GOOD MORNING!
FOREX
The Dollar index holds well above 100 and has potential rise further from here. The strength in the dollar index can drag the Euro lower. The USDJPY has come off from its high. It had surged on Friday after the 25-bps rate hike from the BoJ. While it sustains above the immediate support, the USDJPY can rise back and go further higher. EURJPY can also go higher if it manages to breach the immediate resistance. Aussie looks bullish and can rise more. Pound on the other had looks weak and can fall. The USDINR has room to rise more. This rise can happen either from here itself or after a short-lived dip from current levels.
Dollar Index (100.21) sustains above 100. Support is in the 100-99.75 region. While that holds, 101-101.50 is possible in the short-term. That in turn can drag the EURUSD (1.1485) down to 1.14 or even 1.13.
Dollar-Yen (156.64) surged to a high of 158 after the 25-bps rate hike from the BoJ on Friday. While above 156, it can test 160. EURJPY (179.92) can rise to 182. A break above it can clear the way for 185.
EURINR (110.10) has to sustain above 109.80 in order to go up to 110.50-111. Else, there is a danger of seeing a fall to 109 and even lower.
USDCNY (6.6960) has dipped further. This keeps intact our view of seeing 6.69 on the downside.
Aussie (0.7124) is holding well above 0.71. The upside remains open to see 0.72/0.73.
Pound (1.3391) has bounced slightly. But it is unlikely to sustain. View remains negative to see a fall to 1.33/32.
USDINR (95.88) has room to see 96.50. However, a dip to 95.50 is a possibility that cannot be ruled out before the above-mentioned rise happens.
INTEREST RATES
The US Treasury Yields have risen back well on Friday. That keeps intact our broader bullish view. The yields can rise more from here. Supports are there to limit the downside in case the yields fall back from here. The German Yields have bounced back. But the near-term picture looks weak to see some more rise. Thereafter the broader uptrend can resume. The 10Yr GoI is holding well above its support. That keeps the upside open to see more rise from here.
The US 10Yr (5%) and 30Yr (5.33%) yields have risen back. The view remains bullish to see 5.1%-5.2% (10Yr) and 5.5% (30Yr) on the upside. Support at 4.85% (10Yr) and 5.2% (30Yr) can limit the downside if the yields fall back.
The German 10Yr (3.51%) and 30Yr (3.84%) Yields have bounced back. But the downside remains open to see 3.43%-3.4% (10Yr) and 3.8% (30Yr) first. Thereafter the broader uptrend can resume targeting (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.0686%) has risen back well from the low of 7.0351%. While above 7%, the outlook is bullish to see 7.15%. Thereafter, the yield can turn down.
STOCKS
Dow remains vulnerable below 53000, with a break below 52000 opening the way towards 51000. DAX can bounce towards 26000 if 25500 holds. Nifty needs to break above 23500 for a rise towards 23800. Nikkei has turned stronger and can test 67000, where a pullback may occur. Shanghai is testing 3950 resistance, with a break above it opening 4000-4050.
Dow (52215, +0.26%) can break below 52000 and decline towards 51000 while below 53000. Only a sustained rise above 53000 would negate this downside risk.
DAX (25590, +0.44%) has fallen back sharply in line with our expectations after failing to break above 26000. If 25500 holds, a bounce back towards 26000 can be seen.
Nifty (23,346.40, +0.33%) needs to break above 23500 to turn bullish and gradually rise towards 23800. Otherwise, while below 23500, it remains at risk of falling towards 23000.
Nikkei (64965, -0.09%) is rising, contrary to our expectations, and can rise further towards the immediate resistance near 67000. A pullback can be seen from there.
Shanghai (3933.30, +0.56%) has moved to the upper end of the mentioned range. While 3950 holds, the earlier mentioned 3850-3950 range could remain intact. Otherwise, a break above 3950 would trigger a rise towards 4000-4050.
COMMODITIES
Brent and WTI continue to fall amid easing Middle East supply concerns, with further declines towards $100-$98 and $92-$90 possible. Gold can rise towards $4500-$4600 while above $4300. Silver remains positive above $63 and can rise towards $68-$70. Copper can rise towards $6.80-$6.85 while Natural Gas remains range-bound between $2.80-$3.00.
Brent ($101.56) and WTI ($94.02) continue to fall in line with our expectations amid signs that Middle East supply disruptions could ease. This could boost global oil supplies. A further fall towards $100-$98 and $92-$90 respectively can be seen in the near term.
Gold ($4416.60) can rise towards $4500-$4600 while holding above $4300.
Silver ($67.09) has risen in line with our expectations and can rise further towards $68-$70 while above $63.
Copper ($6.72) is moving higher in line with our expectations. A further rise towards the upper resistance near $6.80-$6.85 can be seen.
Natural Gas ($2.87) can continue to trade within the mentioned $2.80-$3.00 range for some time.
DATA TODAY
No major data release today.
FRIDAY'S DATA:-
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JP CPI
...Expected 1.8 % ...Previous 1.9 % ...Actual 1.9 %
BOJ Meeting
...Expected 1.25 % ...Previous 1.00 % ...Actual l.25 %
US Industrial Production
...Kshitij Expn. -0.1 % ...Expected 0.3 % ...Previous 0.2 % ...Actual 0.0%
US Capacity Utilization
...Kshitij Expn.75.9 %v ...Expected 76.4 % ...Previous 76.3 % ...Actual 76.3%
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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