GOOD MORNING!
FOREX
Most currency pairs are volatile within their respective ranges. Hopes of se-escalation of war in the Middle East has pulled down the Dollar Index from 100.64, taking Euro back towards 1.16. Overall we may expect the Dollar Index and Euro to remain ranged within 101.50-99 and 1.16-1.14 region. EURINR may trade within the 109-106 region while the EURJPY can trade within the 182-185 zone. The USDJPY has held below 160.50 to fall back as expected in the mid of last week. A broad range of 160.50-158 can hold for now. USDCNY has broken below 6.90 and while it trades lower, there can be some scope for a fall towards 6.85. Aussie and Pound can trade within the 0.69-0.72 and 1.31-1.35 region respectively. The USDINR is closed today.
Dollar Index (99.798) came off from 100.64 leading to a rise in the EURUSD (1.1565) on hopes of de-escalation of war in the Middle East. We may expect the Dollar Index and Euro to remain ranged within 99-101.50 and 1.14-1.16 region respectively.
EURINR (107.9976) has dipped as expected and while below 110, we may expect a broad range of 106-110 to hold for the next couple of weeks.
EURJPY (183.51) is likely to continue trading within the 182-185 region for the near term.
Dollar-Yen (158.72) held below 160.50 as expected and has fallen. Overall a broad range of 158-160.50 may hold for the near term before a breakout on either side of the range is seen.
USDCNY (6.8817) has fallen back sharply contrary to our expectations. While below 6.90, there is scope for a dip to 6.85.
Aussie (0.6917) has also moved up in the last 2-sessions from 0.6833 and while above 0.68, Aussie can rise back slowly towards 0.70/71.
Pound (1.3231) tested 1.3159yesterday as expected but thereafter moved up to current level. While above 1.31, thee is some scope for a rise towards 1.33/35 again in the medium term.
USDINR (94.8350) is closed today.
INTEREST RATES
The US Treasury and the German Yields have come down sharply over the last couple of days. Both can fall further in the near term to test their support. The price action thereafter will need a watch. The expected rise in both the German and US Yields is getting delayed. The 10Yr GoI has surged above 7%. It has to sustain this rise in order to move further higher. Else, a corrective dip is possible. We will have to wait and watch what happens.
The US 10Yr (4.30%) and 30Yr (4.89%) Treasury yields have come down sharply. A fall below 4.3% (10Yr) and 4.85% (30Yr) can drag the yields down to 4.25%-4.2% (10Yr) and 4.8%-4.75% (30Yr). We will have to wait and watch.
The German 10Yr (3%) and 30Yr (3.46%) yields have declined over the last couple of days. A test of 3.95%-3.9% (10Yr) and 3.4%-3.35% (30Yr) looks possible in the near term. The expected rise to 3.2% (10Yr) and 3.65% (30Yr) is getting delayed.
The 10Yr GoI (7.0345%) has surged well above 7%. If it sustains above 6.95%, then a further rise to 7.1%-7.2% is also possible. A fall and close below 6.95% can take it down to 6.8% first.
STOCKS
Global equities have rebounded on hopes of de-escalation in the Middle East conflict. Dow has moved above 45000 and can rise towards 48000 if it breaks 47000. DAX is also gaining strength and may move towards 23600-23800 while above 23000. Nifty may open higher and can rise towards 22800-23000 if momentum sustains. Nikkei has turned positive on easing tensions and can move towards 54000 while above 52000. Shanghai is attempting a breakout above 3950 which can take it towards 4000-4050.
Dow (46605, +0.05%) has bounced back sharply to break above 45000 and test a high of 46643 yesterday after Trump stated that US military forces could leave Iran within two to three weeks, even if the Strait of Hormuz remains closed and other nations handle its security. This, along with reports of potential de-escalation and Iran’s openness to ending hostilities with guarantees, has supported the rally. While it holds above 45000, it can break above 47000 and rise towards 48000.
DAX (23212, +1.64%) has bounced back sharply to a high of 23257 yesterday after signals of willingness to end the war. If it sustains above 23000, it can move higher towards 23600-23800.
Nifty (22331.40, -2.14%) closed below 22400 on Monday. Today it may open higher with a gap up near 22500-22600 due to ongoing de-escalation talks in the Middle East. It can target 22800-23000 in the near term if the index opens higher.
Nikkei (53200, -0.52%) has risen sharply to 53225 on optimism over a potential end to the Iran war. A further rise towards 54000 can be seen in the near term while above 52000.
