Kshitij Consultancy Services
Morning Briefing
Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
18 Jul 24. 0851 IST or 0321 GMT or 2321 EST

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GOOD MORNING!
FOREX

Dollar Index continued to decline further amid the higher speculations among the markets for a US rate hike in September and a possible intervention by BOJ yesterday to protect the Yen. Further if the fall continues a test of 103-102 could be seen in the Dollar Index. Euro on the other hand is headed towards 1.10. Watch out for the ECB meeting scheduled today where markets expect rates to remain unchanged. USDJPY and EURJPY have recovered well above their respective supports of 157-156 and 171/170.50 but still needs to see a strong rise past current levels to rise back in the coming sessions. USDCNY above 7.25/24, can head towards 7.28 in the medium term. Aussie and Pound if sustained above current levels, can head towards 0.68/6850 and 1.32 respectively. USDINR can continue to trade between 83.35-83.65 region with bias to the upside. Slight fall can be possible today on stronger Euro and a weaker Dollar. EURINR has risen past 91 and if sustained can extend it further towards 92-93.

Dollar Index (103.78) continued to decline yesterday as well. The two main reasons for it were the possibility of the U.S. Federal Reserve cutting interest rates and a possible intervention by BOJ to protect Yen. Currently it has broken below the support of 104 and if the fall continues, it can get extended to 103-102 in the coming sessions.

EURUSD (1.0935) has surged significantly because of the Dollar weakness. Currently it is headed towards its crucial resistance of 1.10. Thereafter, whether the rise continues further or gets halted will have to be seen. ECB meeting is scheduled today, where the markets expect rates to remain unchanged. Watch price action closely around the current levels.

Dollar-Yen (156.31) and EURJPY (170.92) had dipped slightly below our mentioned supports 156 and 170.50 respectively before recovering from there. Still a strong rise past current levels would be needed to head towards 161/162 and 175/176 respectively in the near term. Else, they would be vulnerable to test lower levels of 152 and 167/66 if follow through selling is seen.

USDCNY (7.2591) is finding it difficult to sustain above 7.26. But while above 7.25/24, we are keeping our view intact to see a rise towards 7.28 in the medium term. Overall, a broad range of 7.28-7.25/24 is likely to hold for some time.

While Aussie (0.6738) is rising higher within its narrow range of 0.67-0.68, Pound (1.3002) has tested its resistance at 1.30. Further if the rise continues, a test of 0.68/0.6850 and 1.32 looks likely to happen. Failure to do so can keep the range of 0.68-0.67 (Aussie) and 1.30-1.28 (Pound) intact for a while.

USDINR (83.5875) was closed yesterday. On the offshore markets is currently trading higher within the mentioned range of 83.30-83.65 which is likely to remain intact for the current week before it eventually starts rising higher towards 83.75 in the upcoming weeks. We will have to see if the Rupee shows some strength today on Euro strength and Dollar weakness. However, the downside for the pair is likely to be limited to 83.40/30.

EURINR (91.4004) continues to remain stable above 91 and if it manages to break above 91.50 and sustain, it can turn bullish to see a rise towards 92-93 in the medium term.

INTEREST RATES

The US Treasury yields have dipped below their support. This keeps intact our view of seeing an extended fall in the coming days. The German yields are at their key supports. We expect the yields to bounce back from here and keep the broader uptrend intact. The ECB meeting outcome today will be important to watch. The 10Yr and 5Yr GoI continue to fall in line with our expectation. They have room to test their supports. Failure to bounce back from that support can drag them further lower.

The US 10Yr (4.17%) and the 30Yr (4.39%) yields have dipped below 4.2% and 4.4% respectively. This keeps intact our view of seeing an extended fall to 4.1% (10Yr) and 4.3% (30Yr). Thereafter a bounce is possible.

The German 10Yr (2.42%) and the 30Yr (2.60%) yields are at their key support at 2.4% (10Yr) and 2.6% (30Yr). They have to sustain above this support to keep the broader bullish view intact of seeing 2.8% (10Yr) and 3% (30Yr) on the upside and avoid a deeper fall to 2.3%-2.2% (10Yr) and 2.5%-2.4% (30Yr).

The 10Yr GoI (6.9632%) continues to fall. It can test 6.95%-6.94%. A break below 6.94% can take it further down to 6.9%.

