GOOD MORNING!
FOREX
The Dollar Index if sustains above 104, can head towards the resistance near 105.25-105.50. The Euro is trading lower within its range of 1.095-1.080. A strong break below 1.08 can drag it towards 1.705-1.070. EURINR has immediate support around current levels. Need to see whether it holds or not. USDJPY has risen past 150, contrary to our view and now if sustained, can rise towards 152 or higher. 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 0.64-0.62 and 1.30-1.29 in the near term. EURJPY is rising as anticipated and above 160, can attempt to rise back towards 164. USDINR fell below the support near 85.70 and now we will have to see whether it bounces back from 85.50 or extends the fall below it. US Case Schiller, US Consumer Confidence & US New Home Sales data releases are scheduled today.
Dollar Index (104.306) looks stable above 104 and if sustained, can extend the ongoing rise to the resistance near 105.25-105.50 region. If so, then the targets of 103-102 can be eliminated.
EURUSD (1.0802) is trading lower within its near-term range of 1.095-1.080. A confirmed break below 1.08 if seen, can drag it towards 1.075-1.070 as well. In such case, it will be assumed that the pair peaked at 1.0954.
EURINR (92.4318) has immediate support around current levels. The cross will have to bounce back higher, else break below 92 can make the cross bearish in the near term.
EURJPY (162.69) is rising in line with our view and if sustained, can test the target of 164 soon.
Dollar-Yen (149.79) was anticipated to hold the range of 150-148 for now. In actual, it surpassed the resistance and rose further to the high of 150.946 as well. Now, while above 150, rise can get extended towards 152 or higher.
USDCNY (7.2624) needs a strong break past 7.26/27 to turn further bullish towards 7.30 and higher. Else, it can fall back within its range of 7.22-7.26.
Aussie (0.6287) and Pound (1.2918) can hold the range of 0.64-0.62 and 1.30-1.29 respectively until a decisive break is seen on the either side of it.
USDINR (85.5710) yesterday slipped below the mentioned support near 85.70 region. The immediate outlook is indecisive. We will have to wait and see whether it bounces back towards 85.80/86 or breaks below 85.50. Watch price action closely around current levels.
INTEREST RATES
The US Treasury yields have risen well. A further rise to test the next resistance is a possibility. But unless that resistance is broken, there is no change in our view of seeing a fall in the yields going forward. Broadly the trend is down. The German yields remain stable. Outlook is bullish. Any dip from here will be limited. The 10Yr GoI remains lower. There is limited room on the downside. There are good chances for the 10Yr GoI to reverse higher after testing its upcoming support.
The US 10Yr (4.33%) and 30Yr (4.66%) Treasury yields have risen well. A sustained break above 4.35% can take the 10Yr up to 4.45% and then the expected fall to 4% can happen. Similarly, if the 30Yr sustains above 4.65%, it can test 4.75%-4.8% and then fall back to 4.3%.
The German 10Yr (2.77%) and the 30Yr (3.11%) yields continue to remain stable. While above 2.7% (10Yr) and 3% (30Yr) the bullish view will remain intact. We expect a rise to 3% (10Yr) and 3.3%-3.4% (30Yr).
The 10Yr GoI (6.6291%) remains lower and stable. It can test 6.6% and then a rise back to 6.7%-6.75% is possible.
STOCKS
The Dow Jones surged above 42200, negating the bearish view, and looks bullish towards 43300-43500. DAX can test the lower end of its 22200-23500 range. Nifty faces resistance overhead near 23700-23800. Watch for price action near the resistance to determine the further view. Nikkei is trading slightly below 38000 and needs a sustained rise past 38000 to negate the fall towards 37000. Shanghai is holding above the support of 3350 and can rise towards 3400-3450.
The Dow (42583.32, +1.42%) has surged above 42200. That negates our bearish view of seeing a fall to 40000-39000. Now, while above 42000, a rise to 43300-43500 first and then further higher is possible.
DAX (22852.66, -0.17%) sustains lower. It can come down to test the lower end of its 22200-23500 range.
Nifty (23658.35, +1.32%) has come up near its key resistance level of 23700-23800. A strong rise above 23800 will boost the momentum for a rise to 24000-24100 and higher. It will also confirm the trend reversal. Failure to breach 23800 can take it down to 23500-23300 and lower.
Nikkei (37877.45, +0.72%) has risen but remains below 38000. The index needs a rise past 38000 to negate the fall towards 37000.
Shanghai (3367.6648, -0.07%) is trading above the support of 3350. If the support holds, then the index can hold the range of 3350-3450 and move higher towards 3400-3450.
COMMODITIES
Brent and WTI have broken higher and may rise further. Gold and silver continue to decline, with downside targets of $3,000-$2,950 and $33.00-$32.50, respectively. Copper needs to stay above $5.12 to remain bullish; otherwise, it may drop to $5.05-$5.00. Natural gas remains weak below $4.00, with further downside possible.
Brent ($72.97) and WTI ($69.05) have broken out of their previous range on the upside and can rise further towards $74-$75 and $71-$72, respectively, in the coming weeks.
Gold ($3,012.60) is declining as expected and may reach the previously mentioned levels of $3,000-$2,950 in the coming weeks.
Silver ($33.52) continues to fall and could test its immediate support near $33.00-$32.50 soon.
Copper ($5.0965) tested a high of $5.1845 before retreating to $5.09 yesterday. It needs to stay above $5.12 to remain bullish towards $5.20-$5.25; otherwise, it risks falling to $5.05-$5.00.
Natural Gas ($3.9650) may decline to $3.70-$3.60 while below $4.00. A break above $4.00 is needed to confirm bullishness towards $4.40-$4.60.
DATA TODAY
9:00 14:30 GER IFO Business Climate
... Kshitij Exp 85.5 ... Expected - ... Previous 85.2
9:00 14:30 GER IFO Business Situations
... Kshitij Exp 84.9 ... Expected - ... Previous 85.0
9:00 14:30 GER IFO Business Expectations
... Kshitij Exp 86.8 ... Expected - ... Previous 85.4
13:00 18:30 US Case Schiller
... Kshitij Exp - ... Expected - ... Previous 4.5%
14:00 19:30 US Cons Conf
... Kshitij Exp 96.3 ... Expected - ... Previous 98.3
14:00 19:30 US New Home Sales
... Kshitij Exp 660K ... Expected - ... Previous 657K
DATA YESTERDAY
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No major data released yesterday.
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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