GOOD MORNING!
FOREX
Lower-than-expected ADP Employment leads the Dollar Index to slip. Watch crucial support near 99.50, which needs to hold to keep the upside view intact. The index could be volatile this week with the US jobless claims data release today and NFP tomorrow. Euro can attempt to test 1.16 while USDJPY can take a breather and remain stable. EURJPY can rise towards 184 while Aussie and Pound can see a near-term rise towards 0.71 and 1.35 before pausing for a reversal. USDCNY holds below 6.75 and could slowly head towards 6.70 while USDINR needs to decisively break below 95 to open a downside target of 94.75/50 else can see bounce from current levels towards 95.25/50 again.
Dollar Index (99.66) slips after a lower than expected ADP Employment data release yesterday. 99.50 is a crucial support on the index and if that breaks, we will have to allow for a decline to 98-97.50 on the downside in the near term. Watch price action today near 99.50. Markets await the weekly jobless claims report today and US NFP data tomorrow. The index could remain subdued for the rest of this week.
EURUSD (1.1555) could reattempt to test 1.16, given that the Dollar Index is likely to remain subdued for the rest of the week or hover around the support at 99.50.
Dollar-Yen (157.66) s likely to remain calm and take a breather now after the sharp fall seen from 164. We may expect near-term trade between 158-157 for now with some scope of extension to 159.
EURINR (109.84) is likely to trade within 110.30 and 109 while EURJPY (182.18) could slowly rise towards 184.
USDCNY (6.7463) trades below 6.75. If the pair sustains a decline below 6.75, we may see 6.70 in the next couple of weeks.
Aussie (0.7057) could continue to trade within 0.71-0.70 region while Pound (1.3469) could attempt to test 1.35 in the coming days, while above 1.34. Thereafter, an eventual decline towards 1.3350 or lower can be possible in the longer run.
USDINR (95.1225) closed above 95.10 yesterday after testing a session low of 94.8625. It would be interesting to see if the spot manages to break again below 95 in the near term which can open chances of a fall towards 94.75/50 but failure to hold below 95 could see a bounce back towards 95.25/50 and eventually higher in the coming weeks. The chances of sustaining below 95 looks low at the moment.
INTEREST RATES
The US Treasury Yields are managing to hold above their key support. A strong bounce is needed from here to avoid an extended fall and also to resume the uptrend from here itself. We will have to wait and watch. The German Yields are hovering above their support. We expect them to bounce back from here and resume their uptrend. The 10Yr GoI has declined below its key support. A further fall from here will confirm the resumption of the broader downtrend and drag it lower. The RBI kept their policy rates unchanged at 5.25% in its meeting yesterday.
The US 10Yr (4.61%) and 30Yr (5.16%) yields are managing to hold above 4.6% (10Yr) and 5.15% (30Yr). A break below these supports can drag them to 4.5% (10Yr) and 5.1% (30Yr). That in turn will delay the rise to 4.8% (10Yr) and 5.35%-5.4% (30Yr).
The German 10Yr (3.11%) and 30Yr (3.62%) Yields remain lower. We expect the support at 3.1% (10Yr) and 3.6% (30Yr) to hold and the yields to bounce back. That will keep the bullish view intact to see 3.3%-3.35% (10Yr) and 3.8% (30Yr) on the upside.
The 10Yr GoI (6.7722%) has declined below 6.8%. This marks the end of the corrective rise. A fall below 6.75% will confirm the same and take it down to 6.7% initially and then to 6.6% eventually.
STOCKS
Dow can extend its rally towards 55000-55500, while DAX remains bullish above 26000 with scope to rise towards 27000-27500. Nifty continues to hold above the key 24500 support and can advance towards 24800-25000. Nikkei has resumed its upward momentum and can rise further towards 67000-68000. Shanghai is approaching the key 3900 resistance, with a sustained break opening the way towards 4000-4050.
Dow (54607.18, +0.21%) has tested a high of 54884 yesterday, in line with our expectations. A further rise towards 55000-55500 can be seen in the coming sessions.
DAX (26300.61, +0.27%) has pulled back, but while above 26000, our view remains intact for a rise towards 27000-27500.
Nifty (24,624.65, +0.04%) tested a low of 24497.95 before closing above 24600 yesterday. While the support near 24500 holds, we retain our view of a rise towards 24800-25000.
Nikkei (65595.72, -0.27%) has risen and looks likely to move further up towards 67000-68000 in the near term.
Shanghai (3892.62, +0.37%) has risen, and a sustained break above 3900 would take the index higher towards 4000-4050. Otherwise, if 3900 holds, the earlier mentioned range of 3750-3900 could remain intact.
COMMODITIES
Brent and WTI remain vulnerable to further declines towards $75-$70 and $70-$65 respectively. Gold has turned bullish after breaking above its previous range and can rise further towards $4500. Silver has also strengthened and can extend its gains towards $65-$70. Copper remains constructive and needs a sustained break above $6.80 to continue its rally towards $6.85-$6.90; otherwise, a pullback towards $6.60-$6.50 is possible. Natural Gas remains weak and can decline towards $2.65 in the near term.
Brent ($79.84) and WTI ($75.52) remain vulnerable to a further decline towards $75-$70 and $70-$65 respectively in the near term.
Gold ($4341.40) has broken above the previously mentioned range and tested a high of $4328 yesterday. A further rise towards $4500 can be seen in the coming sessions.
Silver ($62.62) has risen and can move further higher towards $65-$70 in the coming sessions.
Copper ($6.74) has tested a high of $6.77, in line with our expectations. A sustained break above $6.80 is needed to extend the rally towards $6.85-$6.90. Otherwise, it could pull back towards $6.60-$6.50.
Natural Gas ($2.6760) can test $2.65 in the near term.
DATA TODAY
f0:30 06:00 Australia Trade Balance
...Expected -1.08 A$ Bln ...Previous -2.37 A$ Bln ...Actual 1.93 A$bln
9:00 14:30 EU Retail Sales
...Expected 0.1 % ...Previous 0.2 %
DATA YESTERDAY:-
---------------
AU PMI
...Previous -16.8 ...Actual-19.6
RBI Repo Rate
...Previous 5.25 % ...Actual 5.25 %
RBI Rev Repo Rate
... Previous 3.35 % ...Actual 3.35 %
RBI MSF
...Previous 5.50 % ...Actual 5.50 %
IN Services PMI
...Expected 53.1 ...Previous 53.1 ...Actual 53.3
EU Composite PMI
...Expected 49.6 ...Previous 49.4 ...Acctual 52.0
US ADP Emp
...Kshitij Expn -183 K ...Expected 68 K ...Previous 98 K ...Actual 44K
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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