GOOD MORNING!
FOREX
The Dollar Index has fallen below 102 after the absence of a hawkish signal from Kevin Warsh’s speech on Friday and could extend its decline towards 101.25-101.00, while the Euro may rise towards 1.13 before the broader downtrend resumes. USDJPY could consolidate within 157-159, and EURJPY may decline towards 176 while below 178. EURINR remains bearish towards 105, below 107, though a near-term bounce towards 107 or higher is possible in the next couple of sessions. USDCNY has broken below 6.69 and could move towards 6.68. USDINR may trade within 94.75-95.20/30, with a break on either side determining the next move. The Pound looks bullish towards 1.35 while above 1.33, whereas the Aussie needs a decisive break above 0.70 to target 0.72/0.73.
Dollar Index (101.811) fell sharply below 102 after FED chairman Kevin Warsh’s speech on Friday lacked a hawkish signal. If it sustains below 102, it can fall towards support near the 101.25-101.00 region before pausing to rebound in the medium term. Failure to bounce from 101 would turn bearish for a further decline towards 100. Watch price action near 101.
EURUSD (1.1230) has risen and could extend its rise to 1.13 before resuming its downtrend. Only a break above 1.13, if seen would indicate any bullish sentiment setting in.
Dollar-Yen (157.93) has fallen sharply and could trade between 157-159 region for some time while both levels hold as near-term support and resistance levels.
EURJPY (177.34) looks stable but could decline to 176 while below 178.
EURINR (106.6626) looks bearish towards 105 while it sustains below 107. However, today a possible bounce towards 107 or higher is possible on Euro strength and a possible rise in the USDINR.
USDCNY (6.6826) has broken below 6.69 and could now be headed towards 6.68 in the near term. Overall medium-term view remains bearish.
Aussie (0.6970) has risen but needs a decisive break above 0.70 to head towards 0.72/73. While on the other hand, Pound (1.3328) has surged above 1.33 and, while it sustains, looks bullish towards 1.35.
USDINR (94.95) could have some scope for a test of 95.20/30 on the upside, with immediate downside limited to 94.75. Watch price action for any break on either side of the range.
INTEREST RATES
The US Treasury Yields remain lower. There is some more room to dip further from here. Thereafter a fresh rise can happen to keep the broader uptrend intact. The German Yield have inched up. But the upside can be capped. A dip to test its support is likely to be seen first before the broader uptrend resumes. The 10Yr GoI is stuck inside a narrow range now. The bias is positive. Support is there to limit the downside. The yield has potential to rise more from here.
The US 10Yr (5.07%) and 30Yr (5.42%) yields remain lower. They can test 5%-4.95% (10Yr) and 5.4% (30Yr. Thereafter a fresh leg of rise can take them higher to 5.35%-5.4% (10Yr) and 5.7%-5.75% (30Yr).
The German 10Yr (3.42%) and 30Yr (3.79%) Yields have inched up. 3.45%-3.5% (10Yr) and 3.85% (30Yr) can cap the upside. The yields can fall to test their support at 3.35% (10Yr) and 3.75% (30Yr). Thereafter, they can rise back and target 3.7% (10Yr) and 4%-4.1% (30Yr) on the upside.
The 10Yr GoI (7.3789%) is stuck between 7.35% and 7.42%. The outlook is bullish to see 7.5% on the upside. 7.3% is a good support which can limit the downside.
STOCKS
Dow remains capped below 52500, with scope to decline towards 51500. DAX can move towards 26000 while it holds above 25250. Nifty can extend towards 23500 while it holds above 22800. Nikkei remains vulnerable to a pullback towards 64000 or lower while below 65000. Shanghai needs to sustain above 3700 to move towards 3800, else it can fall towards 3600.
Dow (52242.48, -0.34%) tested a high of 52582 as expected before declining towards 52000 on Friday. While it stays below 52500, it has scope to decline further towards 51500 in the coming sessions.
DAX (25622.61, +0.95%) has scope to move towards 26000 while it holds above 25250 over the week.
Nifty (23146.15, +0.65%) has risen sharply and tested the high of 23149 before closing. Further upside can extend towards 23500 over the coming week while it holds above 22800.
Nikkei (64538.46, -1.22%) touched the low of 63831 and has recovered to current levels. However, it remains vulnerable to a pullback towards 64000 or lower while it stays below 65000.
Shanghai (3707.85, -0.17%) opened lower below 3700 and managed to move back above it. It needs to sustain above 3700 to move higher towards 3800. Else a break below 3700 will open the risk of a sharper fall towards 3600 in the coming week.
COMMODITIES
Brent and WTI crude prices have surged amid a weaker dollar and escalating Middle East tensions. The near-term outlook remains upward. Gold needs to hold above $4100 to target $4300-$4400, while silver remains vulnerable to a fall towards $52-$50 below $60. Copper could rise towards $6.70-$6.80 if support holds, while natural gas may trade within the $3.00-$3.50 range amid forecasts of mild US autumn temperatures.
Brent ($107.88) and WTI ($97.49) prices surged to highs near $100 levels on Friday amid a weaker dollar and concerns that escalating hostilities in the Middle East could disrupt regional energy supplies. The prices have come down slightly but the direction remains upwards for the near term.
Gold ($4201.80) needs to hold above the support near $4100 to keep alive the possibility of a rise towards $4300-$4400. Otherwise, it risks falling further towards $4000-$3900.
Silver ($57.76) has bounced back, but as long as it remains below $60, it remains vulnerable to a fall towards $52-$50.
Copper ($6.62) has bounced back from immediate support. As long as the immediate support holds, a further rise towards $6.70-$6.80 could be seen.
Natural Gas ($3.0680) prices were pressured by the outlook for mild US autumn temperatures to reduce heating demand for nat-gas. It could trade within a range of $3.00-$3.50 for some time.
DATA TODAY
2:00 07:30 CN Retail Sales
...Expected 0.5 % ...Previous 0.4%...Acctual1.1 %
2:00 07:30 CN IIP (YoY)
...Expected 5.4 % ...Previous 5.2 % ...Actual 5.5 %
2:00 07:30 CN GDP
...Expected 4.4 % ...Previous 4.3 % ...Actual 4.5 %
12:30 18:00 CA Inflation Y/Y
...Previous 3.0
Friday's DATA:
-------------
EU CPI (YoY)
...Kshitij Expn 3.6 % ...Expected 3.8 % ...Previous 3.3 % ...Actual 3.8 %
EU Trade Bal
...Previous 10.7 EURblln ...Actual-16.1 Eurbln
US Industrial Production
...Kshitij Expn -0.1 % ...Expected 0.4 % ...Previous 0.1 % ...Actual 0.7 %
US Capacity Utilization
...Kshitij Expn. 75.9 % ...Expected 76.5 % ...Previous 76.3 % ...Actual 76.9 %
US TICS (Net foreign purch of long-term Sec)
...Expected 125.7 $bln ...Previous -27.9 $bln ...Actual 279.2 $bln
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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