GOOD MORNING!
FOREX
Strength in the Dollar Index above 101.50 if sustains can lead to further weakness in major currencies against the US Dollar. The Euro is already trading below 1.14 and can now test 1.13 while EURINR may fall to 106/105 on a decisive break below 107. EURJPY may test 183 while USDJPY may try to push itself beyond 162 and rise to 164/165 along with the rise in the Dollar Index itself. USDCNY has risen well and can test 6.83/85 before pausing. Aussie and Pound have already declined and can test 0.68/67 and 1.31/30 respectively. USDINR fell after testing 94.9125. It is likely to hold below 95.00/10 and dip to 94.50/15 in the coming days.
Dollar Index (101.568) has clearly broken above 101.50 and if it manages to sustain the rise, it can slowly rise towards 102-104 in the coming weeks. This may keep the EURUSD (1.1358) lower and eventually take it towards 1.13/1.12 in the medium term. Watch price action near 1.13 on the Euro.
EURINR (107.0442) has clearly broken below our expected 107.77/50 region and if the spot manages to break below 107, it could open up chances of declining towards 106/105 in the coming weeks.
EURJPY (183.67) has immediate support at 183 which can be tested before attempting to bounce back towards 185/186 again. Failure to hold above 183 can open chances for a further dip to 182 before pausing for a reversal.
Dollar-Yen (161.70) is likely to push itself above 162. If it manages to do so, it may open door for a higher target of 164/165. Else, a decline below 162, if seen can take it back to 161/160. Watch price action near 162.
USDCNY (6.8058) has risen well as expected, breaking above 6.80. A sustained rise from here can take it towards 6.82/85 on the upside before seeing a pause.
Aussie (0.6893) has clearly broken below 0.69 and while the decline sustains, we may look for a test of 0.68/67 in the coming days.
Pound (1.3177) is clearly bearish while below 1.32. It can decline towards 1.31/30 if it manages to sustain the decline.
USDINR (94.67) tested 94.9125 before falling from there to close at 94.67. We may expect 95.00/10 to cap the immediate upside for the spot and lead it down to 94.50/15 in the coming days.
INTEREST RATES
US, German and the Indian yields have all declined. Opening of the Strait of Hormuz and sustained crude prices below $80 has eased inflation fears leading to a slow decline in the yields globally. The US 10Yr and 30Yr Yields can dip to 4.40% and 4.80/75%. The US PCE data release today will need a close watch. Need to see if it can provide the necessary push for the yields to bounce back. The German Yields can fall further from current levels. The 10Yr GoI has declined as well and looks bearish for the next few sessions.
The US 10Yr (4.406%) and 30Yr (4.855%) have dipped, contrary to our expectations of seeing a rise as the opening of the Strait of Hormuz and sustained crude prices below $80 have eased inflation fears. The 10yr now has an immediate support at 4.4% which if breaks can take it down towards 4.25/4.00%; else can bounce back from 4.4% to slowly move higher. The 30Yr yield on the other hand has scope to test 4.80/75% on the downside before pausing for an upside reversal later.
The German 10Yr (2.8683%) and 30Yr (3.4131%) yields have dipped further. A test of 2.85%-2.80% (10Yr) and 3.40%-3.30% (30Yr) looks likely in the coming days.
The 10Yr GoI (6.7832%) has fallen below the key level of 6.80%, contrary to our expectation. The next support is seen around 6.75%, which can be tested in the near term before the yield bounces back from there. Failure to hold above 6.75% can trigger a deeper decline towards 6.70/65/50% in the medium term. Watch price action near 6.75% closely.
STOCKS
Dow needs a sustained break above 52700-53000 to strengthen the bullish outlook. DAX can decline further towards 24500-24250. Nifty has managed to hold above 24000 but needs to break decisively above 24100 to extend its rally towards 24400-24600. Nikkei has rebounded sharply above 71000 and can rise further towards 73000-74000 while it remains above 69000. Shanghai has also bounced back and can advance towards 4200 in the near term.
