GOOD MORNING!
FOREX
The Dollar Index trades above 102, and the Euro weakens ahead of the FED (today) and ECB (tomorrow) policy meetings. The Fed is expected to keep rates unchanged. Dollar-Yen and EURJPY could rise to 158/159 and 177/178, respectively, while EURINR may trade between 105.70 and 107 with some chances of a dip to 105. The pound needs to hold above 1.33 to prevent a decline to 1.32 but the fall may look more likely as the US Dollar seems to hold strong. The Aussie is stable, and USDCNY looks weak towards 6.65. USDINR could reach 95.50 this week, though a break higher remains uncertain and a pullback is possible.
Dollar Index (102.42) has risen as expected ahead of the FED policy meeting today where markets expect the rates to be kept unchanged as the midterms are right around the corner. However, a possible December rate hike is widely expected. The index looks bullish towards 103.
EURUSD (1.1120) has declined as expected and can head towards 1.11/1.10 in the coming days.
Dollar-Yen (157.97) is likely to test 158.15. Thereafter, a sustained rise can take it further up to 159.
Downside for EURJPY (176.05) could be limited to 175 with a possible rise towards 177/178 on the cards in the coming sessions.
EURINR (105.8032) has dipped as expected. Only and only if a bounce is seen from the 105.80/70 region, we may expect a rise towards 107 or higher in the coming sessions; else, a break below 105.70, if seen, can make it vulnerable to decline towards 105.
USDCNY (6.6676) has moved up slightly from 6.6655 yesterday to 6.6676 just now. Our view, however, remains bearish towards 6.65 for the near term and eventually down towards 6.52/50 in the longer run.
Aussie (0.7039) has risen well and while it holds above 0.70, a rise to 0.7050-0.7070 can be possible before the spot faces rejection from there.
Pound (1.3301) has fallen to test 1.33 as expected. It would be crucial to see a bounce from here; otherwise, it could make the spot vulnerable to decline towards lower support at 1.32.
USDINR (95.12) tested 95.2425 yesterday before coming off to close lower. We may expect a test of 95.50 initially. Thereafter, either we may expect an initial pullback towards 95.30/20 before an eventual rise towards 96, or a break above 95.50 could lead to a straight rise without any interim dip. Downside could be limited to 95.00-94.90.
INTEREST RATES
The US Treasury and the German Yields remain stable. The Treasury Yields are likely to go up eventually. But it is not clear whether the expected rise can happen from here itself or after some more dip. We will have to wait and see. The US Fed meeting outcome tonight will need a watch. The German Yields on the other hand can fall more and test its support. Thereafter a fresh rise can happen. The 10Yr GoI has come down after testing the resistance as expected. We can expect a corrective fall going forward. Any bounce from here can be capped.
The US 10Yr (5%) and 30Yr (5.32%) Yields continue to remain stable. The yields can go up to 5.15%-5.2% (10Yr) and 5.4% (30Yr) and higher. This rise can happen either from here itself or after a dip to 4.85% (10Yr) and 5.2% (30Yr).
The German 10Yr (3.36%) and 30Yr (3.69%) Yields remain stable. While below 3.4% (10Yr) and 3.75% (30Yr), the downside will remain open to see 3.25% (10Yr) and 3.6% (30Yr). Thereafter a fresh leg of rise can happen targeting 3.7% (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.4360%) has come down from the high of 7.4983%. The 7.5%-7.6% resistance zone seems to be holding for now. A fall to 7.3% is possible on a break below 7.4%. We expect the upside to be capped at 7.6% for now.
STOCKS
Dow needs to hold 52000 to extend the rise towards 53000 or higher, else it can fall towards 51000. DAX can extend the rise towards 25800 if the rally sustains. Nifty needs to hold 22700 for a rise towards 23000, else it can fall towards 22350-22250. Nikkei has immediate support at 62500, with the rise extending towards 64000. Shanghai remains weak, with scope to fall towards 3600-3500.
Dow (52377.57, +0.03%) inched higher and tested the high of 52477 before closing lower. It needs to hold above 52000 to extend the rise towards 53000 or higher. A break below this level would open the path towards 51000.
DAX (25590.77, +0.71%) has risen sharply to test the high of 25647 before closing, in line with our view. If the current rally sustains, the rise may extend towards 25800 in the near term.
Nifty (22749.75, -0.02%) rose to a high of 22829 and closed above 22700. It needs to hold above 22700 to see a rise towards 23000. A break below 22700 would bring the index down to 22350-22250.
Nikkei (63268.15, +1.73%) has tested the high of 63684 before closing lower. While 62500 is acting as immediate support, the rise may extend towards 64000 in the near term.
Shanghai (3648.30, -1.33%) has fallen sharply from the high of 3708 in line with our view. Scope remains open for a further decline towards 3600-3500 in the coming weeks.
COMMODITIES
Crude oil contracts have rolled over to new front months. Brent ($108 support) and WTI ($98 support) are holding key levels for potential bounces toward $112–$115 and $100–$102. Gold's modest recovery could target $4,200 if $4,000 holds, while Silver remains biased toward $50 as long as resistance at $55–$56 caps gains. Meanwhile, Copper approaches $6.70 with room for further upside, and Natural Gas continues to range-trade within $2.7–$3.2.
Brent ($109.81) contract has rolled over to January '27 as trading volumes have shifted. The price is currently trading below 110 but holds support near 108, above which a bounce back to 112–115 remains likely.
WTI ($98.84) has dipped below 100 following the contract rollover. As long as it holds above 98, the price could bounce back towards 100–102 in the near term.
Gold ($4071.80) has seen a modest recovery. It needs to hold above 4000 to negate further downside risks towards 3900–3800 and push higher towards 4200.
Silver ($54.35) has bounced back from a low of 52.71. However, while trading below 55/56, our view remains intact for a potential decline towards 50 in the near term.
Copper ($6.66) is moving in line with expectations and could soon test 6.70. Thereafter, it remains to be seen whether prices pull back or break higher towards 6.8–6.9.
Natural Gas ($3.06) is expected to hold within a range of 2.7–3.2 for some time.
DATA TODAY
1:30 07:00 AU CPI
...Expected 3.9 % ...Previous 3.9 % ...Actual 3.9%
10:30 16:00 IN IIP
...Prevvious 8.0 %
13:45 19:15 BOC Meeting
...Expected 2.50 % ...Previous 2.25 %
18:00 23:30 US FOMC Meeting
...Expected <4.00 % ...Previous <4.00 %
DATA YESTERDAY:-
----------------
US Durable Goods Orders
...Kshitij Expn 0.4 % ...Expected 1.8 % ...Previous 0.0 % ...Actual 1.8%-
US Case Schiller
...Kshitij Exxpn 2.5 % ...Expected 2.7 % ...Previous 2.5 % ...Actual 2.6%
US New Home Sales
...Kshitij Expn. 694 K ...Expected 649 K ...Previous 684 K ...Actual 676K
US Cons Conf
...Kshitij Expn. 80.8 ...Expected 81.2 ...Previous 84.2...Actual 91.7
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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