GOOD MORNING!
FOREX
Lower US Employment data and a dip in the US NFP on Friday led to a dip in the Dollar Index, which might trade between 100.30-99.30/99.00 for the near term, keeping the Euro within 1.16-1.15. USDJPY has recovered well and looks poised to test 159 in the next few sessions. Thereafter, it would be important to see if it continues rising towards 160 and higher or falls back towards 158/157. EURJPY can slowly rise towards 184 while above 181. Aussie and Pound can test 0.71 and 1.35 before facing rejection from there. USDCNY can target 6.70 in the near term while below 6.75. USDINR could trade within 94.90-95.50 in the early sessions of the week before showing any attempt to rise beyond 95.50.
Dollar Index (99.677) tested 99.403 after US NFP declined by 23000 in July and the last two months also saw downward revisions. While the index remains below 100, it can trade within the 99.40-100 region with some scope for a fall to 99 before a recovery is seen. Note that a sustained break above 100 is necessary to gather the bulls together and start moving up again for the long term.
EURUSD (1.1554) could extend to 1.16 with immediate downside limited to 1.15. A break below 1.15 would be needed for the Euro to resume its downtrend.
Dollar-Yen (158.24) dipped to test 156.66 on Friday but has recovered well today. A rise to 159 looks likely this week. But thereafter, a break above 159 would be needed to re-establish bullish momentum for the long run.
EURINR (110.0073) has risen above 110 and could be headed to 110.30 while EURJPY (182.86) could slowly rise towards 184 while above 181.
USDCNY (6.744) could dip towards 6.70 while it sustains below 6.75.
Aussie (0.7063) could continue to rise towards 0.71 while above 0.70, while Pound (1.3487) has important resistance near 1.35, which needs to hold or break for clarity on further direction from here. If resistance holds, the Pound can come down towards 1.34 again soon.
USDINR (95. 225) could dip towards 95 today and is likely to remain below 95.50. We may expect some range trade in USDINR for this week between the broad 94.90-95.50 region.
INTEREST RATES
The US Treasury and the German Yields are holding higher after their strong bounce seen on Thursday last week. Both remain bullish. They can rise more from current levels. Supports are there to limit their downside. The 10Yr GoI is stuck in a narrow range. The bias is negative to break the immediate support and fall more going forward.
The US 10Yr (4.66%) and 30Yr (5.22%) yields sustain higher. While above 4.6%-4.55% (10Yr) and 5.15%-5.1% (30Yr), the bullish view will remain intact to see 4.8% (10Yr) and 5.35%-5.4% (30Yr) on the upside.
The German 10Yr (3.13%) and 30Yr (3.64%) Yields are holding higher after the bounce from their support. The view remains bullish to see 3.3%-3.35% (10Yr) and 3.8% (30Yr).
The 10Yr GoI (6.7651%) is stuck between 6.75% and 6.8%. The bias is negative to break 6.75% and fall to 6.7% first and then to 6.6%.
STOCKS
Dow is recovering but can continue to trade within the 53000-55000 range with a downside bias towards 53000. DAX remains bullish above 26000 and can rise towards 27000 if it breaks above 26500. Nifty continues to hold above the key 24500 support and can advance towards 24800-25000. Nikkei has strengthened further and can extend its rally towards 68000-70000. Shanghai remains positive and can rise further towards 4000-4050 in the near term.
Dow (54080.13, -0.13%) has seen a slight recovery but remains vulnerable to a decline towards 53000. A broad range of 53000-55000 could hold for some time.
DAX (26379.71, -0.21%) has bounced back in line with our expectations but is struggling to break above 26500. A sustained break above this level is needed to extend the rally towards 27000 or higher. While the immediate support at 26000 holds, the rise towards 27000 remains likely.
Nifty (24,570.65, -0.27%) attempted to rise above 24600 but failed to sustain the move and closed below it on Friday. While it remains above 24500, it has scope to rise towards 24800-25000 in the coming weeks.
Nikkei (66965.18, +0.93%) has risen towards 67000 in line with our expectations and can rally further towards 68000-70000 in the near term.
Shanghai (3940.04, +1.02%) is moving higher in line with our expectations and can rise further towards 4000-4050 in the near term.
COMMODITIES
Crude prices remain volatile amid renewed Middle East tensions, and Brent and WTI likely to remain range-bound within $80-$100 and $75-$90 respectively. Gold remains bullish above $4200 and can rise further towards $4500-$4550, while Silver can extend its gains towards $65-$70. Copper has weakened after failing to break above $6.80 and can decline further towards $6.50-$6.45. Natural Gas has rebounded and can rise towards $2.80-$3.00 while holding above the key support near $2.60.
Brent ($84.52) and WTI ($78.86) have bounced back contrary to our expectations due to renewed tensions in the Middle East. Prices are likely to remain volatile and broadly range-bound between $80-$100 and $75-$90 respectively for some time.
Gold ($4384.10) is moving higher in line with our expectations and can rise further towards $4500-$4550 in the coming sessions while above $4200.
Silver ($63.54) is also moving higher in line with our expectations and can advance further towards $65-$70 in the coming sessions.
Copper ($6.61) failed to break above $6.80 and has pulled back sharply towards $6.57. A further decline towards $6.50-$6.45 can be seen in the coming sessions.
Natural Gas ($2.7270) has bounced back contrary to our expectations. A rise towards $2.80-$3.00 can be seen in the near term while it holds above the support at $2.60.
DATA TODAY
No major data release today.
Data YESTERDAY:-
----------------
CN CPI (YoY)
...Expected 0.8 ...Previous 1.0
CN PPI
...Expected 3.9 ...Previous 4.1
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.
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