Shanghai (3,949.11, +1.47%) is attempting to break past 3950, and a sustained break above this level can take it higher towards 4000-4050.
COMMODITIES
Crude prices remain volatile amid ongoing war developments and peace talk expectations. Brent can bounce towards $115-$120 while holding above $100, and WTI may rise towards $110-$115 if it stays above $95. Gold has rebounded and needs a break above $4750 to move towards $4800-$4900. Silver must break $75 to rise towards $80-$85. Copper has turned positive above $5.60 and can move towards $5.70-$5.75. Natural Gas remains weak but may stay range bound between $3.30-$2.80 if support near $2.80 holds.
Brent ($105.44) surged to a high of $116.89 but fell back sharply to close at $103.97 yesterday on speculation that both the US and Iran may be looking for a way out of the war. Immediate support is near $100 and while this holds, a bounce back towards $115-$120 remains likely. Only if peace talks progress with a positive outcome can the price break below $100 and fall towards $90.
WTI ($102.96) rose to a high of $106.96 and fell back to close at $101.38 yesterday. Immediate support is near $95 and while this holds, we retain our view of a rise towards $110-$115.
Gold ($4709.40) has bounced back sharply contrary to the earlier expected fall towards $4200-$4000. A break above the immediate resistance near $4750 is needed to see higher levels of $4800-$4900 in the coming sessions.
Silver ($74.42) has not fallen as expected and instead bounced back to a high of $75.63. It needs to break above the resistance near $75 to see a further rise towards $80-$85 in the near term.
Copper ($5.6425) has risen above $5.60 contrary to our expectations and while it sustains above this level, a further rise towards $5.70-$5.75 can be seen in the near term.
Natural Gas ($2.8720) is falling but while the support near $2.80 holds, the earlier mentioned range of $3.30-$2.80 can persist for some time.
DATA TODAY
GMT 22:30 IST 04:00 AU PMI
...Previous -15.6
GMT 23:50 IST 05:20 JP Tankan Large Manufacturers Index
...Expectations 16.0 ...Previous 15.0
GMT 0:30 IST 06:00 JP PMI
...Expectations 51.4 ...Previous 53.0
GMT 1:45 IST 07:15 CN PMI
...Expectations 51.8 ...Previous 52.1
GMT 7:30 IST 13:00 CH PMI
...Expectations 47.1 ...Previous 47.4
GMT 8:00 IST 13:30 EU PMI
...Expectations 51.4 ...Previous 50.8
GMT 8:30 IST 14:00 UK PMI
...Expectations 51.4 ...Previous 51.7
GMT 9:00 IST 14:30 EU Unemp
...Expectations 6.1 ...Previous 6.1
GMT 12:15 IST 17:45 US ADP Emp
...Kshitij 103.81 ...Expectations 42.0 ...Previous 63.0
GMT 12:30 IST 18:00 US Retail Sales (MoM)
...Kshitij 0.15 ...Expectations 0.4 ...Previous -0.2
GMT 13:30 IST 19:00 CA PMI
...Previous 51.0
GMT 14:00 19:30 US Manufacturing ISM
...Kshitij 51.81 ...Expectations 52.3 ...Previous 52.4
DATA YESTERDAY
==============
GMT 23:30 IST 05:00 JP Unemp
...Expectations 2.7 ...Previous 2.7 ...Actual 2.6
GMT 7:00 IST 12:30 UK GDP
...Expectations 0.1 ...Previous 0.1 ...Actual 0.1
GMT 9:00 IST 14:30 EU Flash CPI (YoY)
...Expectations 2.5 ...Previous 1.9 ...Actual 2.5
GMT 12:30 IST 18:00 CA GDP
...Expectations 0.0 ...Previous 0.2 ...Actual
GMT 13:00 IST 18:30 US Case Schiller
...Kshitij 0.8 ...Expectations 1.4 ...Previous 1.4 ...Actual
{GMT 14:00 IST 19:30 US Cons Conf
...Kshitij 89.3 ...Expectations 88.0 ...Previous 91.2 ...Actual
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.
WARNING !!
Visitors should be aware that Foreign Exchange transactions and trading are or can be subject to laws, rules and regulations of the country in which the entity undertaking the transactions is situated. It is incumbent upon the Visitors to keep themselves informed and abreast of the Laws they are (or would be expected to be) subject to and governed by, and act in accordance thereto.
