GOOD MORNING!
FOREX
The Dollar Index has fallen below 99 and remains bearish below 99.40, with downside risk toward 98.50, while EURUSD needs a sustained move above 1.17 to regain upside momentum. Dollar-Yen risks slipping toward 158 if it holds below 159, and EURINR/EURJPY may consolidate before attempting higher levels. USDCNY is biased toward 6.70. Aussie remains positive for a rise to 0.73, above 0.72, while Pound could face mild resistance near 1.37. USDINR could ease toward 95.30-95 if crude prices keep falling. The dip yesterday below 95.50 can be attributed to a decline in crude prices and possible RBI intervention.
Dollar Index (98.93) has held below immediate resistance near 99.12 on first testing and may not test 99.40 immediately and instead has scope to dip to 98.50 in the next few sessions. Overall near term view is bearish below 99.40.
EURUSD (1.1670) tested 1.1650 yesterday and has bounced back slightly. It needs to be seen if the Euro can continue to rise towards 1.17+ and sustain in the medium term else could spend some time in a sideways range below 1.17.
Dollar-Yen (159.01) dipped from 159.50 itself instead of rising higher to 160, contrary to our expectations. A break below 159, if seen and held can take the pair down towards 158.
EURINR (111.17) has held well below 112.1038 and could test 110.90 in the next few sessions before attempting to bounce back towards 111.50 or higher in the medium term.
EURJPY (185.58) could trade below 186 for a few sessions. A decisive break above 186 is necessary for the pair to rise towards 187/188 in the longer run.
USDCNY (6.7200) is bearish towards 6.70. A sustained break below 6.72 will trigger this fall.
Aussie (0.7176) looks bullish to 0.72 a break above which can take it higher towards 0.73 in the longer run, while Pound (1.3646) could face mild resistance below 1.37 before seeing an eventual breakout to the upside.
USDINR (95.4020) closed below 95.50 yesterday as resistance near 95.75/80 region has held well on possible RBI intervention and on a decline seen in crude prices. If crude prices continue to decline, USDINR can fall further towards the 95.30-95 region, with 95 being a crucial support in the near term. The NDF quotes a lower USDINR at 95.20 today, indicating some Rupee appreciation today against the Dollar.
INTEREST RATES
The US Treasury Yields have come down sharply. A strong fall in the Crude Oil price has dragged the yields lower. There is room to dip further. But supports are there to limit the downside and keep the broader uptrend intact. The US PCE data release today will need a watch. The German Yields have also come down sharply. The expected corrective fall is happening a little earlier than expected. The yields can fall further from here and then bounce back again. The 10Yr GoI is stuck in a narrow range. The immediate picture is unclear. However, the upside remains open to see some more rise before resuming the downtrend.
The US 10Yr (4.64%) and 30Yr (5.17%) yields have come down sharply. The 10Yr has come down within its 4.59%-4.75% range. We expect the range to hold and the yield to make a bullish breakout for a rise to 4.8% first and then to 5%. The 30Yr has support at 5.15%-5.1% while above which the view remains bullish to see a rise to 5.4%.
The German 10Yr (3.20%) and 30Yr (3.71%) Yields have come down sharply. The corrective fall has begun little earlier than expected. The yields can test 3.15%-3.1% (10Yr) and 3.65%-3.6% (30Yr). Thereafter the yields can rise back again.
The 10Yr GoI (6.8488%) is stuck in a narrow range around 6.85%. The immediate view is mixed. As mentioned yesterday, 6.8%-6.9%/6.95% can be the broad trading range. The chances of a rise within that is still alive.
STOCKS
Global equities have strengthened amid easing tensions in the Middle East. Dow and DAX remain positive and can rise towards 54000 and 26500-26600 respectively. Nifty continues to strengthen and can advance towards 24400-24450. Nikkei has broken above 66000 and can rise towards 67000-68000 while sustaining above this level. Shanghai has also turned bullish after breaking above 3900 and can move towards 4000 in the coming sessions.
Dow (53657.26, +0.02%) is inching higher in line with our expectations and can rise further towards 54000 in the coming sessions.
DAX (26326.72, -0.02%) tested a high of 26399 yesterday, in line with our expectations, and can move further higher towards 26500-26600.
Nifty (24,334.55, +0.48%) has risen to test a high of 24334.50, in line with our expectations. A further rise towards 24400-24450 can be seen in the coming sessions.
Nikkei (66395.48, +0.51%) has risen above 66000, and if it sustains above this level, a gradual rise towards 67000-68000 can be seen.
Shanghai (3926.44, +0.95%) has surged above 3900, contrary to our expectations, amid easing tensions in the Middle East. It can rise further towards 4000 in the coming sessions.
COMMODITIES
Brent and WTI have plunged on easing US-Iran tensions and milder-than-expected sanctions, while their broader ranges of $80-$95 and $75-$90 remain intact. Gold continues to strengthen above $4700 and can rise towards $4750-$4800, while Silver can break above $70 and advance towards $72-$75. Copper remains bullish towards $6.80, with a sustained break above it opening the way towards $7.00 or higher, though failure could trigger a medium-term pullback towards $6.20-$6.00. Natural Gas remains constructive and can rise towards $3.00.
Brent ($86.29) and WTI ($80.39) have plunged sharply after easing US-Iran tensions and milder-than-expected sanctions triggered a sell-off. A further decline can be seen in the near term, keeping the earlier mentioned ranges of $80-$95 and $75-$90 respectively intact for some time.
Gold ($4719.16) has risen above $4700 in line with our expectations and can continue its upward momentum towards $4750-$4800 in the near term.
Silver ($69.47) can break above $70 and move higher towards $72-$75 in the near term.
Copper ($6.74) has risen to $6.75 in line with our expectations. A further rise towards $6.80 can be seen. Thereafter, a sustained break above this level would be needed to extend the rally towards $7.00 or higher. Otherwise, if the long-term resistance near $6.80 holds, a pullback towards $6.20-$6.00 could be seen over the medium term.
Natural Gas ($2.86) continues to move higher in line with our expectations and can rise further towards $3.00 in the coming sessions.
DATA TODAY
12:30 18:00 US Personal Income
...Kshitij Exp. 0.7% ...Expected 0.2 % ...Previous 0.2 %
12:30 18:00 US PCE Price Index M/M
...Kshitij Expn 0.1 % ...Expected 0.2 % ...Previous -0.1 %
12:30 18:00 US Core PCE
...Kshitij Expn. 0.3 % ...Expected 0.2 %. ...Previous 0.1 %
12:30 18:00 US Durable Goods Orders
...Kshhitij Expn. 0.2 ...Expected 0.5 % ...Previous 0.5 %
12:30 18:00 US GDP
...Kshitij Expn. 1.5 % ...Expected 1.5 % ...Previous 1.5 %
DATA YESTERDAY:-
---------------
GER IFO Business Climate
...Expected 88.1 ...Previous87.2 ...Actual 86.6
GER IFO Business Situations Index
...Expected 86.6 ...Previous 87.0 ...Actual 86.5
GER IFO Business Expectations Index
...Expected 88.3 ...Previous 87.5 ...Actual 86.7
US case schiller
...Expected 1.8% ...Previous 1.6 % ...Actual 2.1 %
US Cons Confidence
...Kshitij Expn. 91.6 ...Expected 90.3 ...Previous 90.2 ...Actual 89.4
US New Home Sales
...Kshitij Expn 627 k ...Expected 620 K ...Previous 678 K ...Actual 607 K
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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