GOOD MORNING!
FOREX
Dollar index has eased along with a dip in the bond yields but could have scope for further rise in the medium term. This has led to modest gains in other currencies against the US Dollar. Euro has risen from levels seen yesterday but could be short lived as a decline towards 1.11 is still on the cards. USDJPY can see a slow rise towards 159 or higher and EURJPY can test 178. EURINR looks bearish towards 105 while USDCNY could trade sideways for sometime while above 6.69. USDINR can attempt to test 95 with some chances of a break in the downside to head towards 94.50. Note that 95 itself is a crucial support, only a sustained break below it will bring in 94.50 into the picture. Aussie and Pound looks mildly bullish for the next couple of sessions.
Dollar Index (102.158) has dipped slightly ahead of the US CPI data release today but overall the index looks bullish for the near term for a further rise towards 103/104 soon.
EURUSD (1.1205) has moved up from levels seen yesterday but the rise could be should lived. While below 1.13, downward pressure for a decline to 1.11 is on the cards.
Dollar-Yen (158.43) is headed towards 159-160 while above 157 while EURJPY (177.51) seems to be recovering towards higher levels and needs a break above 178 to avoid further decline towards 176/175.
EURINR (106.4681) looks bearish towards 105 while it sustains below 107. Near term view is bearish.
USDCNY (6.6915) is likely to consolidate above 6.69 for sometime before declining further below it in the medium term.
Aussie (0.6991) has risen well from 0.69. It can briefly rise above 0.70 to hold for a few sessions before we expect a dip again towards 0.6950/6900.
Pound (1.3267) too has risen and can test 1.33 before coming off from there.
USDINR (95.28) closed at 95.28 yesterday. There is scope for a re-test of 95 today with some chances of a break below it towards 94.50 in the coming sessions before a rebound can be seen in the medium term.
INTEREST RATES
The US Treasury Yields have dipped. They can test their support in the near term and then reverse higher to resume their broader uptrend. The US CPI data release today will need a close watch. The German Yields are coming down as expected towards their support. We expect the support to hold and the yields to reverse higher going forward. The broader trend remains up. The 10Yr GoI has dipped after the strong surge seen on Monday. Immediate support is there to limit the downside. The 10Yr GoI remains bullish and can rise further.
The US 10Yr (5.21%) and 30Yr (5.56%) yields have come down. We reiterate that the support at 5.15%-5.1% (10Yr) and 5.55%-5.5% (30Yr) can limit the downside. The yields can resume their uptrend after this dip and target 5.35%-5.4% (10Yr) and 5.7%-5.75% (30Yr.
The German 10Yr (3.46%) and 30Yr (3.82%) Yields have dipped. Our view remains the same. The yields can touch 3.35% (10Yr) and 3.75% (30Yr) first. Thereafter a fresh leg of rise can happen towards 3.7% (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.3655%) has dipped slightly. Immediate support is at 7.3%. While that holds, the upside will remain open to see 7.5%.
STOCKS
Dow remains weak below 52000 with room to fall towards 51500 or lower. DAX can decline towards 24800 on a decisive break below 25000. Nifty is capped near 22800, with a reversal likely towards 22600-22400. Nikkei needs a sustained move above 68200 to advance towards 69000, else it can fall towards 67000. Shanghai remains weak below 3800 and can fall towards 3700.
Dow (51670.10, -0.35%) has fallen sharply after testing the high of 52317 on chip selloff and profit-taking. While it stays below 52000, it has room to fall further towards 51500 or lower in the coming weeks.
DAX (25259.90, -0.07%) has fallen sharply after testing the high of 25453 on tech weakness and mixed earnings. A decisive break below 25000 can open downside room towards 24800 in the coming weeks.
Nifty (22721.95, +1.60%) rose sharply yesterday on a strong rally in the IT sector. While immediate resistance is capped near 22800, there is a good chance of a reversal back towards 22600-22400 over the week.
Nikkei (68039.70, +0.39%) tested the low of 67058 yesterday as expected. It has inched higher today and needs a sustained move above 68200 to advance towards 69000. Else it has scope to fall towards 67000 again.
Shanghai (3789.02, -0.32%) tested the low of 3741 yesterday before moving higher towards 3800. While it holds below this level, it has scope to fall towards 3700 in the coming weeks.
COMMODITIES
Brent faces crucial resistance near $108, with a breakout potentially pushing it towards $110-$112, while WTI could rise towards $100. Gold needs to hold above $4100 to retain the possibility of a rise towards $4300-$4400, while Silver could decline towards $58-$57 if it remains below $60. Copper can rise towards $6.80-$6.85, while Natural Gas could extend its rally towards $3.50 amid tightening domestic supplies due to increased US exports.
Brent ($106.88) has risen amid ongoing tensions in the Middle East but faces crucial near-term resistance near $108. A break above this level could open the way for a further rise towards $110-$112. Otherwise, a range of $100-$108 could prevail for some time.
WTI ($95.14) has risen and looks likely to move higher towards $100 in the coming sessions. Thereafter, it remains to be seen whether it breaks above this level or pulls back.
Gold ($4176.20) needs to hold above the support near $4100 to keep alive the possibility of a rise towards $4300-$4400.
Silver ($59.20) has fallen below $60, and if it remains below this level, a further decline towards $58-$57 could be seen.
Copper ($6.73) could rise towards the previously mentioned levels of $6.80-$6.85 in the near term.
Natural Gas ($3.3240) settled sharply higher on Tuesday, in line with our expectations, as increased US exports tightened domestic supplies. A further rise towards $3.50 could be seen in the coming sessions.
DATA TODAY
1:30 07:00 CN CPI (YoY)
....Expected 1.0 % ...Previous 0.8 %
1:30 07:00 CN PPI
...Expected 4.5 ...Previous3.8
6:30 12:00 IN WPI
...Previous 9.9 %
12:30 18:00 US CPI (MoM)
...Kshitij Expn. 0.3 ...Expected 0.6 ...Previous 0.4
12:30 18:00 US Core CPI (MoM)
...Kshitij Exxpn. 0.1 % ...Exxpected 0.2 % ...Previous 0.3 %
DATA YESTERDAY:-
--------------
US Existing Home Sales
...Kshitij Expn. 4022 K ...Expected 3960 K ...Previous 3980 K
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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