GOOD MORNING!
FOREX
Possible intervention again by the BOJ has led the USDJPY to plunge leading to a dip in the Dollar Index as well ahead of the NFP data release today. Euro and EURINR head towards 1.17 and 110-110.50 respectively while EURJPY has also plunged below 182 and looks bearish for a test of 180. Aussie could rise towards 0.73 while the Pound could test 1.3450 before rebound from there. USDCNY is headed towards 6.71/70. The Indian Rupee has scope to strengthen to 94 before seeing a reversal. a
Dollar Index (98.995) has dipped below 99 breaking our expected range of 100-99 to hold. The index looks bearish towards 98 in the coming days.
EURUSD (1.1628) has risen well and could head towards 1.17 or higher soon while the Dollar index remains weak.
Dollar-Yen (156.05) fell sharply from levels above 158 to current levels. The decline looks like an intervention again from the BOJ. Frequent intervention from the central bank could limit upside at 160 for the pair in the near term suggesting further dip in the coming days.
EURINR (109.90) has moved back towards 110. We cannot negate another dip towards 109 while below 110. We may expect a broad range of 109-111 to hold for the medium term.
EURJPY (181.37) has fallen sharply on Yen strength resulting from a possible intervention from the BOJ again. The decline came in suddenly unexpected and while below 182, the view is bearish for the spot towards 180.
USDCNY (6.7163) has dipped further and is headed towards 6.71/70 soon.
Aussie (0.7210) has moved up well above 0.72 and looks bullish for a rise to 0.73.
Pound (1.3535) has dipped and could test support near 1.3450 before rising back towards 1.3550/36 in the medium term.
USDINR (94.4750) could have scope to test 94 before bouncing back from there. A decisive break below 94 would be needed for a change in trend and to turn our view bearish for the longer run. Till then 94 could hold as a crucial support in the near term.
INTEREST RATES
The US Treasury Yields remain higher and stable. Outlook remains bullish. There is room to rise more. Any dip from here can be short-lived as supports are there to limit the downside. The US unemployment data release today will need a close watch. The German Yields are hovering around their key resistance. A strong follow-through rise is needed to go further higher. Else the yields can fall back. The 10Yr GoI has come down but sustains above its support. Short-term picture remains positive. But, an intermediate dip looks likely before the yield goes higher.
The US 10Yr (4.77%) and 30Yr (5.25%) yields remain stable. We reiterate that 4.75%-4.73% (10Yr) and 5.2% (30Yr) can limit the downside. Outlook is bullish 4.9%-5% (10Yr) and 5.4% (30Yr) on the upside.
The German 10Yr (3.34%) and 30Yr (3.83%) Yields are hovering around their key resistance levels of 3.35% and 3.85% respectively. A strong follow-through rise is needed from here to go up to 3.5% (10Yr) and 4% (30Yr). Else the yields can fall back.
The 10Yr GoI (6.9646%) is hovering around 6.95%. The upside is still open to see 7.15%. But a dip to 6.9% is a possibility that cannot be ruled out before the above-mentioned rise happens.
STOCKS
Dow has turned stronger after breaking above 53000 and can rise towards 54500-55000 on a break above 54000. DAX has bounced back and can rise towards 26500. Nifty remains weak below 24000, with support near 23800 needing to hold to avoid a decline towards 23600. Nikkei remains weak and can decline towards 62000. Shanghai is likely to remain range-bound between 3850-4000 while below 4000.
Dow (53761.89, +0.03%) has broken above 53000 and surged to a high of 53827 yesterday, contrary to our expectations. A break above 54000 is needed to see a further rise towards 54500-55000.
DAX (26055.18, +0.07%) has bounced back, contrary to our expectations. It can rise further towards 26500.
Nifty (23,873.45, -0.17%) failed to sustain above 24000 and closed lower yesterday. Immediate support near 23800 needs to hold for the index to move back towards 24000 in the near term; otherwise, a decline towards 23600 cannot be ruled out.
Nikkei (64600.18, +0.12%) remains weak and can decline towards 62000 in the near term.
Shanghai (3973.67, +0.80%) can continue to trade within the range of 3850-4000 for some time while below 4000.
COMMODITIES
Brent and WTI continue to move higher and can rise towards $100 and $95 respectively. Gold has bounced sharply after stronger US ADP jobs data, but needs to sustain above $4600 for a rise towards $4700-$4800. Silver has also recovered and needs a sustained break above $70 for a move towards $75-$80. Copper remains range-bound between $6.50-$6.80, while Natural Gas remains weak and needs to break above $3.00 for a rise towards $3.25-$3.50.
Brent ($96.16) and WTI ($92.08) continue their upward movement and can rise towards $100 and $95 respectively in the near term.
Gold ($4522.30) has bounced back sharply after the stronger US ADP jobs report eased rate hike expectations. It needs a sustained break above $4600 to move higher towards $4700-$4800.
Silver ($66.88) has bounced back, contrary to our expectations. It needs a sustained break above $70 to move higher towards $75-$80.
Copper ($6.69) has risen and could continue to trade within the range of $6.50-$6.80 for some time.
Natural Gas ($2.82) has fallen back, and a sustained break above $3.00 could pave the way for higher levels of $3.25-$3.50.
DATA TODAY
9:00 14:30 EU Retail Sales
...Expected 0.3 % ...Previous -0.3 %
12:30 18:00 US NFP
...Kshitij Expn. 52.0 K ...Expected 58.0 K ...Previous -23.0 K
12:30 18:00 US Unemployment Rate
...Expected 4.1 % ...Previous 4.1 %
12:30 18:00 US Avg Hrly Earnings
...Kshitij Expn.0.2 ...Expected 0.3 ...Previous 0.1 -
12:30 18:00 US Average Hourly Earnings Production & Non Supervisory Employees
...Previous 0.1
12:30 18:00 CA Labour Force
...Expected 15.8 K ...Previous 75.1 K
DATA YESTERDAY:-
----------------
Australia Trade Balance
...Expected 1.39 A$bln ...Previous 2.34 A$bln ...Actual 1.92 A$bln
IN Services PMI
...Kshitij Expn. 54.7 ...Expected 53.8 ...Previous 54.5 ...Actuaal54.1
CH GDP
...Expected 1.7 % ...Previous 0.6 % ...Actual 1.9 %
CH CPI
...Kshitij Expn.0.7 ...Expected 0.0 ...Previous 0.4 ...Actuall0.8
US Trade Balance
...Kshitij Expn.-81.60 $bln ...Expected -89.40 $bln ...Previous -71.2 $bln ...Actual-88.6 $bln
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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