GOOD MORNING!
FOREX
Near-term stability can be expected in the Dollar Index, Euro, EURJPY, USDJPY, Aussie, Pound and USDINR within 100.20-99.50, 1.1550-1.15, 182-181, 158-156, 0.71-0.70, 1.35-1.34 and 95.50-95.00, respectively, before moving in a specific direction in the medium term. EURINR is likely to sustain below resistance at 100.30. RBI policy meeting is due today.
Dollar Index (99.894) is likely to trade within the 100.20-99.50 region in the very near term before attempting to rise higher eventually while the EURUSD (1.1527) could trade within the 1.15-1.1550 region for now, with resistance seen at higher levels of 1.16 and overall medium-term trend still looking bearish.
Dollar-Yen (157.64) seems to be facing a rejection at 158 just now, and if the dip sustains, we may expect the pair to spend some time below 158 for a few sessions before heading towards upper resistance near 159.
EURINR (109.6279) continues to trade below the resistance at 110.30 and is likely to head towards 109 soon while EURJPY (181.71) could trade between 182-181 region for the very near term.
USDCNY (6.7452) has fallen sharply from yesterday’s session high of 6.7580 to currently trade below 6.75. If the pair sustains a decline below 6.75, we may have to allow for a slow dip towards 6.70.
Aussie (0.7042) is holding above 0.70. We may expect near-term trade to hold between 0.71-0.70 while Pound (1.3445) could attempt to test 1.35 in the coming days, while above 1.34. Thereafter, an eventual decline towards 1.3350 or lower can be possible in the longer run.
USDINR (95.3825) traded within a narrow range yesterday. The RBI is likely to keep repo rates unchanged today. Immediate trade can be seen within 95.00-95.50 with a medium-term extension to 95.50/75 possible.
INTEREST RATES
The US Treasury Yields have come down sharply. A strong fall in oil price following the news that the Strait of Hormuz could be reopened has dragged the yields lower. Support is there near current levels. Failure to bounce back from there can trigger an extended fall. We will have to wait and watch. Our expected rise is just getting delayed but has not been negated. The German Yields are coming closer to their support. We expect them to bounce back and resume the overall uptrend from there. The 10Yr GoI has dipped further. It has to sustain above its immediate support to go back up again. Else the broader downtrend can resume straight away. The RBI monetary policy meeting outcome is due today and it will need a close watch.
The US 10Yr (4.62%) and 30Yr (5.18%) yields have come down sharply. 4.6% (10Yr) and 5.15% (30Yr) are key supports. Failure to bounce back from there can trigger an extended fall to 4.5% (10Yr) and 5.1% (30Yr). Thereafter the yields can rise back. The expected rise to 4.8% (10Yr) and 5.35%-5.4% (30Yr) is getting delayed now.
The German 10Yr (3.12%) and 30Yr (3.63%) Yields are coming close to their support level of 3.1% (10Yr) and 3.6% (30Yr). We expect them to bounce from this support and keep intact our bullish view to see 3.3%-3.35% (10Yr) and 3.8% (30Yr).
The 10Yr GoI (6.8152%) has come down further. It has to sustain above 6.8% and bounce back to keep alive the chances of seeing 6.9% once again. Else the fall to 6.7%-6.6% can happen straight away.
STOCKS
Global equities have strengthened on optimism surrounding easing tensions in the Middle East. Investor sentiment has improved on expectations that the Strait of Hormuz could reopen soon, easing concerns over global energy supplies. Dow and DAX remain bullish and can rise further towards 55000-55500 and 27000-27500 respectively. Nifty continues to hold a positive bias and can advance towards 25000-25200 in the coming weeks. Nikkei has turned bullish and can extend its gains towards 67000-68000. Shanghai is likely to remain range-bound within the 3750-3900 band while below 3900.
Dow (54446.79, +0.33%) has risen sharply above 53000 and tested a high of 54423, in line with our expectations. While above 54000, it can rise further towards 55000-55500.
DAX (26489.19, +0.67%) has moved up sharply in line with our expectations and can extend its rally towards 27000-27500.
Nifty (24,614.90, -0.64%) fell sharply to test a low of 24427 but managed to close above 24600 yesterday. It could open with a gap up near 24800-24900 due to improving optimism surrounding the Middle East. A further rise towards 25000-25200 can be seen over the coming weeks.
Nikkei (66015.38, +0.76%) has moved up sharply, contrary to our expectations of a decline. A further rise towards 67000-68000 can be seen in the near term.
Shanghai (3854.96, +0.85%) has risen sharply, but while below 3900, it can continue to trade within the broad range of 3750-3900 for some time.
COMMODITIES
Commodities remain mixed as easing geopolitical tensions have weighed on crude prices. Brent and WTI can decline further towards $75-$70 and $70-$65 respectively. Gold is likely to remain range-bound within the broad $4000-$4200 range, while Silver can continue to trade between $55 and $62. Copper remains bullish after breaking above $6.60 and can rise further towards $6.70-$6.80. Natural Gas has turned weaker and can decline further towards $2.65 in the near term.
Brent ($78.31) and WTI ($74.53) have fallen sharply amid hopes that the US and Iran are moving towards an agreement to reopen the Strait of Hormuz. A further decline towards $75-$70 and $70-$65 respectively can be seen in the near term.
Gold ($4170.20) can continue to trade within the broad range of $4000-$4200 for some time.
Silver ($60.55) has risen and can continue to trade within the broad range of $55-$62 for some time.
Copper ($6.65) has risen above $6.60 and can extend its gains towards $6.70-$6.80.
Natural Gas ($2.69) has fallen and can decline further towards $2.65 in the near term.
DATA TODAY
22:30 04:00 AU PMI
...Previous -16.8
4:30 10:00 RBI Repo Rate
...Previous 5.25 % ...Expected 5.25 %
4:30 10:00 RBI Rev Repo Rate
...Previous 3.35 %
4:30 10:00 RBI MSF
...Previous 5.50 %
5:00 10:30 IN Services PMI
...Previous 57.4 ...Expected 53.1
8:00 13:30 EU Composite PMI
...Expected 49.6 ...Previous 49.4
12:15 17:45 US ADP Emp
...Kshitij Expn -183 K ...Expected 71 K ...Previous 98 K
DATA YESTERDAY:-
--------------
US Trade Balance
...Expected -73.0 $bln ...Previous-77.6 $bln ...Actuual-77.3$bln
CA PMI
...Expected 50.2 ...Previous 53.0 ...Actual 53.5
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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