GOOD MORNING!
FOREX
The Dollar index may dip to 99.5-99, while the Euro has scope to test 1.16/17 while above 1.15. EURINR looks bearish below 111, while the EURJPY could test 186 while above 185. USDJPY continues its slow uptrend while USDCNY looks bearish towards 6.76/75 while below resistance at 6.80. Aussie and Pound can rise to 0.71-0.7150 and 1.35 respectively from current levels. USDINR dipped to 95.2275 yesterday. There is scope for a further dip to 95 soon.
Dollar Index (99.955) trades just below 100 now and could have scope to decline in the near term towards 99.5-99.0
EURUSD (1.1542) is likely to rise towards 1.16-1.17 in the near term while above 1.15.
EURINR (110.1717) may trade within 110-111 region for the near term. A break below 110, if seen can be bearish towards 109 again in the medium term.
EURJPY (185.03) has risen above 185 as expected. Sustained rise from here can take it further up towards 186.
Dollar-Yen (160.36) is slowly headed towards 161 where it could pause for a reversal.
USDCNY (6.7756) has immediate resistance at 6.80 and support near 6.75. We may expect trade within this broad region for the next couple of weeks at the least.
Aussie (0.7024) has scope to rise back towards 0.71-0.7150 if it holds above 0.70 in the near term.
Pound (1.3373) has scope to rise towards 1.34-1.3450 while above 1.33.
USDINR (95.3550) did dip yesterday from a closing level of 95.69 the previous day to an intra-day low of 95.2275 while the forward premium came down well. There can be chances of a dip to 95 or lower in the near term with upside limited to 96.
INTEREST RATES
The US Treasury Yields have come down sharply. A further dip from here can drag them lower. They have to rise back immediately and breach their resistance to go higher. The US CPI data release today will need a watch to see if it is providing the needed trigger to rise back. The German yields are holding higher. A follow-through rise from here can take them further higher and avoid falling back. The 10Yr GoI has come down as expected and is at an intermediate support. An extended fall is possible if the yield fails to bounce back immediately.
The US 10Yr (4.53%) and 30Yr (5.01%) Treasury yields have come down sharply. They have to rise above 4.6% (10Yr) and 5.05% (30Yr) to go up to 4.8% (10Yr) and 5.2% (30Yr). A further dip from here can take them down to 4.45%-4.4% (10Yr) and 4.95%-4.9% (30Yr). We will have to wait and watch.
The German 10Yr (3.04%) and 30Yr (3.59%) yields are holding higher. A further rise from here can take them up to 3.1%-3.2% (10Yr) and 3.65%-3.7% (30Yr). That will avoid the chances of falling back to 2.9%-2.85% (10Yr) and 3.45% (30Yr).
The 10Yr GoI (6.9082%) has come down to 6.9% much faster than expected. A bounce from here and a rise above 7% is needed to go back up to 7.1%. Else, an extended fall to 6.8% cannot be ruled out.
STOCKS
Dow and DAX remains vulnerable to further declines towards 50000 and 24000 respectively. Nifty continues to show resilience and can rise towards 23,400-23,600 while holding above 23,000. Nikkei remains range-bound and needs a break below 64000 to trigger a fall towards 63000. Shanghai is struggling below the key 4000 resistance and, unless it breaks higher, a decline towards 3900-3850 remains likely.
Dow (50870.33, -0.23%) saw a brief fall below support and tested a low of 50262 before bouncing back above it. However, it remains vulnerable to a sustained break below this support, which could trigger a decline towards 50000 or lower.
DAX (24495.21, -0.18%) tested a low of 24253 in line with our expectations. Our view remains intact for a further decline towards 24000 in the coming sessions.
Nifty (23,242.10, +0.52%) closed higher for the day. The rise can extend further towards 23,400-23,600 while it sustains above 23,000 in the coming weeks.
Nikkei (64945.13, +0.14%) needs a sustained break below 64000 to trigger our earlier mentioned decline towards 63000.
Shanghai (3995.83, -0.35%) needs to break above 4000 to move higher. Otherwise, while it remains below this level, a decline towards 3900-3850 can be seen.
COMMODITIES
Crude prices are testing the key $90 level, and a sustained break lower could drag prices towards $85, while holding above it may lead to a recovery towards $100 in the coming weeks. Gold has fallen to near $4200 as expected and risks a further decline towards $4100-$4000 if this level breaks. Silver remains weak and can extend losses towards $62-$60. Copper is holding above immediate support and can recover towards $6.50-$6.60 if this level remains intact. Natural Gas continues to weaken towards $3.00, with the broader $3.00-$3.50 range likely to hold for now.
Brent ($92.60) saw a brief dip below $90 and tested a low of $89.57 yesterday. A sustained fall below $90 is needed to trigger a further decline towards $85. Otherwise, it can bounce back and rise towards $100 over the coming weeks.
WTI ($89.27) has fallen below $90 and needs to sustain below this level to see a decline towards $85. Otherwise, it can bounce back and rise towards $100 over the coming weeks.
Gold ($4212.20) has fallen to levels near $4200 as expected. A break below $4200 would trigger a further decline towards $4100-$4000.
Silver ($64.41) has fallen sharply in line with our expectations and can continue its decline towards $62-$60 in the coming sessions.
Copper ($6.32) remains above immediate support, which is preventing a further decline towards $6.00. If this support holds, it can move higher towards $6.50-$6.60.
Natural Gas ($3.1370) continues to weaken and could test $3.00 in the near term, keeping the broader $3.00-$3.50 range intact for some time.
DATA TODAY
GMT 1:30 IST 07:00 CN CPI (YoY)
...Market 1.3 ...Previous 1.2
GMT 1:30 IST 07:00 CN PPI
...Market 3.8 ...Previous 2.8
GMT 12:30 IST 18:00 US CPI (MoM)
...Kshitij 0.1 ...Market 0.3 ...Previous 0.6
GMT 12:30 IST 18:00 US Core CPI (MoM)
...Kshitij 0.0 ...Market 0.5 ...Previous 0.4
GMT 13:45 IST 19:15 BOC Meeting
...Market 2.25 ...Previous 2.25
DATA YESTERDAY
==============
GMT 12:30 IST 18:00 US Trade Balance
...Kshitij -48.34 ...Market -55.20 ...Previous -60.31
GMT 14:00 IST 19:30 US Existing Home Sales
...Kshitij 4060 ...Market 4080 ...Previous 4020
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.
