GOOD MORNING!
FOREX
The Dollar index risen and has scope to test 101.60/80 in the near term before pausing for a reversal, while Euro can test support at 1.13. USDJPY has scope to rise slowly towards 158-159 while EURJPY can test 180 in the next few sessions within the broader 181-178 range. USDCNY is headed towards 6.70 while USDINR needs a breakout above 96 to target 96.25/50 soon. Aussie can dip to 0.70 or lower to 0.69 while Pound may hold above crucial support at 1.32.
Rising crude prices have led to a rise in US yields and tightened the inflation narrative, pushing the Dollar Index (101.24) higher again. The index has scope to test 101.60-101.80 in the coming sessions before pausing for a reversal while below 102.
EURUSD (1.1365) can test support at 1.13 before reversing from there.
Dollar-Yen (157.50) tested 156.508 yesterday but has bounced back along with the rise in the Dollar Index. It could slowly rise higher in the near term but could limit its rise to resistance near 159.
EURJPY (179.02) has also bounced back well today. A rise to 180 can be possible within the broad range of 181-178 that could hold for the medium term.
EURINR (109.13) has crucial support near 109 and lower at 108. If the cross pair does not manage to hold at 109, we may see a decline towards 108 in the next couple of weeks.
USDCNY (6.7070) has indeed declined as warned in yesterday’s edition. A further fall to 6.70/69 cannot be negated, while below 6.7250.
Aussie (0.7016) looks stable near current levels. If it holds above 0.70, it can continue to rise from here itself towards 0.71 or higher else we may have to allow for a decline to 0.69 initially before it pauses for a reversal in the medium term.
Pound (1.3249) looks bullish for a rise to 1.34/35 while above crucial support at 1.32.
USDINR (95.9875) tested 95.9925 yesterday and closed below 96. A decisive break on the upside is needed for the pair to rise towards 96.25/96.50 initially in the coming days before reversing from there.
INTEREST RATES
The US Treasury and the German Yields continue to move up in line with our expectation. Both keep their bullish view intact. They can rise further from here. The US PCE data release tomorrow will need a close watch. The 10Yr GoI has risen breaking above its key resistance. So, the expected reversal seems to be not happening. While this break sustains, the 10Yr GoI can go further higher from here.
The US 10Yr (5.23%) and 30Yr (5.55%) yields continue to move up. The view of seeing 5.3%-5.35% (10Yr) and 5.65% (30Yr) and even higher levels remain intact. Support is at 5.1%-5% (10Yr) and 5.4%-5.35% (30Yr).
The German 10Yr (3.64%) and 30Yr (3.96%) Yields are heading up towards 3.7% (10Yr) and 4%-4.1% (30Yr) in line with our expectation. The price action thereafter will need a watch for a reversal.
The 10Yr GoI (7.1848%) has surged above 7.15%. While this holds, the expected reversal will not happen. In turn, an extended rise to 7.25%-7.3% is possible.
STOCKS
Dow remains weak and can decline towards 51500-51000. DAX can rise towards 26000 while remaining range-bound between 25350-26000. Nifty remains weak below 23000 and can decline towards 22600-22500. Nikkei can decline towards 65000-64000 while below 67000. Shanghai has held 3800 support and can bounce towards 3850-3900.
Dow (51787.4, -0.10%) has pulled back in line with our expectations and can decline towards 51500-51000 in the near term.
DAX (25648, +0.25%) can rise towards 26000 in the near term, keeping it range-bound between 25350-26000 for some time.
Nifty (22,847.0, -1.47%) has tested a low of 22792.5. While it remains below 23000, it can fall further towards 22600-22500 over the coming week.
Nikkei (65540, -0.44%) can decline towards 65000-64000 while below the resistance near 67000.
Shanghai (3818.87, -0.14%) has held the support near 3800, as mentioned earlier. While above this level, a bounce towards 3850-3900 can be seen.
COMMODITIES
Brent and WTI remain positive, with further gains towards $110-$115 and $98-$100 possible. Gold remains weak and needs to hold $4100 to avoid a decline towards $4000-$3900. Silver can decline towards $60, while Copper remains bearish towards $6.60-$6.50. Natural Gas remains weak and can test $3.00 and lower.
Brent ($106.78) and WTI ($93.53) erased nearly all of their early gains on Monday. This followed reports of possible US sanctions relief for Iran. The chances of a rise towards $110-$115 and $98-$100 respectively remain intact for now.
Gold ($4162.90) is falling sharply in line with our expectations. It has crucial support near $4100, which needs to hold to avoid further decline towards $4000-$3900.
Silver ($61.13) is falling in line with our expectations and can decline further towards $60 in the near term.
Copper ($6.62) remains bearish and can decline towards $6.60-$6.50.
Natural Gas ($3.14) remains weak and can test $3.00 and lower in the near term.
DATA TODAY
4:30 10:00 RBA Meeting
...Expected 4.60 % ...Previous 4.35 %
9:00 14:30 EU Biz Climate
...Expected 99.0 ...Previous 98.4
12:30 18:00 CA GDP
...Expected 0.1 % ...Previous 0.3
13:00 18:30 US Case Schiller
...Kshitij Expn 2.2 % ...Expected 2.2 % ...Previous 2.1 %
14:00 19:30 US Cons Conf
...Kshitij Expn. 91.9 ...Expected 90.1 ...Previous 89.4
DATA YESTERDAY:-
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IN IIP
...Expected 6.0 % ...Previous 6.7 %
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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