GOOD MORNING!
FOREX
The Dollar Index holds stable ahead of the FOMC tonight. The markets expect rates to remain unchanged with a 30% probability to a surprise rate hike. We continue to look at the near-term range of 100.70-101.50 to hold for now while Euro may trade in the 1.1350-1.1420 region. EURINR trades higher today above 109 but the risk of slipping towards 108.50 or lower remains on the cards. USDJPY remains bullish towards 164.50-165 with immediate stability for a few sessions while EURJPY can extend to 187/188 while above 186. USDCNY may trade within 6.75- 6.7850. Aussie may test 0.69 while Pound may find support near 1.3250 before bouncing towards 1.34. USDINR has tested 95.6250 before closing higher. There is some scope to see 95.50/25 this week before resuming the upmove towards 96 or higher again.
Dollar Index (101.373) is stable ahead of the FED policy meeting tonight. We continue to hold on to a near term range of 101.50-100.70 till further breakout is seen on either side of the range.
EURUSD (1.1391) also looks stable below 1.14. We may expect a near term trade between 1.1350-1.14 with some scope of testing 1.1420 on the upside.
EURINR (109.0565) has bounced back slightly to trade above 109 now. Below 109, there is support at 108.50, which can produce a bounce back towards 110 soon. Only a break below 108.50, if seen in the medium term, can lead to further weakness.
Dollar-Yen (163.71) seems to be holding steady below 164 for some time before we see a resumption of the rally towards 164.50-165 in the medium term.
EURJPY (186.51) has moved up and while it continues trade above186, it can rise towards 187/188 in the longer run. Any dip from here can limit itself to 185.75.
USDCNY (6.7707) is has moved up a bit but can remain within the near-term range of 6.7580-6.75.
Aussie (0.6953) tested 0.6937 before rising from there slightly. While below 0.70, Aussie has scope to dip further towards 0.69.
Pound (1.3297) trades below 1.33. Lower support is seen near 1.3250, which is likely to hold and produce a bounce back towards 1.34 in the medium term.
USDINR (95.8575) tested 95.6250 and bounced back from there to close higher. There is decent scope of seeing 95.50/25 this week, from where we may look for a decent bounce back towards 96. Buy on dips is suggested.
INTEREST RATES
The US Treasury yields trade lower and could continue to decline for the near term before testing respective supports and resuming the uptrend in the longer run. The Fed meeting policy meeting tonight will need close watch where the markets expect the rates to be kept unchanged. The German Yields are also trading lower but could see limited room on the downside as support levels could soon produce a bounce and take the yields up to resume the broader uptrend. The 10Yr GoI has come down sharply. While below 6.80%, the yield is bearish for a test of 6.70/60% unless immediate reversal is seen. Overall near term view looks bearish.
The US 10Yr (4.618%) and 30Yr (5.099%) yields have dipped as expected and are likely to remain lower in the next few sessions with scope of testing 4.6%-4.55% (10Yr) and 5.05% (30Yr) respectively. However, thereafter we may expect a resumption of upmove back towards 4.8% (10Yr) and 5.2% (30Yr) in the longer run.
The German 10Yr (3.1158%) and 30Yr (3.6182%) yields have also dipped slightly from levels seen yesterday. The 10Yr is headed towards support at 3.10% which if holds can produce a bounce back towards 3.15% or higher soon. The 30Yr also has support at 3.6%-3.58% region from where a bounce can be expected soon. Longer term upside targets of 3.25% (10Yr) and 3.75% (30Yr) remain intact.
The 10Yr GoI (6.77%) trades below 6.8% and has scope to test 6.70%-6.60% in the coming days. Overall view is bearish while below 6.8%.
STOCKS
Dow needs a sustained break above 53000 to extend its rally towards 53500-54000; otherwise, it is likely to remain within the 52000-53000 range. DAX also requires a sustained break above 25500 to rise towards 26000, failing which it could decline towards 25000-24800. Nifty needs to hold above 24000 to move higher towards 24100-24150. Nikkei remains bearish and can decline further towards 60000 or lower. Shanghai also continues to trade with a weak bias and can fall towards 3750-3700 while below 3900.
Dow (52932.77, -0.05%) has risen to a high of 53105. A sustained break above 53000 is needed to trigger a further rise towards 53500-54000. Otherwise, it could continue to trade within the broad range of 52000-53000.
DAX (25472.27, -0.43%) opened higher at 25675 today but has pulled back from there. It needs to sustain above 25500 to extend its rise towards 26000. Otherwise, it could decline towards 25000-24800.
Nifty (23,985.35, -0.40%) is hovering near 24000 but needs to sustain above this level to rise further towards 24100-24150 over the coming week.
Nikkei (61640.99, -1.53%) remains bearish, in line with our expectations, and can decline further towards our earlier mentioned target of 60000 or lower in the near term.
Shanghai (3804.20, -0.24%) has weakened and can decline further towards 3750-3700 while below 3900.
COMMODITIES
Crude prices can trade in a broad range amid continued uncertainty over geopolitical tensions in the Middle East. Gold can continue to trade within the broad $4000-$4200 range, while Silver is expected to remain range-bound between $55 and $65. Copper remains constructive above $6.30 and can rise towards $6.50. Natural Gas has turned weaker after breaking below $2.70 and can decline further towards $2.65.
Brent ($87.20) and WTI ($82.29) closed lower yesterday, but prices have opened higher today and are moving up gradually. A broad range of $80-$100 for Brent and $75-$95 for WTI could hold for some time until further directional clarity emerges, as tensions in the Middle East remain uncertain.
Gold ($4030.63) is likely to remain within the broad range of $4000-$4200 for some time.
Silver ($58.85) can continue to trade within the broad $55-$65 range for some time.
Copper ($6.34) can rise towards $6.50 in the near term while above $6.30.
Natural Gas ($2.6950) has fallen below $2.70, in line with our expectations, and could decline further towards $2.65.
DATA TODAY
1:30 07:00 AU CPI
...Expected 4.1% ...Previous 4.1%
18:00 23:30 US FOMC Meeting
...Expected <3.75 % ...Previous<3.75
DATA YESTERDAY:-
---------------
IN IIP
...Expected 5.6 % ...Previous 5.1% ....Actual 7.3%
US Case Schiller
...Expected 0.80 % ...Previous 1.10 % ...Actual 1.62%
US Cons Conf
...Kshitij Expn.94.8 ...Expected 92.1 ...Previous 91.2 ...Actual 90.8
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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