GOOD MORNING!
FOREX
Lower-than-expected ADP Employment and US Jobless claims data have kept the Dollar Index lower. The market now awaits the NFP data today. A weaker-than-expected level, if seen, can drag down the Dollar Index lower from current levels, delaying a break above 100 by a week or so. That keeps Euro within the 1.15-1.16 region for the near term while the USDJPY can trade within the broad 159-157 region. EURJPY can slowly rise towards 184 while above 181. Aussie and Pound can trade within 0.71-0.70 and 1.35-1.34 region while USDCNY can target 6.70 while below 6.75. USDINR needs to decisively break above 95.50 to trigger a rally. Till then a range of 94.90/95.00-95.25/50 could hold.
Dollar Index (99.95) has risen and seems to be holding above the 99.50 support. A break above 100 is needed for the index to start moving up further towards 100.50-101 in the next week. Watch US NFP data release today. A dip in the data would make the index fall back towards the 99.50 or slightly lower. Thereafter it would be important to see if the price can bounce back in the coming week or not.
EURUSD (1.1524) has dipped well but we continue to keep a trade range of 1.15-1.16, allowing for a possible rise back to the upper end in case the US NFP data comes out weaker than market expectations.
Dollar-Yen (158.27) is likely to trade within the 159-158/157 region for the next few sessions before we see any decisive breakout on either side of this range.
EURINR (109.81) is likely to trade 110.30 and head towards 109 below in the coming week while EURJPY (182.42) could slowly rise towards 184 while above 181.
USDCNY (6.7474) could dip towards 6.70 in the next couple of weeks while it sustains below 6.75.
Aussie (0.7029) could continue to trade within 0.71-0.70 region while Pound (1.3453) could fluctuate within the 1.35-1.34 region.
USDINR (95. 225) closed higher yesterday above 95.22. Note that important resistances are seen near 95.25 and higher at 95.50, which, if holds, could keep the spot within the 95.50/25-95.00/94.90 region for the near term, with possible bullish bias intact for the medium to long term, which would get triggered on a break above 95.50.
INTEREST RATES
The US Treasury and the German Yields have risen back well from their support as expected. The bullish outlook remains intact for both the German and US Yields. They can rise more from here. The US Unemployment and NFP data release today evening will be important to watch. The 10Yr GoI has dipped further. A break below the intermediate support can drag it further lower from here. Outlook remains bearish.
The US 10Yr (4.67%) and 30Yr (5.22%) yields have risen back sharply. The support at 4.6% (10Yr) and 5.15% (30Yr) has held very well. That keeps intact out bullish view of seeing 4.8% (10Yr) and 5.35%-5.4% (30Yr) on the upside.
The German 10Yr (3.14%) and 30Yr (3.64%) Yields have bounced back from their support as expected. Bullish view is intact. The yields can rise to 3.3%-3.35% (10Yr) and 3.8% (30Yr).
The 10Yr GoI (6.7666%) has dipped further. As mentioned yesterday, a break below 6.75% can drag it down to 6.7% initially and then to 6.6% eventually.
STOCKS
Dow has turned weaker and can decline further towards 53000. DAX is pulling back but remains constructive above 26000, with scope for a rebound towards 27000 unless it breaks lower. Nifty continues to hold above the key 24500 support and can rise towards 24800-25000. Nikkei remains under pressure but can bounce back towards 67000-68000 while above 64000. Shanghai has strengthened after breaking above 3900 and can advance further towards 4000-4050 in the near term.
Dow (53910.67, -0.19%) has retreated sharply, contrary to our expectations. A test of 53000 can be seen in the coming sessions.
DAX (26241.71, -0.03%) has pulled back, but it needs a break below 26000 to trigger a further decline towards 25500-25000. Otherwise, our view remains intact for a bounce back towards 27000.
Nifty (24,636.00, +0.05%) closed above 24600 yesterday and can eventually rise towards 24800-25000 while it remains above the support near 24500.
Nikkei (65110.68, -0.84%) is weakening, but while above 64000, the possibility of a bounce back towards 67000-68000 remains intact.
Shanghai (3912.57, +0.31%) has risen above 3900, in line with our expectations, and can now move further higher towards 4000-4050 in the near term.
COMMODITIES
Commodities remain volatile as renewed Middle East tensions have lifted crude prices. Brent and WTI likely to stay range-bound within $80-$100 and $75-$90 respectively. Gold remains bullish above $4200 and can rise further towards $4500, while Silver can extend its gains towards $65-$70. Copper remains constructive but needs a sustained break above $6.85 to move towards $6.90-$7.00. Natural Gas has weakened further after breaking below expected levels and can decline towards $2.55-$2.50 in the near term.
Brent ($83.82) and WTI ($78.02) have bounced back contrary to our expectations due to renewed tensions in the Middle East. Prices are likely to remain volatile and broadly range-bound between $80-$100 and $75-$90 respectively for some time.
Gold ($4317.70) can rally further towards $4500 in the coming sessions while above $4200.
Silver ($62.43) has strengthened and can rise further towards $65-$70 in the coming sessions.
Copper ($6.76) briefly broke above $6.80 and tested a high of $6.87, but failed to sustain the gains and closed lower at $6.71. A sustained break above $6.85 is needed to trigger a further rise towards $6.90-$7.00.
Natural Gas ($2.6260) has fallen below our expected levels and can now decline further towards $2.55-$2.50.
DATA TODAY
12:30 18:00 US NFP
...Kshitij Expn 137 K ...Expected 88 K ...Previous 57 K
12:30 18:00 US Unemployment Rate
...Expected 4.2 % ...Previous 4.2 %
12:30 18:00 US Avg Hrly Earnings
...Kshitij Expn 0.3 ...Expected 0.3 ...Previous 0.3
12:30 18:00 US Average Hourly Earnings Production & Non Supervisory Employees
...Previous 0.2
12:30 18:00 CA Labour Force
...Expected 15.0 ...Previous 18.2 K
DATA YESTERDAY:-
--------------
Australia Trade Balance
...Expected -1.08 A$Bln...Previous -2.37 A$bln ...Actual 1.93 A$bln
EU Retail Sales
...Expected 0.1% ...Previous 0.4 % ...Actual-0.3%
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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