GOOD MORNING!
FOREX
BOJ kept the interest rates unchanged at 0.50%. The Dollar Index has resistance near 99, break past which can only take it higher. Else, it can fall back towards 97-96. Euro and EURINR have a scope to fall towards 1.1450-1.1400 and 98.50-98.00 initially before attempting to rise back. EURJPY can test 166 if the fall extends further. USDJPY and USDCNY can remain ranged within the 142-146 and 7.17-7.20 region respectively. AUDUSD and Pound can trade within the ranges of 0.6500-0.6400 and 1.36-1.34 respectively. The USDINR can rise towards 86.40/50 while the support near 85.80 holds. Watch out for the US Housing starts and the US FOMC meeting scheduled today.
Dollar Index (98.277) has bounced from 98. Still a break above the resistance at 99 will be needed to head towards 101-102. Else, it can fall back towards 97 or even 96. A better clarity is expected post today’s FOMC, where rates are likely to stay at 4.5%, but focus will be on forward guidance amid tariff and geopolitical risks.
EURUSD (1.1496) is coming off as anticipated and can test the support near 1.1450-1.1400 soon before attempting to rise back towards 1.17. Chances are that the pair can remain ranged broadly within 1.14-1.17 for some time.
EURINR (99.3165) tested 99.85 on the upside before declining from there. A corrective fall towards 98.50-98.00 can happen while the resistance near 100 holds.
EURJPY (166.89) failed to sustain its rise past 167 and started coming off from 167.61 itself. If the fall extends further, a test to 166.00-165.50 can happen before attempting to rise back again.
BOJ kept the rates unchanged at 0.50%. Dollar-Yen (145.13) is trading higher within its immediate range of 142-146. A decisive break on either side will be needed for further clarity. Till then, the range is likely to persist.
USDCNY (7.1863) continues to remain within the 7.17-7.20 range. A fall to 7.15 might not happen if a break past 7.20 is seen. For now, the range can remain intact in the near term.
Aussie (0.6483) and Pound (1.3547) extended the fall within respective ranges of 0.6550-0.6400 & 1.36-1.34 due to Dollar strength. Near term supports are coming around 0.645 and 1.34/33, above which the ranges are likely to hold for some time.
USDINR (86.28) rose to the high of 86.2825 before closing lower. The pair can extend the rise towards 86.40-86.50 while support near the 85.80 region holds.
INTEREST RATES
The US Treasury Yields are bouncing back after a sharp fall on Tuesday. Broadly the range is intact now, and we remain bearish to see a downside break of this range. The US Fed meeting outcome tonight is going to be very important. Interest rates are likely to remain unchanged. But what is important to watch would be their economic forecast and the future policy rate path. Any significant change in their economic forecast can move the markets sharply. We will have to wait and watch. The German yields remain stable and seem to lack strong follow-through rise. Failure to break the immediate resistance can drag them down. The 10Yr GoI is holding above its support as expected. A sideways consolidation is possible for some time before the yield moves higher.
The US 10Yr (4.40%) and 30Yr (4.90%) Treasury yields are attempting to bounce after a sharp fall on Tuesday. For now, the near-term outlook is mixed and ranged-bound between 4.3%-4.55% (10Yr) and 4.8%-5% (30Yr). We remain bearish to see a downside break of this range going forward.
The German 10Yr (2.53%) and 30Yr (2.98%) yields continue to remain stable and seem to be struggling to get a strong follow-through rise. Failure to rise above 2.6% (10Yr) and 3.1% (30Yr) from here can drag them down to 2.4% (10Yr) and 2.85%-2.8% (30Yr) again.
The 10Yr GoI (6.3180%) tested 6.3% and is holding above it as expected. While above 6.3%, the yield can rise back. 6.3%-6.4% can be the range for some time before an eventual rise to 6.5% happens.