The 5Yr GoI (6.9150%) is coming down towards 6.9% as expected. Failure to bounce thereafter can drag it down to 6.8%.

STOCKS

Dow Jones has surged breaking above 40250 and has scope to target 42000. DAX continues to fall over the last 3 sessions but downside could be limited to 18400-18300. Nifty remains bullish to target 24700-25000. Nikkei and Shanghai have fallen sharply. Nikkei might fall towards 39000 while Shanghai might get support at 2900 and trade between 2900-3000 for a while.

Dow (41,198.08, +0.59%) has surged beyond 41000. Momentum is strong and if this sustains, 42000 can be seen in the coming days. Thereafter the price action will need a close watch.

DAX (18437.30, -0.44%) continues to fall. But support at 18400-18300 can limit the downside and trigger a reversal to keep the broader uptrend intact for seeing 19000-19200 on the upside.

Nifty (24613, +0.11%) continues to inch up. The bullish view is intact to see 24700 and higher levels. Support is at 24500 and then at 24250 and 24000.

Nikkei (40298.50, -2.08%) has fallen sharply, breaking below the support at 41000. Now the chances of rise towards 43000-44000 has got negated. It can fall further towards 39000.

Shanghai (2944.33, -0.63%) has fallen below 2950 contrary to our view for seeing a rise towards 3000. Support is at 2900. While that holds, a broad range of 2900-3000 can hold for some time.

COMMODITIES

Crude prices have recovered sharply but have resistance ahead which may hold and keep them range bound for a while. Gold and Silver can fall towards 2400 and 29.70/50. Copper is near its key support. Need to see if that holds or Copper continues to fall. Natural gas is heading down towards 2.0. We expect 2.0-1.9 to holds and produce a bounce back from there. Key focus is on the ECB meeting today.

Brent ($85.44) indeed fell to $83.30 in line with expectations for a fall to $83 and has bounced back from there. It may rise towards $87. For now a broad range of $87-83 can hold for a while.

WTI ($81.92) fell to $79.27 in line with expectations for a fall towards $79 and has risen back from there. A rise to $83-84 looks possible. If $84 holds, a broad range of $84-79 can be the trading range for a while.

Gold (2466.50) rose sharply to test 2488.40 in line with expectations for a test of 2460-2500 and has retreated from there. If it remains below 2500, a dip towards 2400 could be seen.

Silver (30.56) has fallen sharply breaking below the lower end of the 30.50-32.00 range and tested a low of 30.26 so far. A further fall to 29.70-29.50 looks likely. If 29.50 holds, it may bounce back towards 31.50-32.00 again.

Copper (4.41) has declined towards the support at 4.4. If 4.4 holds, a rise towards 4.6-4.7 could be seen. Else it would be vulnerable to a fall towards 4.3 or even lower.

Natural Gas (2.0530) is heading down towards 2.0 as expected. 2.0-1.9 are key immediate supports. While these holds, a rise towards 2.4-2.5 can be seen in the coming days.

DATA TODAY

1:30 07:00 Australia Labour Force
Kshitij Expn - ...Expected - ...Previous 39.7K

6:00 11:30 UK Unemp
Kshitij Expn 4.6% ...Expected - ...Previous 4.4%

11:45 17:15 ECB Mtg
Kshitij Expn 4.25% ...Expected - ...Previous 4.25%

12:30 18:00 US Philifed Index
Kshitij Expn 1.9 ...Expected - ...Previous 1.3

13:00 18:30 US TICS (Net foreign purch of long-term Sec)
Kshitij Expn - ...Expected - ...Previous 123.1$ Bln

Data Yesterday
..............
6:00 11:30 UK CPI Y/Y
Kshitij Expn 1.9% ...Expected 1.9% ...Previous 2.0% ...Actual 2.0%

9:00 14:30 EU CPI (YoY)
Kshitij Expn 2.5% ...Expected 2.5% ...Previous 2.6% ...Actual 2.5%

12:30 18:00 US Housing Starts
Kshitij Expn 1198K ...Expected 1300K ...Previous 1314K ...Actual 1353K

13:15 18:45 US Industrial Production
Kshitij Expn -0.1% ...Expected - ...Previous 0.9% ...Actual 0.7%

13:15 18:45 US Capacity Utilization
Kshitij Expn 78.5% ...Expected - ...Previous 78.3% ...Actual 78.8%

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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