GOOD MORNING!
FOREX
Weaker-than-expected NFP data yesterday is the main catalyst for the market movement over yesterday and today. Dollar Index has declined as expected but can slowly rise towards 101-101.50 next week. Today the US market is closed. Euro is also likely to hold below 1.15 and decline back towards 1.1350. USDJPY had dipped due to the fall in the Dollar Index, but can slowly recover back towards 161.50-162. EURINR can trade within 108-109.50 region while EURJPY may rise towards 185/186 while above 183. USDCNY has fallen below 6.78 and if that holds, can test 6.77/76. Aussie and Pound have risen well. Sustained rise from current levels can take it towards 0.70 and 1.35 respectively. USDINR, opened below 95 yesterday but moved back to close sharply higher. We may expect some dip today towards 95-94.90 but the dip may be short lived. We suggest buy on dips on the USDINR for the near term while above 94.75.
Dollar Index (100.839) fell sharply to 100.558 yesterday after the lower-than-expected US NFP data that showed that the economy added just 57k jobs in June26. The index fell below our mentioned support at 100.75 but has bounced back today to trade higher. While the index sustains above 100.75, a slow and steady rise back to 101-101.50 looks possible in the coming week. That said, the EURUSD (1.1437) rose to 1.1472 yesterday before coming off from there to trade lower today. While below 1.15, the Euro can head towards 1.1380/50.
EURINR (108.8702) tested 109.2320 before coming off from there. A dip to 108 looks possible with immediate upside capped at 109.50.
EURJPY (184.34) has declined to 183.753 yesterday, in line with our expectation of seeing a dip to 184/183. Immediate support is at 183 above which a rise back to 185/186 can be possible.
Dollar-Yen (161.16) tested 160.62 on the sharp decline on the dollar index but has now recovered from there. A break above 161.50 is again needed for the pair to slowly move back towards 163/164 in the medium term.
USDCNY (6.7787) has dipped below 6.78. Failure to bounce back from here can drag it lower towards 6.77/76 in the coming days.
Aussie (0.6933) is trading just above the upper end of the 0.6866-0.6931 range mentioned yesterday. A sustained break above the current levels, if seen can take it higher towards 0.70. Else, a rejection can keep the spot within the mentioned range for some more time.
Pound (1.3362) has risen as expected but moved past our mentioned 1.3340. A decisive break above 1.34, if seen can take it higher towards 1.35 in soon.
USDINR (95.3975) opened below 95 yesterday but could not sustain the dip and instead rose back sharply to close higher near 95.40. The dip in the Dollar Index yesterday could have an impact on the USDINR today but may not be able to hold it lower for long. We may suggest buy on dips for the near term with possible downside limited to 94.75/94.90 region.
INTEREST RATES
The US Treasury Yields remain higher. We retain our view of seeing more rise from here. The US markets are closed today for the Independence Day holiday. The US unemployment rate dipped to 4.2% in June from 4.3% a month ago. The German Yields have room to rise further from here. They can test their resistance and turn down again. The 10Yr GoI has come down again. The expected rise is not happening. A break below the immediate support can trigger a deep fall going forward.
The US 10Yr (4.48%) and 30Yr (4.99%) yields remain higher and stable. We retain our view of seeing a rise to 4.55% (10Yr) and 5.05% (30Yr).
The German 10Yr (2.90%) and 30Yr (3.49%) are inching up. There is room for a rise to 3% (10Yr) and 3.55% (30Yr) after which the yields can turn down again.
The 10Yr GoI (6.7180%) has come down again. The rise to 6.8% seems to be not happening. A decisive break below 6.7% will increase the danger of a steep fall to 6.5%-6.4%.
STOCKS
Global equities are showing mixed trends. Dow and DAX have turned bullish after breaking above key resistance levels and can rise further towards 53500-54000 and 26000-26500 respectively. Nifty has also strengthened and can advance towards 24250-24600, making a deeper pullback less likely. Nikkei remains weak and is likely to trade within the broad 68000-73000 range. Shanghai is holding above key support near 4000 and could remain within the 4000-4150 range for some time.
Dow (53216.57, +0.06%) has risen sharply, breaking above the immediate resistance near 53000, and tested a high of 53218 yesterday. If it sustains above 53000, a further rise towards 53500-54000 can be seen.
DAX (25751.77, +2.00%) has exceeded our expectations and surged to a high of 25810, supported by Germany's new domestic economic reform package and softer US jobs data, which boosted expectations of interest rate cuts. If it holds above 25500, a further rise towards 26000-26500 can be seen.
Nifty (24,175.70, +0.71%) has broken above the immediate resistance near 24150 and can now move towards the interim resistance near 24250. A break above this level would take the index further higher towards 24400-24600. A pullback towards 23800-23600 looks less likely for now.
Nikkei (68365.91, +0.26%) continues to weaken and could trade within the broad range of 68000-73000 for some time.
Shanghai (4028.90, -2.03%) plunged to a low of 4019.21 yesterday. Immediate support is seen near 4000. While this level holds, our earlier mentioned range of 4000-4150 could persist for some time.
COMMODITIES
Crude prices remain weak and can decline further towards $70 and $65 before a corrective bounce back is seen. Gold has held above the key $4000 support, keeping the bullish outlook intact for a rise towards $4200-$4250. Silver continues to recover gradually and can rise towards $65-$70 while support near $55 holds. Copper remains constructive above $5.90 and can advance towards $6.25-$6.30. Natural Gas is likely to continue trading within the broader $3.00-$3.50 range.
Brent ($71.56) can decline further to test $70 in the near term before a bounce back towards $80-$85 is seen thereafter.
WTI ($68.47) can decline further towards $65 in the near term before a bounce back towards $75-$80 takes place.
Gold ($4142.70) did not break below $4000, keeping alive our earlier view of a rise. It tested a high of $4157 yesterday. While above $4000, a further rise towards the immediate resistance near $4200-$4250 can be seen.
Silver ($61.59) is inching higher gradually, with immediate support seen near $55. While this level holds, a rise towards $65-$70 can be seen in the near term.
Copper ($6.18) remains above $5.90. While this level holds, a rise towards $6.25-$6.30 can be seen in the near term.
Natural Gas ($3.2070) can continue to trade within the broad $3.00-$3.50 range for some time.
DATA TODAY
GMT 5:00 IST 10:30 IN Services PMI
...Market 57.3 ...Previous 59.8
GMT 8:00 IST 13:30 EU Composite PMI
...Market 48.9 ...Previous 47.7
DATA YESTERDAY
==============
GMT 1:30 IST 07:00 Australia Trade Balance
...Market 2.18 ...Previous 1.38 ...Actual -3.02
GMT 6:30 IST 12:00 CH CPI
...Market 0.2 ...Previous 0.6 ...Actual 0.5
GMT 9:00 IST 14:30 EU Unemp
...Market 6.3 ...Previous 6.3 ...Actual 6.2
GMT 12:30 IST 18:00 US NFP
...Kshitij 102 ...Market 114 ...Previous 172 ...Actual 57
GMT 12:30 IST 18:00 US Unemployment Rate
...Market 4.3 ...Previous 4.3 ...Actual 4.2
GMT 12:30 IST 18:00 US Avg Hrly Earnings
...Kshitij 0.1 ...Market 0.3 ...Previous 0.3
GMT 12:30 IST 18:00 US Average Hourly Earnings Production & Non Supervisory Employees
...Kshitij 1.5 ...Previous 0.2
GMT 13:30 IST 19:00 CA PMI
...Previous 52.9
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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