Dow (52266.13, -0.04%) has risen slightly but needs a sustained break above the resistance zone near 52700-53000 to trigger a further rise towards 53500-54000. Otherwise, the index remains vulnerable to a decline towards 51000-50000.
DAX (24859.21, -0.11%) has fallen sharply below 25000 and tested a low of 24755 in line with our expectations. A further decline towards 24500-24250 can be seen in the near term.
Nifty (24,021.65, +0.83%) managed to hold above 24000 yesterday. Immediate resistance near 24100 needs to be decisively broken and sustained to trigger a rise towards 24400-24600. Otherwise, the index remains vulnerable to a decline towards 23600.
Nikkei (71990.36, +3.58%) has bounced back by more than 3%, contrary to our expectations, and has risen above 71000. While above 69000, a further rise towards 73000-74000 can be seen.
Shanghai (4109.78, -0.03%) has bounced back in line with our expectations and can rise further towards our earlier mentioned target of 4200 in the near term.
COMMODITIES
Brent and WTI have declined in line with our expectations and remains vulnerable to further declines towards $70 and $65 respectively. Gold has slipped below $4000 and could extend losses towards $3900-$3800. Silver is testing a crucial support near $55, from where a bounce back towards $60 is possible; otherwise, a break lower could trigger a fall towards $50-$45. Copper has broken below $6.00 and can decline further towards $5.80-$5.75. Natural Gas remains range-bound between $3.00-$3.50 for some time.
Brent ($72.57) has fallen below $75 in line with our expectations and can decline further towards $70 in the near term.
WTI ($69.33) has fallen below $70 as expected and can decline further towards $65 in the near term.
Gold ($3995.30) has fallen below $4000 and tested a low of $3975.50 yesterday. A sustained break below this level would drag the price further down towards $3900-$3800 in the coming sessions.
Silver ($56.68) has exceeded our expectations and tested a low of $55.75 yesterday. Immediate support is seen near $55, which, if it holds, could produce a bounce back towards $60 or higher. Otherwise, a break below this level would open the door for a further decline towards $50-$45.
Copper ($5.9760) has fallen sharply below $6.00 in line with our expectations and tested a low of $5.9240. A further decline towards $5.80-$5.75 can be seen in the near term.
Natural Gas ($3.2950) has risen but can continue to trade within the broad $3.00-$3.50 range for some time.
DATA TODAY
GMT 1:30 IST 07:00 Australia Labour Force
...Market 30.3 ...Previous -18.6
GMT 12:30 IST 18:00 US Personal Income
...Kshitij 0.12 ...Market 0.40 ...Previous 0.00
GMT 12:30 IST 18:00 US PCE Price Index M/M
...Market 0.30 ...Previous 0.40
GMT 12:30 IST 18:00 US Core PCE
...Kshitij 0.4 ...Market 0.3 ...Previous 0.2
GMT 12:30 IST 18:00 US Durable Goods Orders
...Market -4.90 ...Previous 7.95
GMT 12:30 IST 18:00 US GDP
Kshitij 1.79 ...Market 1.60 ...Previous 1.61
DATA YESTERDAY
==============
GMT 9:00 IST 14:30 GER IFO Business Climate
...Kshitij 86.3 ...Market 85.6 ...Previous 85.0 ...Actual 85.6
GMT 9:00 IST 14:30 GER IFO Business Situations
...Kshitij 85.3 ...Market 86.0 ...Previous 86.1 ...Actual 87.0
GMT 9:00 IST 14:30 GER IFO Business Expectations
...Kshitij 86.0 ...Market 86.1 ...Previous 83.8 ...Actual 84.1
GMT 12:30 IST 18:00 US Current Account Balance
...Kshitij -241.23 ...Market -219.0 ...Previous -190.7
GMT 14:00 IST 19:30 US New Home Sales
...Kshitij 606.7 ...Market 637.0 ...Previous 622.0
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 !!
Visitors should be aware that Foreign Exchange transactions and trading are or can be subject to laws, rules and regulations of the country in which the entity undertaking the transactions is situated. It is incumbent upon the Visitors to keep themselves informed and abreast of the Laws they are (or would be expected to be) subject to and governed by, and act in accordance thereto.
