GOOD MORNING!
FOREX
The Dollar index has dipped and could test 99 while Euro has moved up well above 1.16 which if sustains can take it towards 1.1675. EURINR can test 109 before bouncing back to higher levels of 110.50 while the EURJPY is attempting to sustain above 186 which if succeeds can rise higher towards 188-189. USDJPY continues to trade within 159.70-160.70 region. Weakness in the dollar index if seen can pull down USDJPY towards 159.50-159. USDCNY looks bearish towards 6.75. Aussie and Pound can rise to 0.71-0.7150 and 1.3550 respectively from current levels with downside likely to be limited to 0.70 and 1.34 respectively. USDINR needs to sustain a break below 94.50 to decline towards 94.05 in the coming sessions. Our expectation of a rise to 95 mentioned yesterday may not happen.
Dollar Index (99.522) has dipped lower and has scope to fall towards 99 while EURUSD (1.1612) has risen well above 1.16 and could extend its rise towards 1.1675.
EURINR (109.7131) is likely to trade within the 110.50-109 region in the near term, both levels being immediate resistance and support levels.
EURJPY (186.19) has to sustain above 186 and move higher to avoid a decline to 184/183 and instead open doors for 189-189.50 on the upside.
Dollar-Yen (160.32) continues to remain ranged within the 160.75 and 159.75 region.
USDCNY (6.7560) has been coming down slowly as expected and is headed towards support near 6.75 from where a bounce can be expected towards 6.78/80 later. Failure to bounce from 6.75 will make it vulnerable to decline to 6.70.
Aussie (0.7066) is rising towards resistance near 0.71-0.7150 while above 0.70.
Pound (1.3428) may trade between 1.34-1.3550 for the near term.
USDINR (94.6050) needs to sustain break below 94.50 to fall towards 94.05 in the next few sessions. Although the fall looks likely, it could be aided if we see further weakness in the Dollar Index.
INTEREST RATES
The US Treasury Yields have come down again. They can dip further to retest their key support. Whether they manage to sustain above their support or not will determine the next direction of move. That may largely depend on the outcome of the Fed meeting tonight. Their economic projections will need a close watch to see their future policy path. The Bank of Japan increased the interest rate by 25 bps points yesterday. The German Yields are coming down in line with our expectation. They can fall more to test their support. The 10Yr GoI has turned down again failing to sustain the bounce. That keeps intact our bearish view to see more fall.
The US 10Yr (4.43%) and 30Yr (4.94%) Treasury yields come down again. The support at 4.4% and 4.9% (30Yr) can be revisited. The yields have to sustain above this support to avoid an extended fall to 4.3% (10Yr) and 4.8% (30Yr). We will have to wait and watch.
The German 10Yr (2.93%) and 30Yr (3.51%) yields have dipped further. The fall to 2.9%-2.85% (10Yr) and 3.45% (30Yr) is happening as expected. We can expect the yields to bounce back after this fall.
The 10Yr GoI (6.8651%) has come down failing to sustain the bounce seen on Monday. That keeps intact our bearish view of seeing 6.8% on the downside.
STOCKS
Global equities remain supported by positive risk sentiment. Dow has reached our expected level of 52500 and can rise further towards 53000. DAX remains constructive above 24500 and can advance towards 25250-25500. Nifty is holding above its key support near 23750 and could break above 24000 to rise towards 24250-24500. Nikkei has moved above 70000 in line with expectations and can extend gains towards 70500-71000. Shanghai needs a sustained break above 4100 to strengthen further and target 4125-4150.
Dow (52515.21, -0.09%) has risen to our projected level of 52500 and could move higher towards 53000 in the coming sessions.
DAX (24821.11, -0.39%) can rise towards 25250-25500 while it remains above 24500.
Nifty (23,989.15, +0.57%) moved higher and closed just below 24000 yesterday. The index has 8-week moving average support near 23750, which, if it holds, could push it above 24000 and trigger a rise towards 24250-24500.
Nikkei (70020.31, +1.18%) has risen above 70000 in line with our expectations and can move higher towards 70500-71000 in the near term while it remains above 68000.
Shanghai (4089.26, -0.07%) needs a sustained break above 4100 to see a further rise towards 4125-4150.
COMMODITIES
Crude prices continue to weaken in line with expectations. Brent and WTI can decline towards $75 and $70 respectively in the near term. Gold remains below $4400, but the broader outlook stays positive for a rise towards $4500-$4600. Silver can extend gains towards $72-$74, while Copper remains bullish and can rise further towards $6.70-$6.75. Natural Gas has bounced back and is likely to remain within the broader $3.00-$3.50 range for some time.
Brent ($79.05) has dipped below $80 in line with our expectations and could decline further towards $75-$70 while it remains below $85.
WTI ($75.38) has fallen sharply in line with our expectations and looks likely to decline further towards $70 in the near term.
Gold ($4353.50) is trading below $4400, but the view remains intact for a rise towards $4500-$4600 in the near term.
Silver ($70.36) is likely to rise towards $72-$74 in the near term.
Copper ($6.52) has risen and can move further higher towards our expected levels of $6.70-$6.75.
Natural Gas ($3.2520) has bounced back and could continue to trade within a broad range of $3.00-$3.50 for some time.
DATA TODAY
GMT 6:00 IST 11:30 UK CPI Y/Y
...Market 3.00 Previous 2.82
GMT 9:00 IST 14:30 EU CPI (YoY)
...Market 3.2 ...Previous 3.2
GMT 12:30 IST 18:00 US Retail Sales (MoM)
...Kshitij 0.06 ...Market 0.50 ...Previous 0.47
GMT 18:00 IST 23:30 US FOMC Meeting
...Kshitij <3.75 ...Market <3.73 ...Previous <3.75
DATA YESTERDAY
==============
GMT 5:30 IST 11:00 CN Retail Sales
...Market -0.2 ...Previous 0.2 ...Actual -0.6
GMT 5:30 IST 11:00 CN IIP (YoY)
...Market 4.3 ...Previous 4.1 ...Actual 4.5
GMT 3:00 IST 08:30 BOJ Meeting
...Market 1.00 ...Previous 0.75 ...Actual 1.00
GMT 4:30 IST 10:00 RBA Meeting
...Market 4.35 ...Previous 4.35 ...Actual 4.35
GMT 9:30 IST 15:00 IN Trade bal
...Market -27.00 ...Previous -28.38
GMT 12:30 IST 18:00 US Housing Starts
Kshitij 1442 ...Market 1420 ...Previous 1465
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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