GOOD MORNING!
FOREX
Dollar Index fell along with the decline in USDJPY on possible intervention from the Bank of Japan. This has led to a short rally in major currencies against the US Dollar. Euro could trade within 1.1550-1.1650 in the near term while Aussie could rise towards 0.73. EURINR has declined as expected and could test 109 in the near term before trying to rebound from there. The Indian Rupee strengthened in the offshore Market as RBI stated a $127mln FCNR deposits so far. This could translate to further Rupee strength in the very near term taking it to 94.50 or even 94 before reversing. The Chinese Yuan can strengthen towards 6.70 soon while 6.7250/7270 holds. USDJPY and EURJPY look bearish towards 158-156 and 184 respectively for the near term.
Dollar Index (99.555) has dipped. We may expect a test of 99, the lower end of the 100-99 range before the index moves up.
EURUSD (1.1585) has immediate support near 1.1550 above which a rise towards 1.1650 looks possible in the near term. Near term range of 1.1550-1.1650 can hold for the near term.
Dollar-Yen (158.44) fell back from levels above 160 seen yesterday contrary to our expectations of sustained trade above 160. Now while below 160, the pair looks bearish for a dip to 158 or lower.
EURINR (109.5072) has fallen sharply in line with our expectation. A dip to 109 or lower looks likely but may hold temporarily and lead to a bounce back soon.
EURJPY (183.58) has interim support at 184.50 and lower at 184 which is likely to hold and take the cross pair towards 186 in the medium term.
USDCNY (6.7178) has dipped on a decline in the Dollar index. While below 6.72, view is bearish towards 6.70.
Aussie (0.7167) looks stable for now. It has support at 0.71 above which the view is bullish for a slow rise towards 0.72 and eventually towards 0.73 in the medium term.
Pound (1.3489) has broken below the initial support at 1.35 and has scope to test 1.3450 in the near term before pausing for a rebound.
USDINR (94.7550) traded below 95 yesterday. However, in the offshore Market, the pair saw a sharp decline to 94.50/20 as the RBI stated the FCNR deposits to have risen to $127.22 mln. It would be important to see if the decline seen in the offshore Market translates into a dip in the OTC also today or not in which case, we may expect a test of 94.50 or even 94 before a sharp rebound is seen.
INTEREST RATES
The US Treasury Yields have come down slightly. Supports are there to limit the downside. The bullish view is intact, and the yields can rise more. The German Yields have risen above their key resistance. Need to see if this break sustains. If it does, then more rise is on the cards. The 10Yr GoI has come off from its high of Wednesday. But the upside remains open for more rise while it sustains above the immediate support.
The US 10Yr (4.78%) and 30Yr (5.26%) yields have come down slightly. Support at 4.75%-4.73% (10Yr) and 5.2% (30Yr) can limit the downside. The bullish view is intact to see 4.9%-5% (10Yr) and 5.4% (30Yr).
The German 10Yr (3.37%) and 30Yr (3.89%) Yields have risen above their 3.35% and 3.85% resistance respectively. If this sustains, a further rise to 3.5% (10Yr) and 4% (30Yr) is possible. Need to wait and watch.
The 10Yr GoI (6.9754%) touched 7% and then has come down. While above 6.95%, the chances of a rise to 7.15% cannot be ruled out.
STOCKS
Dow remains vulnerable to 52500-52000 while below 53500. DAX can decline towards 25500. Nifty needs to sustain above 24000 for a rise towards 24200, while a break below 23800 could drag it towards 23600. Nikkei remains weak and can decline towards 62000. Shanghai is likely to remain range-bound between 3850-4000 while below 4000. 4000.
Dow (53157.29, +0.07%) fell to 52790 and bounced back to close above 53000 yesterday. Immediate resistance is seen near 53500. While this holds, the index remains vulnerable to a fall towards 52500-52000.
DAX (25894.71, +0.07%) tested a low of 25759 yesterday and remains vulnerable to a decline towards 25500.
Nifty (23,914.45, -0.59%) closed higher after testing a low of 23786. It needs to move above 24000 to rise towards 24200 in the coming weeks. Alternatively, a break below 23800 would drag the index further down towards 23600.
Nikkei (64690.27, +0.30%) tested a low of 63740 yesterday and, as mentioned, can decline towards 62000 in the near term.
Shanghai (3960.07, +0.47%) can continue to trade within the range of 3850-4000 for some time while below 4000.
COMMODITIES
Crude prices continue to strengthen towards $100 (Brent) and $95 (WTI) respectively. Gold remains vulnerable to a decline towards $4200 unless it sustains above $4600. Silver has weakened sharply and can dip further towards $62-$60 before a recovery. Copper is likely to remain range-bound between $6.50-$6.80 for some time. Natural Gas is attempting to break above $3.00, with a sustained break opening the way towards $3.25-$3.50.
Brent ($95.58) and WTI ($91.96) continue their upward movement and can rise towards $100 and $95 respectively in the near term.
Gold ($4454.23) has seen a low of $4329 yesterday and remains vulnerable to a decline towards $4200 in the coming sessions unless it breaks above $4600 on a sustained basis.
Silver ($66.36) fell to a low of $63.38 yesterday. A dip towards $62-$60 remains possible in the near term before any recovery is seen.
Copper ($6.61) could continue to trade within the range of $6.50-$6.80 for some time.
Natural Gas ($3.0210) is attempting to break above $3.00, and a sustained break above this level could pave the way for higher levels of $3.25-$3.50.
DATA TODAY
0:30 06:00 Australia Trade Balance
...Expected 1.39 A$bln ...Previous 1.93 A$bln
5:00 10:30 IN Services PMI
...Expected 53.8 ...Previous 54.5 -
5:45 11:15 CH GDP
...Expected 1.7 % ...Previous 0.7 %
6:30 12:00 CH CPI
...Expected 0.0 % ...Previous 0.4 %
12:30 18:00 US Trade Balance
...Kshiitij Expn -81.60 $bln ...Expected-86.40 $bln ...Previous-73.26 $bln
DATA YESTERDAY:-
---------------
AU PMI
...Previous -19.6 ...Actual -16.6
AU GDP
...Expected 0.30 ...Previous 0.29 % ...Actual 0.42%
BOC Meeting
...Expected 2.25 % ...Previous 2.25 % ...Actual 2.25 %
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.
WARNING !!
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