GOOD MORNING!
FOREX
Dollar Index has risen slightly but can be bearish while below 100 while Euro could trade within 1.1550-1.1650 in the near term. Aussie and Pound could rise above 0.72 and 1.36 respectively while EURINR looks bearish for a dip to 109.50-109. Indian Rupee strengthened as RBI sold dollars and increased the short dollar position which could keep rupee strength intact for the near term while the Chinese Yuan can strengthen towards 6.70 soon while 6.7250/7270 holds. USDJPY and EURJPY can rise in the near term towards 161-162 and 186 respectively.
Dollar Index (99.7681) has slightly risen. We expect the index to trade within 100-99 for sometime before seeing a decisive break on either side.
EURUSD (1.1579) 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 (160.32) has risen well and if sustains above 160, can rise towards 161-162 again in the medium term.
EURINR (110.0326) has fallen sharply. A break below 110, if seen can take it down initially towards 109.50-109.
EURJPY (185.65) is headed towards 186 in the coming sessions. Thereafter a break above 186 needs to be seen and sustained for further bullishness.
USDCNY (6.7229) has scope to rise to 6.7250-6.7270 before reversing back towards 6.72 and lower in the medium term. Overall view is bearish for a decline towards 6.70.
Aussie (0.7144) has support at 0.71 above which the bview is bullish for a slow rise towards 0.72 and eventually towards 0.73 in the medium term.
Pound (1.3501) has immediate support near 1.35 and lower at 1.3450 which are likely to hold and produce a decent bounce towards 1.37 in the coming days. Near term view is bullish.
USDINR (94.94) declined sharply yesterday as RBI intervened and sold dollars. This has further increased the short dollar position to $136.77bln. This could be supportive of Rupee strength in the near term. A sustained trade below 95 is needed to dip towards 94.50 in the coming days.
INTEREST RATES
The US Treasury Yields continue to move up. Rising oil price is pushing the yields higher. The Treasury yields have room to rise more. Outlook continues to remain bullish. The German Yields remain in their resistance zone. Need to see if they are able to breach the resistance and go higher or falling down from here. The 10Yr GoI has risen just above its key resistance. If the breakout sustains, then the yield can rise more. It will also negate our view of seeing a fall back.
The US 10Yr (4.81%) and 30Yr (5.29%) yields continue to move up. The 10Yr has risen above 4.8%. While this sustains, a further rise to 4.9%-5% is possible. The 30Yr can rise to 5.4%.
The German 10Yr (3.34%) and 30Yr (3.81%) Yields remain in their respective resistance zone of 3.3%-3.35% and 3.8%-3.85%. Need to wait and watch if the yields are breaking above 3.35% (10Yr) and 3.85% (30Yr) and going higher or turning down.
The 10Yr GoI (6.9581%) has risen above 6.95%. If this sustains, then 7% and even 7.15% can be seen on the upside. That in turn will negate the fall to 6.8% and lower that we were expecting.
STOCKS
Dow and DAX remain weak and could fall further towards 52500-52000 and 25500, respectively, as Middle East tensions weigh on sentiment. Nifty is also under pressure and, while it remains below 24,200, the chances are slightly tilted towards a break below 24,000, which could drag it towards 23800-23700. Nikkei needs to hold above 64500 to keep the earlier upside view towards 67000-68000 intact, while Shanghai is likely to remain range-bound within 4000-3850 for some time.
Dow (52840.89, +0.02%) has broken below 53000 due to heightened tensions in the Middle East between the US and Iran. A further decline towards 52500-52000 could be seen in the coming sessions.
DAX (25843.38, -0.55%) has fallen well below our mentioned level of 26000 and tested a low of 25835 yesterday. It risks falling further towards 25500 or lower in the coming sessions.
Nifty (24,055.80, –0.10%) tested a low near 23,950 before closing almost flat yesterday. It needs to move above 24,200 to rise further towards 24,400 in the coming weeks. Alternatively, a break below 24,000 would trigger a further fall towards 23,800-23,700. Considering the heightened tensions in the Middle East, the chances are slightly tilted towards a break below 24,000.
Nikkei (64575.72, -0.47%) has fallen contrary to our expectation but needs to break below 64,500 to negate our earlier-mentioned rise towards 67,000-68,000 and trigger a fresh fall towards 62,000. We need to wait and watch.
Shanghai (3937.32, -1.08%) has pulled back and could trade within our earlier-mentioned range of 4000-3850 for some time.
COMMODITIES
Brent and WTI have turned strongly bullish after breaking above our earlier ranges and could move towards 100 and 95, respectively, as US-Iran tensions remain high. Gold and Silver remain weak and could fall further towards 4200 and 62-60, respectively, while higher Treasury yields and hawkish Fed expectations continue to weigh on them. Copper can hold within 6.5-6.8 as long as 6.5 remains intact. Natural Gas is likely to remain range-bound between 2.70-3.00 while below 3, but a break above 3.00 could open the way towards 3.25-3.50.
Brent ($95.81) and WTI ($91.09) have soared and broken above our mentioned ranges due to the fresh strikes between the US and Iran. With tensions running high, prices could move further up towards 100 and 95, respectively, in the near term.
Gold ($4345) has broken below 4400 due to rising rate hike expectations and pressure from higher Treasury yields. It risks falling further towards 4200 in the coming sessions.
Silver ($64.36) has fallen sharply, contrary to our expectation, due to the hawkish Fed signal from Jackson Hole. A dip towards 62-60 remains possible in the near term before any recovery is seen.
Copper ($6.53) has plunged to a low of 6.51 yesterday, in line with our expectation. While 6.5 holds, our earlier-mentioned range of 6.5-6.8 could hold for some time.
Natural Gas ($2.96) is holding below 3, and while below this level, a range of $2.70-$3.00 could hold for some time. Alternatively, a break above $3.00 could pave the way for higher levels of $3.25-$3.50.
DATA TODAY
22:30 04:00 AU PMI
...Previous -19.6 ...Actual-16.6
1:30 07:00 AU GDP
...Expected 0.30 % ...Previous 0.27 % ...Actual 0.4%
14:00 19:30 BOC Meeting
...Expected 2.25%...Previous 2.25 %
DATA YESTERDAY:-
----------------
JP PMI
...KshitijExpnn 54.5 ...Expected 55.1 ...Previous 54.5 ...Actual 54.9
CN PMI
...kshitijExpn 51.8 ...Expected 51.5 ...Previous 50.9 ...Actual 51.5
IN Manufacturing PMI
...Kshiitiij Expn 53.5 ...Expected 52.9 ...Previous52.9 ...Actuual52.8
CH PMI
...Kshtj Expn 56.2 ...Expected 54.1 ...Previous 53.2 ...Actual 57.1
EU PMI
...Expected 52.8 ...Previous 52.8 ...Actual 52.7
UK PMI
...kshitij Exp 51.9 ...Expected 51.5 ...Previous 51.5 ...Actual51.7
EU Unemp
...Expected 6.3 % ...Previous 6.4 % ...Actual 6.4%
CA PMI
...Previous 53.5 ...Actual 53.0
US Manufacturing ISM
...kshitij Expn. 56.9 ...Expected 55.2 ...Previous 55.6 ...Actual54.6
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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