for medium-term bearishness for the USDINR. Watch price action while below 94.50
INTEREST RATES
The US Treasury Yields continue to move down. Key supports are coming up which can be tested in the coming days. We expect the Yields to sustain above their support and reverse higher going forward. The US unemployment data release today will need a close watch. The German Yields are heading down towards their support in line with our expectation. The Yields are likely to bounce back from their support and resume the broader uptrend. We will have to wait and see. The 10Yr GoI has bounced back sharply from its intraday low yesterday. A follow-through rise is needed today to get some breather. Else it can fall back again. Broadly, we can look for the yield to oscillate in a wide trading range in the coming weeks.
The US 10Yr (4.83%) and 30Yr (5.25%) Yields continue to move down. We expect them to test 4.8% (10Yr) and 5.2% (30Yr) and resume the uptrend. A rise to 5% (10Yr) and 5.4% (30Yr) and then to 5.15%-5.2% (10Yr) and 5.4% (30Yr) eventually is possible thereafter.
The German 10Yr (3.24%) and 30Yr (3.63%) Yields are heading down towards 3.2% (10Yr) and 3.6% (30Yr) in line with our expectation. After this fall, a fresh rise to 3.7% (10Yr) and 4%-4.1% (30Yr) can be seen over the medium term.
The 10Yr GoI (7.1710%) has risen back sharply from the low of 7.0669%. A rise above 7.2% is needed to give some relief and go up to 7.3%. While below 7.2%, a test of 7% is a possibility. Broadly, 7%-7.5% can be the wide trading range that can be expected for some time.
STOCKS
Global equities have turned risk-off in the US and Japan on an AI and chip selloff, with the Dow holding near 51,500 and a bounce towards 52,000 possible above it. DAX needs to stay above 26,000 to rise towards 27,000. Nifty remains strong and needs to sustain above 24,400 to rise towards 24,800. Nikkei has fallen sharply and can decline towards 52,000-50,000 while it stays below 62,500. Shanghai holds firm above 3,600, with scope to rise towards 3,750.
Dow (51523.06, -3.44%) has fallen sharply from the high of 53710 towards the crucial level near 51500 on a broad AI and chip selloff after the US midterm results. While it stays above 51500, there is scope for a bounce towards 52000 or higher. Else a decisive break below it can drag the index towards 51000-50800 over the coming week.
DAX (26325.67, -0.43%) dipped lower after testing the high of 26692. It needs to stay above 26000 for a rise towards 27000 over the coming week.
Nifty (24536.60, +2.40%) has risen well as expected to test the high of 24579 so far before closing. It may open lower today and needs to sustain above 24400 for a rise towards 24800 in the coming session.
Nikkei (56890.77, -6.90%) failed to hold 60000 and has fallen sharply to the current level on heavy AI and semiconductor selling. Further decline towards 52000-50000 remains open and can be seen in the next few sessions while it stays below 62500.
Shanghai (3689.17, +0.10%) moved higher and has scope to extend the rise towards 3750 in the coming session while it holds above 3600.
COMMODITIES
Crude oil prices recovered sharply on short covering following fresh attacks on Russian oil refiners. However, downside risk remains toward 90–85 for Brent and 85–80 for WTI while holding below 105 and 95. In precious metals, Gold trades constructively above 4000 with potential to extend gains toward 4200–4250, while Silver's minor pullback leaves room for a bounce toward 54–55. Copper relies on crucial support near 6.20 to prevent further weakness toward 6.1–6.0. Natural Gas pushes higher toward 3.2 to keep its 2.7–3.2 range intact.
Brent ($99.98) and WTI ($91.62) prices recovered from overnight losses on Thursday and settled sharply higher today. Short covering emerged following fresh Ukrainian attacks on Russian oil refineries, which could squeeze global energy supplies. However, as long as Brent and WTI stay below 105 and 95, respectively, the overall direction remains skewed toward a decline toward 90–85 for Brent and 85–80 for WTI in the near term.
Gold ($4074.13) rose to 4155 yesterday in line with expectations. It remains to be seen whether it can extend gains toward 4200–4250 while holding above 4000.
Silver ($52.06) has dipped slightly but could bounce back and rise toward 54–55 in the near term.
Copper ($6.28) touched a low of 6.19 yesterday as noted previously. Crucial support near 6.20 must hold to prevent further bearish pressure toward 6.1–6.0.
Natural Gas ($2.9860) continues to move up and could soon test 3.2, keeping the previously mentioned 2.7–3.2 trading range intact for now.
DATA TODAY
10:00 15:30 EU Retail Sales
...Expected -0.10%...Previous 0.10 %
13:30 19:00 US NFP
...KshitijExp. 45.8 K ...Expected 63.0 K ...Previous 29.0K
13:30 19:00 US Unemployment Rate
...Expected 4.2% ...Previous 4.2%
13:30 19:00 US Avg Hrly Earnings
...Kshitij Expn 0.20 ...Expected 0.30 ...Previous 0.13
13:30 19:00 US Average Hourly Earnings Production & Non Supervisory Employees
...Kshitij Expn.0.1 ...Previous 0.2
13:30 19:00 CA Labour Force
...Expected 14.5 K ...Previous -68.3 K
DATA YESTERDAY:-
--------------
Australia Trade Balance
...Expected 0.96 A$bln ...Previous 0.18 A$bln ...Actual2.83 A$blnn
BOE Mtg
...Expected 4.00 % ...Previous 3.75 % ...Actual4.00%
UK BOE Minutes
...Expected 7-0-2 ...Previous3-0-6 ...Actual 9-0-2
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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