GOOD MORNING!
FOREX
The Dollar Index needs to rise past 100 to head towards 101-101.50. We retain our view that the Euro and EURINR can witness a fall back to 1.12-1.11 and 96.0-95.5 respectively. EURJPY is trading lower within its 164-160 range. USDJPY if fails to rise past 144, can be vulnerable to initially test 140 in the near term. AUDUSD is trading near the crucial resistance around 0.635-0.640. The USDCNY is rising as anticipated and if sustained, can test 7.35 as well. Pound while above 1.30 has scope to head towards 1.35. USDINR is coming off as expected and while below 86, view remains bearish to 85.50-85.30 or even lower to 85.00. The US Retail Sales, US Industrial Production & US Capacity Utilization data releases scheduled today.
Dollar Index (99.789) yesterday tested 100.28 before declining a bit from there. Only a sustained rise past 100 can take it towards the support turned resistance near 101.0-101.5 region. Else, a fall below 99 can drag it to 98-96, thereby delaying the anticipated rise.
EURUSD (1.1340) observed the low of 1.1264 but later recovered as well. While below 1.15, we retain our view of seeing a fall back towards 1.12 or 1.11 in the near term before eventually bouncing back higher.
EURINR (97.4816) in line with our view, cross slipped to the low of 96.61 so far. For now, view remains intact to see a fall to the support near 96.0-95.5 level in the coming sessions before attempting to rise back again.
EURJPY (161.51) is coming off within its range of 164-160 region. Watch price action around 160 closely to see whether it holds or not. A break below 160 can open the doors for 158 or even 156 on the downside.
Dollar-Yen (142.71) needs to see an immediate rise past 144 to rise to 146-147 and assume that the pair has bottomed out. Else, can extend the fall to 140 initially before attempting to rise back.
USDCNY (7.3235) has met our initial target of 7.32 and has even exceeded a bit. While the rise sustains, can get extended to 7.35 in the near term.
Aussie (0.6341) continues to oscillate near the crucial resistance between 0.635-0.640 region. While the resistance holds, a range of 0.64-0.62/61 intact for a while.
Pound (1.3254) has risen past 1.32 as well. Now, if sustained, can extend the rise to the resistance coming at 1.35. Overall, view remains bullish above 1.30 for now.
USDINR (85.6760) fell to the low of 85.58 yesterday before recovering from there. While the resistance at 86 holds, we retain our view of a fall towards 85.50-85.30 or even lower to 85.00 levels in the coming sessions.
INTEREST RATES
The US Treasury yields remain lower. The yields have to sustain above their upcoming support in order to keep alive the chances of rising back. If the support is broken, then more fall can be seen. The German yields have inched up. It is likely to be short-lived. The view remains bearish to see more fall from here. The ECB meeting outcome tomorrow will be important to watch. The 10Yr GoI is testing its crucial support. We expect this support to hold and the yield to see a rise in the coming days.
The US 10Yr (4.33%) and 30Yr (4.79%) Treasury yields remain lower. The 10Yr has to hold above 4.3% to move back up to 4.6% again. Else a fall to 4.2% and lower levels can be seen. The 30Yr can test 4.7%-4.65%.
The German 10Yr (2.53%) and 30Yr (2.91%) yields have inched up. The view remains bearish while below 2.6% (10Yr) and 3% (30Yr). The yields can fall to 2.4%-2.3% (10Yr) and 2.8%-2.7% (30Yr).
The 10Yr GoI (6.4142%) has come down to test the crucial support at 6.4%. We expect this support to hold and the yield to rise back to 6.55%-6.6%. A break below 6.4% will negate this view and drag it to 6.3%.
STOCKS
Dow seems to be struggling to see fresh buying and could either rise to 41500 or fall below 40000 in the near term. Asian equities have opened with a decline today with Nikkei and Shanghai down by around 0.73%. It is a Wait and watch scenario till further directional clarity is seen. Dax and Nifty look bullish but it has to be seen if the Nifty can dip slightly today in line with the negative Asian indices.
The Dow (40368.96, -0.38%) seems to be struggling to get fresh buying. As mentioned yesterday, a rise to 41500 is possible while above 40000. But at the same time, there is also the danger of seeing a fall back to 39000-38000 again. Stay out and watch.
