GOOD MORNING!
FOREX
Lower US CPI print for Jun-26 (in line with market expectations) has pulled down the Dollar Index against other major currencies today. The dollar index can bounce back from 100.40, but the dip over yesterday has led the Euro, Aussie, Pound, and Yen to strengthen against the dollar temporarily. All the mentioned currencies can again start to weaken in the coming days as the dollar index starts to rise again. EURINR may rise on the expected rise in the USDINR towards 96.50 soon, but we may expect a dip today. EURJPY may test 186 initially before falling back to 184. USDCNY fell as expected but now it can bounce back from 6.7550 towards 6.78/80 again. USDINR could see an initial dip today to 96-95.90/85 max, on dollar weakness within an overall bullish biad towards 96.50.
Dollar Index (100.824) fell after the lower CPI release yesterday at 3.46% (US Headline CPI) for Jun-26 from the previous 4.17% seen for May-26. However, we may expect the index to remain above 100.40 and gradually rise back above 101 in the coming days. That said, EURUSD (1.1433) is trading higher just now but the upside is likely to be capped at 1.1470, from where a dip towards 1.1370 looks likely.
EURINR (109.9599) has risen to test 110, as mentioned yesterday, as the USDINR rallied to 96+ levels. The cross pair can face rejection from 110 and see a dip back towards 109.50 or slightly lower. But overall bullishness in the USDINR can keep EURINR bullish.
Dollar-Yen (162.06) has support at 161.50 with immediate resistance at 162.50, which needs to be breached to head towards our bullish target of 163/165. Till then we may expect consolidation within the 161.50-162.50 region.
EURJPY (185.35) has been rising over the last 3-sessions from 184.25. It could test 186 before again seeing a pullback towards 184 while the 186-184 trade region holds well.
USDCNY (6.7661) has fallen from 6.7843, as our expected level of 6.7850 seems to have held well. However, the immediate downside is likely to be capped at 6.7550 above which the pair can again bounce back towards 6.77/78.
Aussie (0.6985) and Pound (1.3401) have risen on temporary dollar weakness and could soon decline back towards 0.69 and 1.33 in the coming days, with immediate upside capped at 0.70 and 1.35, respectively.
USDINR (96.20) rose sharply above 96.00 to close higher. A further rise towards 96.50 and higher can be seen in the coming sessions while it remains above the immediate support zone of 95.90-95.85. However, for today, we may expect a test of the support triggered by temporary dollar weakness.
INTEREST RATES
The US Treasury Yields have come down after the inflation data release. However, support is there to limit the downside. The broader bullish view remains intact and the upside remains open to see more rise. The US CPI fell sharply to 3.46% in June from 4.17%. This fall is mainly due to lower crude prices in June. There are chances for the CPI to rise again in July following the recent rise in Crude Oil price. The German Yields remain stable. The bullish view is intact, and the yields can rise more. The 10Yr GoI has risen back sharply contrary to our expectation. A further rise from here can take it higher and delay the fall that we have been expecting.
The US 10Yr (4.59%) and 30Yr (5.10%) yields have dipped. But while above the 4.55%-4.5% (10Yr) and 5.05%-5% (30Yr) support zone, the bias will remain positive to see a rise to 4.7%-4.8% (10Yr) and 5.2% (30Yr).
The German 10Yr (3.11%) and 30Yr (3.62%) Yields remain stable. We retain our bullish view of seeing a rise to 3.2% (10Yr) and 3.75% (30Yr). Support is at 3%-2.98% (10Yr) and 3.55% (30Yr).
The 10Yr GoI (6.7945%) has risen back sharply contrary to our expectation. A rise above 6.8% can see an extended rise to 6.9%. That in turn will delay the fall to 6.6%.
STOCKS
Global equities remain mixed. Dow can decline further towards 52000-51800 while below 53000. DAX has recovered from key support and is likely to remain within the 24800-25500 range. Nifty remains weak below 24100 and could decline towards 23800, keeping the 23800-24400 range intact. Nikkei needs a break above 69000 to extend its recovery towards 70000-71000. Shanghai has bounced back from recent lows but remains vulnerable to a pullback towards 3900-3850 while below 4000.
Dow (52819, -0.33%) tested a low of 52255. While it remains below 53000, a further decline towards 52000-51800 can be seen in the near term.
DAX (25164, -0.40%) failed to sustain below 25000 and bounced back from a low of 24898. A broad range of 24800-25500 could hold for some time.
Nifty (24,052.05, -0.66%) remains weak after closing below 24100. A decisive break below 24000 could drag the index towards 23800 over the week, keeping our earlier mentioned range of 23800-24400 intact.
Nikkei (68480.89, +0.35%) has bounced back sharply from a low of 66430, contrary to our expectations. Immediate resistance is seen near 69000. A sustained break above this level could trigger a further rise towards 70000-71000. Otherwise, it may fall back towards 67000-66000.
Shanghai (3969.48, +0.04%) tested a low of 3869 and bounced back sharply to close near 3967 yesterday. While it remains below 4000, the index stays vulnerable to a pullback towards 3900-3850.
COMMODITIES
Brent and WTI can rise further towards $90 and $85 respectively. Gold continues to hold near the crucial $4000 support, keeping the broader $4000-$4250 range intact. Silver is likely to remain range-bound between $55 and $65. Copper has turned stronger after breaking above $6.30 and can rise further towards $6.40-$6.45. Natural Gas remains weak and can decline towards $2.85-$2.80 in the near term.
Brent ($85.60) can rise further towards $90 in the coming sessions. Thereafter, a sustained break above $90 would strengthen the bullish outlook towards $95-$100.
WTI ($80.05) can rise towards $85 in the coming sessions.
Gold ($4048.00) is hovering near the key support at $4000, which needs to hold to avoid a further decline towards $3800-$3600 and keep the earlier mentioned $4000-$4250 range intact.
Silver ($58.85) can continue to trade within the broad range of $55-$65 for some time.
Copper ($6.37) has risen above $6.30, contrary to our expectations. If it sustains above this level, a further rise towards $6.40-$6.45 can be seen.
Natural Gas ($2.9210) has risen slightly but can decline towards our earlier mentioned target of $2.85-$2.80 in the near term.
DATA TODAY
GMT 2:00 IST 07:30 CN Retail Sales
...Market -0.1 ...Previous -0.6
GMT 2:00 IST 07:30 CN IIP (YoY)
...Market 4.6 ...Previous 4.5
GMT 9:00 IST 14:30 EU Ind Prodn (MoM)
...Market 0.3 ...Previous 0.1
GMT 12:30 IST 18:00 US PPI
...Kshitij 0.6 ...Market 0.0 ...Previous 1.1
GMT 12:30 IST 18:00 US PPI ex Food & Energy (MoM)
...Kshitij 0.3 ...Market 0.3 ...Previous 0.4
GMT 9:30 IST 15:00 IN Trade bal
...Previous -28.21
GMT 14:00 IST 19:30 BOC Meeting
...Market 2.25 ...Previous 2.25
DATA YESTERDAY
==============
GMT 6:30 IST 12:00 IN WPI
...Market 9.2 ...Previous 9.7 ...Actual 10
GMT 12:30 IST 18:00 US CPI (MoM)
...Kshitij 334.1 ...Market -0.1 ...Previous 0.5 ...Actual -0.4
GMT 12:30 IST 18:00 US Core CPI (MoM)
...Kshitij 0.0 ...Market 0.2 ...Previous 0.2 ...Actual 0
GMT 20:00 IST 01:30 US TICS (Net foreign purch of long-term Sec)
...Market 128.5 ...Previous 104.8 ...Actual 232.7
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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