GOOD MORNING!
FOREX
Dollar Index has risen above 102 and the Euro is headed lower ahead of the FED and ECB policy meetings later this week. Dollar-Yen is sustaining the bounce and looks bullish towards 158, while EURJPY can rise to 177. EURINR can trade within 107-105.80 for the near term, while Pound can test 1.33 before a bounce can be seen from there. Aussie looks stable. USDCNY looks weak towards 6.65, while USDINR can rise to 95.50 this week. However, whether it would break past 95.50 and move higher or not is to be seen; there can be some pullback from levels near 95.50.
Dollar Index (102.02) trades above 102 as expected and could eventually move higher steadily towards 103. In the near term, an initial break above 102.15 is needed. Else, a decline back towards 101.50/30 could be on the cards, which can delay the expected rise by a couple of weeks.
EURUSD (1.1171) looks vulnerable to see 1.1150-1.11 on the downside while it remains below the 1.1250-1.1260 resistance zone.
Dollar-Yen (157.57) continues to rise and could be headed towards 158-158.15 soon. Thereafter, it is to be seen if the spot would face rejection and decline or manage to break higher. Above 158, 159 would come into the picture. Rise in the Dollar-Yen can take the EURJPY (176.05) higher to 177 in the coming days while support at 175 holds.
EURINR (106.3623) could remain ranged within 107-105.80 region unless a sharp break above 107 is seen in the medium term. The very near-term outlook is for steady trading.
USDCNY (6.6682) has fallen back after a brief rise seen yesterday to 6.6703. Our view however, remains bearish towards 6.65 for the near term and eventually down towards 6.52/50 in the very long term.
Aussie (0.7025) is holding steady above 0.70 and could remain within the 0.6990-0.7050 region for the very near term before a breakout on either side of the range is seen.
Pound (1.3339) is headed towards 1.33, a bounce from where, if seen can produce a rise towards 1.34/35 in the medium term.
USDINR (95.1950) rose sharply above 95 as expected and has closed higher. A test of 95.50 looks possible this week but whether there will be a pullback from there towards 95.20/95.00 or if the spot would break above 95.50 and continue to rise towards 96 needs to be seen.
INTEREST RATES
The US Treasury Yields remain stable. A strong follow-through rise is needed to go higher from here. Else, a fall to test their support can still happen first before the broader uptrend resumes. The US Fed meeting tomorrow will need a close watch. The German Yields have inched up. Resistance ahead can cap the upside and drag them lower again. The 10Yr GoI continues to move up. A key resistance zone is coming up which can halt the current rise and trigger a corrective fall. Need to wait and watch closely.
The US 10Yr (4.99%) and 30Yr (5.31%) Yields remain stable. A follow-through rise is needed to go up to 5.15%-5.2% (10Yr) and 5.4% (30Yr) straight away. Else, a fall to 4.85% (10Yr) and 5.2% (30Yr) is still a possibility before the broader uptrend resumes.
The German 10Yr (3.36%) and 30Yr (3.69%) Yields have inched up. But resistance at 3.4% (10Yr) and 3.75% (30Yr) can cap the upside. The yields are likely to turn down and fall to 3.25% (10Yr) and 3.6% (30Yr). The expected rise to 3.7% (10Yr) and 4%-4.1% (30Yr) will get delayed.
The 10Yr GoI (7.4826%) is inching up towards 7.5%. The 7.5%-7.6% is a key resistance zone which will need a close watch for a reversal.
STOCKS
Dow needs to hold 52000 to extend the rise towards 53000 or higher, else it can fall towards 51000. DAX has scope to rise towards 25600-25800 while it holds above 25000. Nifty needs to sustain above 22600 to advance towards 23000, else it can fall towards 22350-22250. Nikkei needs a sustained break above 64000 to open the path towards 65000 or higher. Shanghai remains weak below 3700 and can fall towards 3600-3500.
Dow (52361.58, +0.38%) has tested the high of 52620 before closing lower. It needs to hold above 52000 to extend the rise towards 53000 or higher. A break below this level would open the path towards 51000.
DAX (25410.84, +0.91%) has tested the high of 25509 before closing lower. While support at 25000 holds, the index has scope to rise towards 25600-25800 in the coming sessions.
Nifty (22753.20, +0.68%) recovered as expected after testing the low of 22387. It may open lower today but needs to sustain above 22600 to advance towards 23000. A decisive break below 22600 would drag the index towards 22350-22250 over the week.
Nikkei (63550.57, +2.19%) has rebounded sharply after testing the low of 62094 as anticipated. A sustained break above 64000 is required to open the path towards 65000 or higher in the coming weeks.
Shanghai (3697.52, +0.19%) remains below 3700. Scope remains open for a further decline towards 3600-3500 in the coming weeks.
COMMODITIES
Brent and WTI are declining as expected, with further downside towards $114–112 and $100–98, respectively. Gold has bounced above $4,000, but remains vulnerable to a sustained break below this level, which could drag prices towards $3,900–3,800. Silver also remains weak and can fall towards $52–50. Meanwhile, copper has risen as expected and can extend its gains towards $6.65–6.70 in the coming sessions.
Brent ($114.72) is coming off as expected and a further fall towards 114–112 can be seen. Alternatively, a break above 117 is needed to see a rise towards 119–120.
WTI ($100.84) has fallen as expected and can fall further towards 100–98 in the near term.
Gold ($4031.20) has bounced back above 4000 after testing level of 3990. Only a sustained break below 4000 would drag the price down to 3900–3800. Given the current momentum, the chances of this happening remain high.
Silver ($53.94) remains vulnerable for a decline towards $52–$50 in the near term.
Copper ($6.58) has risen in line with our expectation and can rise further towards 6.65-6.70 in the coming sessions.
Natural Gas ($3.0360) has risen and can stay within a range of 3.2–2.7 for some time.
DATA TODAY
12:30 18:00 US Durable Goods Orders
...Kshitij Exp.0.4 % ...Expected 1.8 % ...Previous 0.0 %
13:00 18:30 US Case Schiller
...Kshitij Expn. 2.5 % ...Expected 2.7 % ...Previous 2.5 % -
14:00 19:30 US New Home Sales
...Kshitij Expn. 694 K ...Expected 649 K ...Previous 684 K
14:00 19:30 US Cons Conf
...Kshitij Expn. 80.8 ...Expected 80.5 ...Previous 81.9
DATA YESTERDAY:-
--------------
GER IFO Business Climate Index
...Kshitij Expn.90.1 ...Expected 89.8 ...Previous 89.9 ...Actual 90.2
GER IFO Business Situations Index
...Kshitij Expn. 89.2 ...Expected 89.9... Previous 89.5 ...Actual 88.8
GER IFO Business Expectations Index
...Kshitij Expn. 91.1 ....Expected 90.4...Previous 90.4 ...Actual 91.6
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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