GOOD MORNING!
FOREX
The Dollar Index is likely to trade within 99-101 range. Watch for FOMC policy meeting tonight where the FED is expected to keep rates unchanged. Euro has risen but could limit it's upside to 1.1550-1.16 before declining back to 1.14 later. EURINR has risen as expected and may continue to rise towards 107/108 while above support near 105.50. EURJPY needs to rise past 183.50 to head towards 184/185 while USDJPY can see a pull back towards 159/158 while below immediate resistance at 160. USDCNY remains bullish to 6.90/95 while above 6.85. Aussie is headed towards 0.72 while the Pound can trade within 1.3250-1.35 The USDINR may trade within 92.00-92.50 region for the near term unless a breakout on the upside is seen. But Overall bias is bullish for the medium term.
Dollar Index (99.582) tested 100.115 yesterday before coming off from there. Currently trading lower, the Dollar Index is likely to trade within the 99-101 region for the near term.
EURUSD (1.1535) is headed towards 1.1550-1.16 in line with our expectations and can pause there for a decline again towards 1.14 in the medium term. We continue to look at the broad 1.16-1.14 range to hold for the next 2-3 weeks.
EURINR (106.5786) is rising as expected and is headed towards 107/108 while above support at 106.
EURJPY (183.42) seems to be inching up slowly. A rise past 183.50 can take it higher towards 184-185 in the near term before pausing for a reversal.
Dollar-Yen (158.98) has dipped just below 159 after testing a high of 159.74 in the past 2-sessions. While below 160, a pull back towards 158 or even 157 can be possible.
USDCNY (6.8820) may rise slowly towards 6.90 and higher while above 6.85.
Aussie (0.7113) tested 0.7150 yesterday before coming off. Overall view is bullish for a rise to 0.72. Thereafter we need to see if the rise sustains or falls all the way back to 0.70/0.69 again.
Pound (1.3353) has recovered back to 1.33+ levels. A range of 1.3250-1.35 can hold for now with a slow rise to the upper level of the range.
USDINR (92.3750) is currently holding below the immediate resistance at 92.50. We may expect immediate range of 92.00-92.50 to hold for a while before an eventual rise past 92.50 comes into the picture. Overall bias still remains bullish for the medium term.
INTEREST RATES
The US Treasury yields have come down. There is support near current levels. While that holds, the yields can rise back going forward. The US Fed meeting outcome is due tonight. Their economic projections that will be released today will need a close watch. The corrective fall in the German yields is happening in line with our expectation. The yields can resume their upmove after some more fall from here. The 10Yr GoI is inching up as expected. The bullish view remains intact. There is room for the yield to rise further.
The US 10Yr (4.20%) and 30Yr (4.85%) Treasury yields have come down. The 10Yr has to rise back immediately to go up to 4.3%-4.35%. Else it can fall to 4.1%. The 30Yr on the other hand has support at 4.85% while above which the upside is open to see 4.9%-4.95%.
The German 10Yr (2.90%) and 30Yr (3.47%) yields are coming down towards 2.88% (10Yr) and 3.45% (30Yr) as expected. Thereafter the upmove can resume targeting 3.2% (10Yr) and 3.65% (30Yr).
The 10Yr GoI (6.7114%) is inching up towards 6.75% in line with our expectation. We retain our bullish view of seeing 6.8% on the upside eventually.
STOCKS
Global equities are seeing a short term bounce but the broader outlook remains cautious. Dow is moving higher but while below 48000 the view stays bearish towards 46000. DAX can rise towards 24000 before a possible reversal towards 22000. Nifty has gained but needs a break above 24000 to trigger a rise towards 24500-25000 and negate the downside risk towards 22000-21740. Nikkei is also rising against expectations but the medium term outlook remains weak towards 50000-48000 while below 56000. Shanghai remains relatively weak and may continue to oscillate within the 4000-4200 range.
Dow (47483, +0.29%) is moving up, but while it holds below 48000 we retain our view of a fall towards 46000 in the near term.
DAX (23,787, +0.25%) is moving up and can rise to test 24000 in the near term before taking a reversal and eventually falling towards 22000.
Nifty (23,581.15, +0.74%) has risen but needs to break above 24000 to see a rise towards 24500-25000 and negate our expected decline towards 22000-21740 mentioned in the morning edition.
Nikkei (54775, +1.00%) is moving up contrary to our expectations, but the outlook remains intact for a fall towards 50000-48000 over the medium term while below 56000.
Shanghai (4,039.60, -0.28%) remains weak and can continue to oscillate within the 4000-4200 range for some time.
COMMODITIES
Crude prices remain supported above key supports. Brent can rise towards $108-$110 while WTI may move higher towards $104-$106. Precious metals remain weak as Gold may decline towards $4800 and Silver towards $75-$70 before any pause or reversal appears. Copper may stay range bound within $6.00-$5.60 for some time. Natural Gas is falling towards the support near $2.80 and can later bounce towards $3.50 if the support holds.
Brent ($102.48) and WTI ($94.13) have risen and while they hold above the immediate supports near $98-$100 on Brent and $94-$96 on WTI, the view remains intact for a rise towards $108-$110 and $104-$106 on Brent and WTI respectively.
Gold ($5006.90) and Silver ($79.27) are falling and can decline to test $4800 and $75-$70 respectively in the near term before any pause or reversal is seen.
Copper ($5.7650) can remain in a range of $6.00-$5.60 for some time.
Natural Gas ($2.9770) is falling in line with our expectations and can test the support near $2.80. While this holds, it can eventually rise towards $3.50.
DATA TODAY
GMT 10:00 IST 15:30 EU Final CPI (YoY)
...Expectations 1.9 ...Previous 1.9
GMT 11:45 IST 17:15 BOC Meeting
...Expectations 2.25 ...Previous 2.25
GMT 12:30 IST 18:00 US PPI
...Expectations 0.3 ...Previous 0.5
GMT 12:30 IST 18:00 US PPI ex Food & Energy (MoM)
...Kshitij 0.6 ...Expectations 0.3 ...Previous 0.8
GMT 18:00 IST 23:30 US FOMC Meeting
...Expectations <3.75 ...Previous <3.75
GMT 20:00 IST 01:30 US TICS (Net foreign purch of long-term Sec)
...Expectations 71.6 ...Previous 28.0
DATA YESTERDAY
================
GMT 3:30 IST 09:00 RBA Meeting
...Expectations 4.10 ...Previous 3.85 ...Actual 4.10
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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