STOCKS
The Dow and Dax have declined after Trump demanded for "Unconditional Surrender" from the Iran leader. If the Dow breaks below 42000, it can be dragged further to 41000. A broad range of 43000-41000 can hold for a few weeks. Dax can be headed towards 23000-22500 while below 23500. Nifty has fallen as well and could continue to trade within 24400-25200 region with a possibility to test the lower of the range. Nikkei could face rejection from anywhere between current levels and 39000 while Shanghai could trade within 3400-3350 region.
The Dow (42215.8, -0.70%) fell sharply after Trump demanded "Unconditional Surrender" from the Iran leader. Under the intensified Iran-Israel situation the Dow might find it difficult to rise to 43000 and could instead test 42000 or even break lower towards 41000 in the near term. Overall a broad 43000-41000 range may continue to hold for the next few weeks.
DAX (23434.65, -1.12%) has fallen sharply too and can head towards 23000-22500 soon. View is bearish below 23500.
Nifty (24853.40, -0.37%) has dipped back and if a break below 24800 is seen, it can head towards the lower end of the broad 24400-25200 range.
Nikkei (38695.05, +0.41%) trades higher today but could face resistance anywhere between current levels and 39000 which if holds can lead to a corrective decline in the near term targeting 38000. A decisive break above 39000 would be needed for further bullishness in the medium term.
Shanghai (3383.14, -0.13%) has dipped and trades within the broad 3350-3400 region. A break on either side would clarify further direction for the medium term. Till then the range can hold.
COMMODITIES
Crude oil prices have rebounded sharply amid escalating Middle East tensions, with further gains expected. Gold remains strong above $3,400, targeting $3,500–$3,600, while Silver has broken out and may rise to $38–$39. Copper is gradually heading towards $4.90–$5.00, and Natural gas has also surged past its range, eyeing $4.00–$4.20 in the coming weeks.
Brent ($76.38) has bounced back sharply due to rising tensions in the Middle East after President Trump downplayed the possibility of an early resolution to the Israel-Iran conflict. A further upward move towards $78–$80 looks likely in the near term.
WTI ($73.19) has bounced back in line with our expectations and may potentially move further up towards $76–$78 in the near term.
Gold ($3,404.10) is holding above $3,400. While it remains above this level, our outlook for a potential rise towards $3,500–$3,600 in the near term stays intact.
Silver ($37.24) has broken out of its previous range and surged sharply to a high of $37.33 yesterday, contrary to expectations. It may rally further towards $38–$39 in the coming weeks.
Copper ($4.8130) may rise towards $4.90–$5.00 in the near term, within the broader range of $4.70–$5.00.
Natural Gas ($3.8890) has broken above the previously mentioned range, contrary to our expectations, and may move further up towards $4.00–$4.20 in the coming weeks.
DATA TODAY
6:00 11:30 UK CPI Y/Y
...Kshitij 4.1% ...Expectation 3.3% ...Previous 3.5%
9:00 14:30 EU Final CPI (YoY)
...Kshitij 2.1% ...Expectation 1.9% ...Previous 1.9%
12:30 18:00 US Housing Starts
...Kshitij 1282k ...Expectation 1360k ...Previous 1361k
13:00 01:30 US TICS (Net foreign purch of long-term Sec)
...Expectation 147.4 ...Previous 161.8
18:00 23:30 US FOMC Meeting
...Expectation <4.50 ...Previous <4.50
DATA Yesterday
3:00 08:30 BOJ Meeting
...Expectation 0.50% ...Previous 0.50% ...Actual 0.50%
12:30 18:00 US Retail Sales (MoM)
...Kshitij -0.5% ...Expectation -0.6% ...Previous -0.1% ...Actual -0.98%
13:15 18:45 US Industrial Production
...Kshitij 0.2% ...Previous 0.0% ...Actual -0.2
13:15 18:45 US Capacity Utilization
...Kshitij 77.8% ...Expectation 77.7% ...Previous 77.7% ...Actual 77.4%
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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