DAX (21253.70, +1.43%) has risen further. But a decisive break above 21300 is needed to move up to 22000-22300. Only then the danger of falling back to 19600 and lower will get negated.
Nifty (23328.55, +2.19%) has risen well above 23000. Outlook is bullish. A rise to 23500-23700 can be seen now.
Nikkei (34016.31, +0.73%) could be facing some difficulty to rise sharply from current levels but while above 33000 there could be some scope for a slow rise towards 36000. A decline below 33000 will take it sharply down to 32000-31000.
Shanghai (3243.19, -0.75%) may continue to trade within 3200-3300 for sometime. A decisive break above 3300 is needed for further upmove towards 3400.
COMMODITIES
Brent and WTI remain bearish, targeting $60–$55 and $55–$50 respectively. Gold has hit resistance near $3,300; a drop to $3,200–$3,100 is possible unless it breaks higher towards $3,400–$3,500. Silver stays firm above $32 with potential to rise to $33–$34. Copper faces resistance near $4.70 and may fall to $4.40–$4.20. Natural gas continues its decline, eyeing $3.00 before a possible rebound.
Brent ($64.65) and WTI ($61.31) maintains their bearishness towards $60-55 and $55–$50 respectively in the near term.
Gold ($3,288.20) has risen to its immediate resistance level, as expected. While this level holds, a decline towards $3,200–$3,100 appears possible. However, a break above this resistance would confirm further bullish momentum, with potential upside targets at $3,400–$3,500. Watch price action near $3,300.
Silver ($32.41) is holding above $32. As long as it remains above this level, a continued rise towards $33–$34 can be expected in the coming sessions.
Copper ($4.5960) faced rejection near $4.70 and has since retreated. While $4.7 holds, a further decline towards $4.40–$4.20 seems likely in the coming weeks.
Natural Gas ($3.2890) has dipped as anticipated and may fall further towards $3.00 in the near term, before a potential rebound is seen.
DATA TODAY
2:00 07:30 CN GDP
... Kshitij Exp - ...Expected 5.2 ... Previous 5.4
5:30 11:00 CN Retail Sales
... Kshitij Exp - ...Expected 4.2 ... Previous 4.0
5:30 11:00 CN IIP (YoY)
... Kshitij Exp - ...Expected 5.7 ... Previous 5.9
6:00 11:30 UK CPI Y/Y
... Kshitij Exp 2.3% ...Expected 2.7% ... Previous 2.8%
9:00 14:30 EU CPI (YoY)
... Kshitij Exp 1.9% ...Expected 2.2% ... Previous 2.3%
12:30 18:00 US Retail Sales (MoM)
... Kshitij Exp 0.6% ...Expected 1.4% ... Previous 0.5%
13:15 18:45 US Industrial Production
... Kshitij Exp 0.3% ...Expected -0.2% ... Previous 0.8%
13:15 18:45 US Capacity Utilization
... Kshitij Exp 78.3% ...Expected 78.0% ... Previous 78.2%
14:00 19:30 BOC Meeting
... Kshitij Exp - ...Expected 2.8% ... Previous 2.8%
13:00 01:30 US TICS (Net foreign purch of long-term Sec)
... Kshitij Exp - ...Expected 35.2 ... Previous -45.2
DATA YESTERDAY
---------------
6:00 11:30 UK Unemp
... Kshitij Exp 4.5% ...Expected 4.4% ... Previous 4.4% ...Actual 4.4%
6:30 12:00 IN WPI
... Kshitij Exp 2.34% ...Expected 2.50% ... Previous 2.38% ... Actual 2.05%
9:00 14:30 EU Ind Prodn (MoM)
... Kshitij Exp -0.2% ...Expected 0.1% ... Previous 0.6% ...Actual 1.1%
10:00 15:30 IN Trade bal
... Kshitij Exp - ...Expected - ... Previous -14.1
... Actual - 21.5
10:30 16:00 IN CPI
... Kshitij Exp 3.81 ...Expected 3.60 ... Previous 3.61 ...Actual 3.34
12:30 18:00 CA Inflation Y/Y
... Kshitij Exp - ...Expected 2.4% ... Previous 2.6%
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.
WARNING !!
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