GOOD MORNING!
FOREX
The Dollar Index is testing 101; a break can lift it to 101.50-102, while failure may pull it back to 100.50. Safe-haven demand from US-Iran tensions and oil-linked inflation risk keeps the dollar supported, with the ECB meeting a key watch for EUR crosses this week. EURUSD may bounce from 1.14 while USDJPY needs to break above 162.85 for testing 163/165, and USDINR needs to break above 96.50 for testing 96.75; otherwise pullbacks remain possible.
Dollar Index (100.977) has moved up to test the near term resistance at 101. It would be important to see if it holds and pushes the index back towards 100.50 and lower or breaks to pave way for 101.50-102 in the coming days.
EURUSD (1.1415) is likely to bounce from 1.14 and rise to 1.1450/70 in the near term. Markets await ECB policy meeting this week.
EURINR (110.1532) could limit its immediate downside to 109.50 with a near term bullish target of 110.50-111 in the medium term.
Dollar-Yen (162.50) has been trading in a very narrow range. A sustained break above 162.85 I needed for a rise to 163/165 zone else we may expect a dip towards 162-161.50.
EURJPY (185.49) is likely to trade within the 186-185 region for the near term.
USDCNY (6.7638) has declined well from levels seen yesterday. The spot can test 6.75 before slowly aiming to bounce back towards 6.78.
Aussie (0.7005) and Pound (1.3435) seems to have bounced a bit today. Aussie needs to sustain above 0.70 to avoid a dip back towards 0.69 while Pound may move up towards 1.35.
USDINR (96.4350) closed below 96.50 yesterday. A sustained break above 96.50 is needed for the spot to rise towards 96.75 else we may expect a pull back towards 96-95.85 in the coming days.
INTEREST RATES
The US Treasury Yields have moved up. A follow-through rise from here can take them higher and will negate the chances of falling back. The German Yields are moving up in line with our expectations. They can go further higher from here. The 10Yr GoI has come down sharply from its high. A further fall from here can drag it down and will reduce the chances of rising back again.
The US 10Yr (4.59%) and 30Yr (5.12%) yields have moved up. The 10Yr can rise to 4.7%-4.8% on a break above 4.6%. The 30Yr has breached 5.1%. While this sustains, a further rise to 5.2% is possible.
The German 10Yr (3.15%) and 30Yr (3.65%) Yields are moving up towards 3.2% (10Yr) and 3.75% (30Yr) in line with our expectation.
The 10Yr GoI (6.7777%) has come down from the high of 6.8315%. A fall below 6.75% can take it down to 6.7% and will reduce the chances of rising back above 6.85%. Broader picture is bearish to see 6.6% eventually.
STOCKS
Dow is testing near term support at 52000, while DAX continues to hold above 24700-24800, keeping their broader ranges intact. Nifty remains constructive above 24000 and can rise towards 24400-24600. Nikkei's recovery appears limited, with the broader bearish view towards 62000 still intact. Shanghai remains weak and can decline further towards 3700-3600.
Dow (52095.44, +0.04%) is testing the support near 52000. If this level holds, our earlier mentioned range of 52000-53000 remains intact. However, with the ongoing tensions in the Middle East, the possibility of a break below 52000 cannot be ruled out.
DAX (24840.89, -0.408%) is holding above the previously mentioned support at 24800/24700. While this support holds, the broad range of 24700-25500 could remain intact for some time.
Nifty (24,238.50, -0.39%) managed to close above 24200 yesterday. While the support at 24000 holds, the index can rise towards 24400-24600 in the coming weeks.
Nikkei (65355.79, -0.28%) is showing a slight recovery, but our view remains intact for a decline towards 62000 in the near term.
Shanghai (3758.45, -0.99%) remains vulnerable to a further decline towards 3700-3600.
COMMODITIES
Brent and WTI can rise further towards $95 and $90 respectively. Gold continues to hold above the key $4000 support and can rebound towards $4200, while a break below $4000 could trigger a decline towards $3800-$3700. Silver is likely to remain range-bound between $55 and $65 while support at $55 holds. Copper remains bullish and can rise further towards $6.50. Natural Gas has turned weaker below $2.85 and can decline further towards $2.82-$2.80.
Brent ($88.62) and WTI ($82.32) have dipped, but our view remains intact for a rise towards $95 and $90 respectively in the near term.
Gold ($4030.20) has held above the key support near $4000 for now. While above this level, a bounce back towards $4200 can be seen. However, a sustained break below $4000 would bring a decline towards $3800-$3700 into the picture.
Silver ($57.23) has bounced back and can continue to trade within the broad $55-$65 range for some time, while support at $55 holds.
Copper ($6.37) is moving higher in line with our expectations and can rise further towards $6.50 in the near term.
Natural Gas ($2.8460) has fallen below $2.85 in line with our expectations and can decline further towards $2.82-$2.80 in the near term.
DATA TODAY
6:00 11:30 UK Unemp
...Expected 4.9% ...Previous 4.9 %
DATA YESTERDAY:-
--------------
CA Inflation Y/Y
...Expected 2.90 % ...Previous 3.23 % ...Actual 2.80%
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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