GOOD MORNING!
FOREX
The brief decline in the Dollar Index seen last week has recovered, as the Dollar Index is headed towards 101, taking Euro down towards 1.14 or lower and USDJPY higher towards 162/163. EURINR can test 108 while below 109.50, while EURJPY may rise towards 185/186. USDCNY may trade within the 6.76-6.8250 region for the coming weeks. Aussie and Pound could remain below 0.70 and 1.34 for the very near term as they hold as interim resistance with the Dollar Index poised to rise. USDINR could fall to 95.08 but unless that breaks lower, it may bounce back towards 95.50 and gradually rally towards 96. We would suggest buying on dips for the near term.
Dollar Index (100.921) has held above 100.50 and risen slightly today. It can rise further towards 101-101.50 while above 100.25. This could put downward pressure on the EURUSD (1.1432) and take it down to 1.14-1.1380 soon.
EURINR (108.8756) dipped slightly on Friday as expected. It can continue to fall towards 108.50-108 with near-term upside capped at 109.50.
EURJPY (184.89) is headed towards 186 as expected.
Dollar-Yen (161.77) has scope to rise to 162-163 in the coming days as the pair looks strong above 160.
USDCNY (6.7844) is likely to trade within the broad 6.8250-6.76 region for the next 2-3 weeks.
Aussie (0.6930) is likely to test 0.70 before facing rejection from there. Unless a sustained rise above 0.70 is seen, it would be difficult for Aussie to turn bullish for the medium term.
Pound (1.3339) could dip while below 1.34 and range within the 1.34-1.3250 region for the near term.
USDINR (95.3975) dipped lower but closed above 95 on Friday. Immediate support is seen at 95.08. A sustained break below is needed to fall to 94.90-94.80 this week. However, overall direction is still bullish. We suggest buy on dips from current levels for a rally towards 96 in the coming weeks.
INTEREST RATES
The US Treasury Yields have room to go higher and test their resistance this week. But the price action thereafter will need a close watch. The German Yields continue to move up in line with our expectation. They can test their resistance and then turn down again. The 10Yr GoI looks vulnerable to break its immediate support and see a deep fall going forward.
The US 10Yr (4.47%) and 30Yr (4.98%) yields were closed on Friday. We expect them to rise towards 4.55% (10Yr) and 5.05% (30Yr) from here. Need to see what happens after that.
The German 10Yr (2.93%) and 30Yr (3.51%) continues to move up. That keeps intact our view of seeing 3% (10Yr) and 3.55% (30Yr) on the upside. The yields can turn down thereafter.
The 10Yr GoI (6.7108%) has dipped further. That keeps it vulnerable to break 6.7% and see a deeper fall to 6.5%-6.4%. A rise above 6.75% is needed to get some breather.
STOCKS
Global equities remain broadly positive. Dow and DAX can rise further towards 53500-54000 and 26500 respectively while holding above key support levels. Nifty is also constructive above 24250 and can advance towards 24400 and higher. Nikkei has bounced back from recent lows but is likely to remain within the 68000-73000 range unless it breaks below 68000. Shanghai continues to hold above 4000 and could trade within the 4000-4150 range for some time.
Dow (53249.57, +0.12%) can rise further towards 53500-54000 in the near term while it remains above 53000.
DAX (25981.23, +0.28%) tested a high of 25978 on Friday in line with our expectations. A sustained break above 26000 could trigger a further rise towards 26500 in the near term.
Nifty (24,270.85, +0.39%) dipped lower but closed above 24250 on Friday. While it holds above this level, there is scope for a rise towards 24400 and higher in the coming weeks.
Nikkei (69770.56, +2.12%) has bounced back after testing a low of 67730 and could trade within the broad range of 68000-73000 for some time. A sustained break below 68000 would drag it further down towards 67000-66500.
Shanghai (4043.64, +0.37%) is holding above the key support near 4000. While this level holds, our earlier mentioned range of 4000-4150 could persist for some time.
COMMODITIES
Brent and WTI can decline further towards $70 and $65 before a corrective bounce back is seen. Gold is approaching immediate resistance near $4200-$4250, where the next directional move will become clearer. Silver and Copper continue to strengthen and can rise towards $65-$70 and $6.30-$6.40 respectively. Natural Gas is likely to remain range-bound within the broader $3.00-$3.50 range.
Brent ($71.81) can decline further to test $70 in the near term before a bounce back towards $80-$85 is seen thereafter.
WTI ($68.51) can decline further towards $65 in the near term before a bounce back towards $75-$80 takes place.
Gold ($4191.70) is moving higher in line with our expectations and can soon test the immediate resistance near $4200-$4250. Thereafter, it remains to be seen whether it breaks above this level and moves higher or reverses lower.
Silver ($63.14) is rising in line with our expectations and can move further up towards $65-$70 in the near term.
Copper ($6.24) has risen in line with our expectations and can move higher towards $6.30-$6.40 in the near term.
Natural Gas ($3.1850) can continue to trade within the broad $3.00-$3.50 range for some time.
DATA TODAY
GMT 9:00 IST 14:30 EU Retail Sales
...Previous -0.38
DATA LAST FRIDAY
================
GMT 5:00 IST 10:30 IN Services PMI
...Market 57.3 ...Previous 59.8 ...Actual 57.4
GMT 8:00 IST 13:30 EU Composite PMI
...Market 48.9 ...Previous 47.7 ...Actual 49.4
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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