GOOD MORNING!
FOREX
U.S. President Donald Trump slapped a 25% tariff on imported cars and light trucks starting next week. The Dollar Index has risen as anticipated and if sustained, can head towards the resistance near 105.00-105.25. The Euro is stuck between 1.7050/30-1.0850 region. EURINR has broken below the support near 92.50. Now we need to see whether it breaks below 92 or not. USDJPY above 150 has a scope to see a rise towards 152 and EURJPY below 162 can be vulnerable to fall towards 161-160. The USDCNY needs to see a strong break past 7.27 to rise towards 7.30, else the range of 7.22-7.26 can continue to hold. AUDUSD & Pound can trade within respective ranges of 0.62-0.64 and 1.285-1.30 in the near term. USDINR while above 85.50, can extend the rise to 86 or higher before eventually coming down. US GDP data release is scheduled today.
Dollar Index (104.371) rose to the high of 104.68 on the news of Trump imposing tariffs on 25% tariff on imported cars and light trucks. Immediate resistance is coming at 105.00-105.25 region, break past which will be needed to end the downtrend. Whether it will happen or not is uncertain. While below 105.25, Index can be vulnerable to fall back towards 103.75 or lower.
EURUSD (1.0790) in line with our bearish view, tested 1.07329 before recovering from there. Currently, the pair is stuck between 1.0750/30-1.0850 region. A break on the either side will be needed for further directional clarity.
EURINR (92.5292) initially tested the low of 92.1164 before rising back. The immediate support near 92.50 has been broken and a break below 92 if seen can be bearish for the cross. Only a rise to 93 if seen, can mark this as a false break. Watch price action closely around the current levels.
EURJPY (161.91) has slipped below 162 and while it holds, the EURJPY can get dragged towards 161-160. It will have to see a sustained rise past 162 to negate the anticipated fall.
Dollar-Yen (150.22) looks stable above 150 for now. On a rise past 151, it can head towards 152. Only a break below 150 can bring the previous range of 150-148 back into picture.
USDCNY (7.2617) needs a strong break past 7.27 to turn further bullish towards 7.30 and higher. Else, it can fall back within its range of 7.22-7.26.
Aussie (0.6310) and Pound (1.2914) needs to see a decisive break on the either side of the respective ranges of 0.62-0.64 and 1.285-1.300 for further directional clarity.
USDINR (85.8320) yesterday tested 83.8925 on the upside. While above 85.50, the rise can get extended to 86 or higher before eventually coming down.
INTEREST RATES
The US Treasury yields are moving up. There is room to rise further before resuming the broader downtrend. The US PCE data release tomorrow will be important to watch. The German yields are up. The bullish view is intact. The yields can rise further from here. The 10Yr GoI has come down to test its crucial support. We expect the yield to bounce back from here and rise going forward.
The US 10Yr (4.35%) and 30Yr (4.7%) Treasury yields are inching up. The 10Yr can rise to 4.45% on a sustained break above 4.35%. The 30Yr can test 4.75%-4.8% while above 4.65%. Thereafter the expected fall to 4% (10Yr) and 4.3% (30Yr) can happen.
The German 10Yr (2.79%) has risen well while the 30Yr (3.13%) remains stable. Outlook is bullish. The yields can rise to 3% (10Yr) and 3.3%-3.4% (30Yr) while they remain above their support at 2.7% (10Yr) and 3% (30Yr).
The 10Yr GoI (6.6050%) has come down sharply to test its crucial support at 6.60%. We expect the yield to sustain above this support and rise back to 6.7%-6.75% in the coming weeks.
STOCKS
The Dow Jones has come down; however, while above 42000, it looks bullish towards 43300-43500. DAX is holding the range of 22200-23500. Nifty has fallen below 22600 and could extend the downside to 23300-23250. Nikkei has fallen slightly, and while below 38000, the index is expected to decline towards 37000. Shanghai is holding above 3350 and attempting to rise past 3380. A rise past 3380 would confirm our target of 3400-3450.
The Dow (42454.79, -0.31%) has come down. It has to fall below 42000 again to bring back the danger of seeing 40000-39000. While above 42000, the bias is positive to see 43300-43500 and higher levels.
DAX (22839.03, -1.17%) has come down again. The 22200-23500 range is intact. Failure to get a sustained rise above 23000 can drag it down to 22200 – the lower end of its range.
Nifty (23486.85, -0.77%) has come down to 23500 as expected. The downside is open to test 23300-23250 while the Nifty remains below 23600.
Nikkei (37669.09, -0.93%) is coming down towards 37000 as expected.
Shanghai (3370.9947, +0.07%) is sustaining above 3350 and needs a rise past 3380 to move higher towards 3400-3450.
COMMODITIES
Brent and WTI are rising as expected and can target $74-$75 and $71-$72, respectively. Gold is holding above $3,000 and could rebound toward $3,100-$3,150, while Silver remains steady with a potential rise to $34.50-$35.00 in the near term. Copper is testing resistance at $5.25-$5.30, with a bullish bias toward $5.50-$5.60. Natural Gas continues to decline and may drop further to $3.80-$3.60.
Brent ($73.87) and WTI ($69.76) are rallying as expected and can target $74-$75 and $71-$72, respectively, in the coming weeks.
Gold ($3,031.70) is holding above $3,000 for now, and while above this, it can rebound towards $3,100-$3,150 in the near term. A break below $3,000, if seen, could be limited to $2,950 on the downside.
Silver ($34.29) has remained stable since yesterday. The outlook remains unchanged, with a potential rise towards $34.50-$35.00 in the near term.
Copper ($5.2360) is hovering near the neckline at $5.25-$5.30. While below this level, a dip towards $5.20-$5.15 is possible, but the broader bias remains bullish for a break above $5.30 and a rise towards $5.50-$5.60 in the coming weeks.
Natural Gas ($3.8570) continues to decline as expected and could fall further towards $3.80-$3.60 in the near term.
DATA TODAY
12:30 18:00 US GDP
... Kshitij Exp - ... Expected 2.4% ... Previous 2.3%
DATA YESTERDAY
---------------
6:00 11:30 UK CPI Y/Y
... Kshitij Exp 2.7% ... Expected 2.9% ... Previous 3.0% ...Actual 2.8%
12:30 18:00 US Durable Goods Orders
... Kshitij Exp -0.3% ... Expected -0.6% ... Previous 3.3% ... Actual 0.9%
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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