GOOD MORNING!
FOREX
The Dollar index trades higher above 99.50 after a stronger US IIP data release yesterday. While the index looks bullish above 99.50, Euro may fall back to 1.15. EURINR can test 109 before bouncing back to higher levels of 111-112 while the EURJPY could test resistance at 186. Thereafter it would be crucial to see which way the price moves. USDJPY continues its slow uptrend to 161 while USDCNY looks bearish towards 6.75 while below resistance at 6.80. Aussie and Pound can rise to 0.71-0.7150 and 1.3550 respectively from current levels. USDINR rose from 94.45 to close higher at 94.72. A sustained rise can take it back to 95+ in the near term. Watche price action today near 95, if seen.
Dollar Index (99.663) is currently trading above 99.5 and has scope to rise towards 100 in the near term while EURUSD (1.1588) has dipped on solar strength and has dipped to continue trading within the 1.16-1.15 region.
EURINR (109.5695) has scope to test 109 in the near term while below 110. Note that 109.50 and 109 are crucial supports on the long term charts which may hold and produce a bounce back towards 111-112 again.
EURJPY (185.59) is likely to face rejection from 186 and dip to 184/183. Failure to decline from 186 will open doors for a rise to 189-189.50.
Dollar-Yen (160.14) has very near term support at 160.20 above which the currency pair may trade higher and slowly rise towards 191-192.
USDCNY (6.7593) is almost stable. It is likely to fall to support near 6.75 before bouncing back towards 6.78/80 later.
Aussie (0.7065) has scope to rise towards near term resistance near 0.71-0.7150 while it holds above 0.70.
Pound (1.3411) has scope to rise towards 1.3450-1.3550 while above 1.34.
USDINR (94.72) tested a low of 94.45 yesterday before closing above the 13-week MA support near 94.50/40. It needs to sustain above this level to move higher towards 95.0 today.
INTEREST RATES
The US Treasury Yields have risen back sharply. The support has held very well. A strong follow-through rise from here will ease the downside pressure and take them further higher. The US Fed meeting outcome tomorrow will be important to watch to see if there is any change in their interest rate path for the rest of the year. The German Yields have come down further. They have room to test their support before reversing higher again. The 10Yr GoI remains lower. Any bounce will be short-lived. There is room to fall more from here to test its support and then possibly reverse higher again.
The US 10Yr (4.47%) and 30Yr (4.98%) Treasury yields rose back sharply. The support at 4.4% and 4.9% (30Yr) has held very well. Need to see if they are getting a strong follow-through rise from here and go up to 4.55%-4.6% (10Yr) and 5.05%-5.1% (30Yr). Wait and watch.
The German 10Yr (2.95%) and 30Yr (3.53%) yields are coming down towards 2.9%-2.85% (10Yr) and 3.45% (30Yr) in line with our expectation. A bounce is possible after this fall.
The 10Yr GoI (6.8768%) touched a low of 6.8458% and bounced back to close at 6.8768. The downside remains open to see 6.8% before any sustained reversal happens.
STOCKS
Global equities remain supported by positive sentiment surrounding the expected US-Iran agreement. Dow continues to trade near record highs and can rise towards 52500-53000 while above 51000. DAX remains constructive above 24500 and can advance towards 25250-25500. Nifty needs to hold above 23750 to attempt another breakout above 24000. Nikkei remains bullish towards 70500-71000 while above 68000. Shanghai continues to strengthen and can rise further towards 4125-4150.
Dow (52123.21, -0.02%) tested a high of 52380 yesterday. While above 51000, the possibility of a rise towards 52500-53000 remains open.
DAX (24862.11, -0.28%) has fallen back below 25000. However, the view remains intact for a rise towards 25250-25500 while it stays above 24500.
Nifty (23,853.90, +0.98%) failed to sustain above 24000 and closed lower yesterday. Immediate support is seen near 23750, which needs to hold for the index to move higher and attempt a breakout above 24000 in the coming week.
Nikkei (69365.31, -0.74%) is falling back, but the view remains intact for a rise towards 70500-71000 in the near term while it remains above 68000.
Shanghai (4091.26, -0.11%) rose to a high of 4097 yesterday in line with our expectations. A further rise towards 4125-4150 can be seen.
COMMODITIES
Crude prices remain under pressure as Brent and WTI continue to trade below $85. If they sustain below this level and the expected US-Iran MoU signing proceeds smoothly, a further decline towards $75-$70 becomes more likely. Gold and Silver have recovered from recent lows and can rise towards $4500-$4600 and $72-$74 respectively in the near term. Copper has seen a minor dip, but the broader outlook remains positive for a rise towards $6.70-$6.75. Natural Gas is likely to remain within the broad $3.00-$3.50 range for some time.
Brent ($83.41) and WTI ($81.09) are trading below $85 and need to sustain below this level for some time to see a further decline towards $75-$70, thereby negating our earlier bullish view towards $100. With the US-Iran MoU expected to be signed on Friday, and if tensions remain subdued, a fall towards $75-$70 becomes more likely.
Gold ($4338.50) has bounced back and can rise towards $4500-$4600 in the near term.
Silver ($69.55) is likely to rise towards $72-$74 in the near term.
Copper ($6.44) has dipped, but our view remains intact for a rise towards $6.70-$6.75.
Natural Gas ($3.1520) can trade within a broad range of $3.00-$3.50 for some time.
DATA TODAY
GMT 5:30 IST 11:00 CN Retail Sales
...Market -0.2 ...Previous 0.2
GMT 5:30 IST 11:00 CN IIP (YoY)
...Market 4.3 ...Previous 4.1
GMT 3:00 IST 08:30 BOJ Meeting
...Market 1.00 ...Previous 0.75
GMT 4:30 IST 10:00 RBA Meeting
...Market 4.35 ...Previous 4.35
GMT 9:30 IST 15:00 IN Trade bal
...Market -27.00 ...Previous -28.38
GMT 12:30 IST 18:00 US Housing Starts
Kshitij 1442 ...Market 1420 ...Previous 1465
DATA YESTERDAY
==============
GMT 6:30 IST 12:00 IN WPI
Kshitij 5.21 ...Previous 8.30
GMT 9:00 IST 14:30 EU Ind Prodn (MoM)
...Previous 0.2
GMT 9:00 IST 14:30 EU Trade Bal
...Previous 3.50
GMT 13:00 IST 18:30 IN Trade bal
...Previous -28.38
GMT 13:15 IST 18:45 US Industrial Production
...Kshitij 0.08 ...Previous 0.69
{GMT 13:15 IST 18:45 US Capacity Utilization
...Kshitij 75.81 ...Previous 76.10
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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