GOOD MORNING!
FOREX
Announcement from President Trump to halt military actions against Iran for the next 5 days have given some relief to the markets. The Dollar Index may continue trade within the bounce back from 99 to rise back towards 100-101 while he Euro could dip while below 1.1650. EURINR may decline below 108 to fall towards 106/105 while it trades below 108. EURJPY could continue to hold within 182-185 while the USDJPY seems to be falling while below 160. USDCNY remains intact within the 6 88-6.92 region. Aussie and Pound can trade within 0.69-0.72 and 1.32-1.35 region respectively. The USDINR is likely to open lower with a possible test of 93.25 while below 94.
Dollar Index (99.345) dipped after President Trump announced a no-military-action on Iran for 5days. Overall 99-101 range may continue to hold for now.
EURUSD (1.1584) moved up on dip in the Dollar Index. An upside test of 1.1650 has already been seen but the currency has been managing to dip back. Currenntly, while below 1.1650, a decline to 1.15/14 looks possible. Only a break above 1.1650 will bring in 1.17 into the picture.
EURINR (107.9685) has been falling since yesterday. The pair has fallen below 108 and now while that sustains, a fall to 106/105 can be possible.
EURJPY (183.71) has dipped. However, we expect the broad range of 185-182 to hold for the near term.
Dollar-Yen (158.62) seems to be holding well below 160 and may continue to trade between 160 and 158/157 for the near term.
USDCNY (6.8802) has dipped back along with a reversal in other currencies. We may see trade between 6.85-6.92 for some more time before May breakout is seen on either side of the range.
Aussie (0.6986) has dipped and can test 0.69 before bouncing back towards 0.70/72 in the medium term.
Pound (1.3395) is likely to move up towards the trading zone within the 1.32-1.35 region.
USDINR (93.7150) tested 94.02 and dipped to close at 93.98 yesterday. We expect a fall in the USdINR. towards 93.50/25 as mentioned yesterday. Overall depreciation for Rupee is intact for the rest of the year.
INTEREST RATES
The US Treasury Yields have come down sharply after the US-Iran war de-escalation news. But on the charts the picture still looks positive. Support can limit the downside. The yields can rise back and keep intact the upside. The German Yields have dipped slightly. But the upside remains open to see more rise. The 10Yr GoI has seen a strong surge on Monday. This has opened the door for more rise. An intermediate dip is possible before further rise happens.
The US 10Yr (4.37%) and 30Yr (4.94%) Treasury yields have come down after testing 4.45% and 4.98% respectively. But support is there at 4.3% (10Yr) and 4.9% (30Yr). While that holds, the 10Yr can breach 4.45% and rise to 4.6%. The 30Yr can rise back to 5.05%-5.1%.
The German 10Yr (3%) and 30Yr (3.5%) yields have dipped slightly. The 10Yr has support at 2.9% while above which the bias is positive to see 3.2%. The 30Yr has support in the 3.45%-3.4% region. A break above 3.55% can take it higher to 3.65%.
The 10Yr GoI (6.8379%) has surged well beyond our expected level of 6.8%. The upside now opens up to see 6.95%-7%. But before this rise happens, an intermediate dip to 6.75%-6.7% is possible while below 6.9%.
STOCKS
Global equities have bounced back sharply due to easing tensions in the Middle East. Dow rebounded but while below 47000 the risk of a fall towards 45000 remains. DAX also recovered but stays weak below 23000 with downside towards 22000 or lower unless it breaks above 23500. Nifty may see a short term rise towards 23000 but downside towards 21000 remains as long as geopolitical risks persist. Nikkei has reversed lower again and can fall towards 50000-48000 while below 54000. Shanghai continues to weaken and may decline further towards 3750-3700.
Dow (46265, -0.58%) bounced back sharply from a low of 45453 and rose to a high of 47210 yesterday on news of easing tensions in the Middle East. As long as it holds below 47000, the chances of a decline towards 45000 remain intact.
DAX (22,653.19, -0.71%) tested a low of 22057 and bounced back sharply to a high of 23710 due to ongoing peace talks in the Middle East, but closed lower at 22814 yesterday. While it holds below 23000, it can fall back towards 22000 or even lower in the near term. Only a sustained break above 23500 in the coming weeks can reverse the downtrend and take it higher towards 24000.
Nifty (22512.65, -2.60%) closed just above 22500 today. Some upside towards 23000+ levels can be seen tomorrow if the Rupee appreciates. However, as long as the US-Iran conflict persists, downside chances towards 21000 remain intact.
Nikkei (51,455, -2.99%) bounced back sharply to a high of 54020 yesterday due to easing tensions in the Middle East. However, it is falling sharply today and while it holds below 54000, our earlier bearish view of 50000-48000 remains intact.
Shanghai (3,819.62, -3.47%) fell to a low of 3794 yesterday in line with our expectations and can decline further towards 3750-3700 in the near term.
COMMODITIES
Crude prices have dropped sharply on easing geopolitical tensions. Brent may fall towards $90-$85 if it breaks below $95, while WTI needs to sustain below $90-$88 to decline towards $82-$80. Precious metals have also corrected sharply, but a bounce towards $4500 in Gold and $75 in Silver is possible if supports near $4000 and $60 hold. Copper remains weak below $5.70 and can fall towards $5.00. Natural Gas is holding above $2.80 and may stay within a $3.30-$2.80 range for some time.
Brent ($102.96) has plunged from a high of $114 to a low of $96 yesterday after President Trump postponed strikes on Iran's power plants and said discussions were underway to end the war. A sustained break below $95 is needed to see a decline towards $90-$85.
WTI ($91.91) plunged to a low of $84.37 yesterday following talks of peace in the Middle East. Today it has opened higher and is trading above $90. It needs to sustain below $90-$88 to see a further fall towards $82-$80.
Gold ($4322.40) and Silver ($66.76) have plunged in line with our expectations and tested lows of $4100 and $61 respectively. If the respective support levels hold, a bounce back towards $4500 and $75 can be seen in the near term.
Copper ($5.4130) has bounced back after hitting a low of $5.26 yesterday. While below $5.70, a fall to test $5.00 remains likely in the near term.
Natural Gas ($2.9350) has fallen sharply to a low of $2.87 yesterday. Immediate support is seen near $2.80, and while this holds, a range of $3.30-$2.80 can persist for some time.
DATA TODAY
GMT 0:30 IST 06:00 JP CPI
…Expectations 1.7 …Previous 1.5
DATA YESTERDAY
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NO MAJOR DATA HAS BEEN RELEASED TODAY.
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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