GOOD MORNING!
FOREX
The Dollar Index fell after the softer US PPI but has bounced back and may hold above 100.30/100.00 before rising towards 101 or higher. EURUSD may dip back towards 1.14, while EURINR, if below 111, can fall to 109.50-109. Dollar-Yen may remain range-bound, and EURJPY needs to hold below 186 to fall towards 185/184. USDCNY can dip to 6.7550 while below 6.7850. Aussie and Pound may ease towards 0.69 and 1.35/3450, respectively, while USDINR can test 95.90-95.85 before rising towards 96.50 or higher.
Dollar Index (100.504) fell after the US PPI fell by -0.28% for Jun-26. The index did break below our expected 100.40 but has managed to bounce back higher now. We may expect the index to remain above 100.30/100.00 and gradually rise back to 101 or higher in the coming days. That said, EURUSD (1.1465) rose to test 1.14825, breaking above our expected 1.1470, but may soon decline back towards 1.14 or lower.
EURINR (110.4720) tested 110.8764 as the Euro rallied to a higher level than expected. While below 111, the pair can dip towards 109.50-109 region for the next 1-2 weeks. A break above 111, if seen can be further bullish towards 112-115 on the upside. For now, watch price action near 111.
Dollar-Yen (162.06) continues to consolidate within the 161.50-162.50 region and may hold that for the next few sessions while the EURJPY (185.83) tested 186.032 as expected. It will be important to see if the cross dips back from here to target 185/184 again or breaks higher to target 187/188.
USDCNY (6.7676) declined after a brief test of 6.7808 yesterday. While below 6.7850, we may expect a dip to 6.7550 or lower.
Aussie (0.6993) and Pound (1.3527) rose sharply to test 0.7021 and 1.35579, respectively, yesterday. We may now expect a dip from here in the next few sessions towards 0.69 and 1.35/3450.
USDINR (96.26) tested 96.05 before bouncing back to close higher. We reiterate a possible test of 95.90-95.85 before bouncing back, to target 96.50 or higher in the coming days.
INTEREST RATES
The US Treasury Yields have dipped further. They have room to dip further and test their support. Thereafter a rise is possible again. The German Yields continue to remain higher and stable. Outlook is bullish and the yields can rise further from here. The 10Yr GoI has dipped. A further fall from here will negate the extended rise and drag it down from here itself.
The US 10Yr (4.56%) and 30Yr (5.09%) yields have dipped further. We expect the support at 4.5% (10Yr) and 5% (30Yr) to hold and keep the upside open to see 4.7%-4.8% (10Yr) and 5.2% (30Yr).
The German 10Yr (3.12%) and 30Yr (3.63%) Yields continue to remain stable. Our bullish view is intact to see 3.2% (10Yr) and 3.75% (30Yr) on the upside. Support is at 3%-2.98% (10Yr) and 3.55% (30Yr).
The 10Yr GoI (6.7738%) has come down. Need to see if it goes down below 6.75% to negate the rise above 6.8% and go down to 6.6% straightaway.
STOCKS
Dow and DAX are likely to trade within the 52000-53000 and 24800-25500 ranges respectively. Nifty remains vulnerable below 24100, with a break below 24000 opening the downside towards 23800. Nikkei has turned weaker after breaking below 67000 and can decline further towards 66000 or lower. Shanghai also remains weak below 4000 and can pull back towards 3900-3850.
Dow (52909.66, +0.02%) remains below 53000. While below this level, a broad range of 52000-53000 could hold for some time.
DAX (25079.78, -0.21%) has dipped and could continue to trade within the broad range of 24800-25500 for some time.
Nifty (24,078.50, +0.11%) failed to sustain above 24200 and slipped below the key level of 24100, in line with our expectations. A decisive break below 24000 would open the downside towards 23800 in the coming weeks. Overall, the broad range of 23800-24400 could hold for the next few weeks.
Nikkei (66790.69, -1.57%) has fallen sharply below 67000, in line with our caution yesterday. A further decline towards 66000 or lower can be seen in the coming sessions.
Shanghai (3955.57, -0.29%) remains below 4000. While below this level, the index stays vulnerable to a pullback towards 3900-3850.
COMMODITIES
Brent and WTI can rise towards $90 and $85 respectively. Gold continues to hold above the key $4000 support, keeping the broader $4000-$4250 range intact. Silver is likely to remain range-bound between $55 and $65. Copper needs to sustain above $6.30 to extend its rally towards $6.40-$6.45. Natural Gas remains weak and can decline further towards $2.85-$2.80.
Brent ($85.32) and WTI ($80.13) can rise further towards $90 and $85 respectively in the coming sessions.
Gold ($4052.60) is hovering near the key support at $4000, which needs to hold to avoid a further decline towards $3800-$3600 and keep the earlier mentioned $4000-$4250 range intact.
Silver ($57.79) can continue to trade within the broad range of $55-$65 for some time.
Copper ($6.36) needs to sustain above $6.30 to trigger a further rise towards $6.40-$6.45.
Natural Gas ($2.9030) remains vulnerable to a further decline towards our earlier mentioned target of $2.85-$2.80 in the near term.
DATA TODAY
GMT 6:00 IST 11:30 UK Trade Bal
...Market -22.80 ...Previous -26.05
GMT 6:00 IST 11:30 UK GDP
...Market -0.30 ...Previous 0.10
GMT 9:00 IST 14:30 EU Trade Bal
...Market 2.5 ...Previous 1.3
GMT 12:30 IST 18:00 US Retail Sales (MoM)
...Kshitij 0.3 ...Market 0.3 ...Previous 1.0
GMT 12:30 IST 18:00 US Philifed Index
...Market 12.1 ...Previous 10.3
DATA YESTERDAY
==============
GMT 2:00 IST 07:30 CN Retail Sales
...Market -0.1 ...Previous -0.6 ....Actual 1.0
GMT 2:00 IST 07:30 CN IIP (YoY)
...Market 4.6 ...Previous 4.5 ....Actual 5.3
GMT 9:00 IST 14:30 EU Ind Prodn (MoM)
...Market 0.3 ...Previous 0.1 ....Actual -0.2
GMT 12:30 IST 18:00 US PPI
...Kshitij 0.6 ...Market 0.0 ...Previous 1.1 ....Actual -0.28
GMT 12:30 IST 18:00 US PPI ex Food & Energy (MoM)
...Kshitij 0.3 ...Market 0.3 ...Previous 0.4 ....Actual 0.2
{GMT 14:00 IST 19:30 BOC Meeting
...Market 2.25 ...Previous 2.25 ....Actual 2.25
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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