GOOD MORNING!
FOREX
Continued decline in crude prices has led the Dollar Index to trade higher with scope to rise towards 102 soon, while Euro looks vulnerable below 1.14, towards 1.13. This keeps the EURINR at risk of slipping towards 107.50-108.50 if it sustains below 109. USDJPY remains bullish towards 164.50-165, while EURJPY can extend to 187/188 above 186. USDCNY may edge down to 6.75 while below 6.7850. Aussie is nearing the 0.6960 support while Pound may find support near 1.3250 before bouncing towards 1.34. USDINR has met the 95.85 downside target; if the fall sustains, 95.50/25 is possible before a bounce.
Dollar Index (101.4950) is trading higher today at the upper end of the 101.55-100.70 range. A break on the upside would lead to 102 faster than expected. Watch price action near current levels for the next few sessions.
EURUSD (1.1372) has declined from 1.1418 and is finding it difficult to sustain above 1.14. A decisive and sustained trade below 1.14 will lead to a slow decline to 1.13.
EURINR (109.0533) declined to test 108.85, on a weak Euro and a corresponding dip in the USDINR yesterday. A sustained break below 109, if seen can take it down to the 107.50-108.50 support region before showing up a medium-term bounce later.
Dollar-Yen (163.77) continues to rise and is now headed towards 164.50-165.
EURJPY (186.23) has dipped slightly, but overall, while the pair remains above 186, it can rise towards 187/188 in the longer run. Any dip from here can limit itself to 185.75.
USDCNY (6.7657) is likely to test 6.75 in the next few sessions while below 6.7850.
Aussie (0.6988) is heading towards the lower end of the sideways range of 0.7030-0.6960 mentioned yesterday. Watch price action near 0.6960.
Pound (1.3292) has just broken below 1.33. Note that below 1.33, the next support is seen near 1.3250, which is likely to hold and produce a bounce back towards 1.34 in the medium term.
USDINR (95.90) declined well below 96, in line with our earlier downside limit of 95.85. However, we need to see if the dip sustains today also, in which case we may allow for a dip to 95.50/25 on the downside before expecting a bounce back from there.
INTEREST RATES
The US Treasury Yields remain lower but stable. They can dip further to test their support and then rise back to resume the broader uptrend. The Fed meeting outcome tomorrow will need a close watch. The German Yields have come down. There is limited room on the downside from here. Support is there to halt the fall and trigger a reversal to keep the uptrend intact. The 10Yr GoI has come down sharply. The corrective rise seems to have ended. The yield can fall more from here.
The US 10Yr (4.63%) and 30Yr (5.12%) yields remain lower but stable. We reiterate that a test of 4.6%-4.55% (10Yr) and 5.05% (30Yr) is possible from here. Thereafter the broader upmove can resume to target 4.8% (10Yr) and 5.2% (30Yr).
The German 10Yr (3.13%) and 30Yr (3.62%) Yields have come down further. The 10Yr has dipped below 3.15% but has another support at 3.1%. The 30Yr has support at 3.6%-3.58%. We expect the yields to bounce back from this support and keep the upside open to see 3.25% (10Yr) and 3.75% (30Yr).
The 10Yr GoI (6.7739%) has come down sharply below 6.8%. The rise to 6.9% seems to have got negated. While below 6.8%, the fall to 6.7% and 6.6% can happen straight away from here.
STOCKS
Global equities remain mixed. Dow is likely to stay within the 52000-53000 range while above 52000. DAX needs a sustained break above 25500 to extend its rally towards 26000; otherwise, it remains vulnerable to a pullback towards 25000. Nifty has strengthened and can rise further towards 24100-24150. Nikkei remains under pressure and can decline further towards 60000 or lower. Shanghai continues to trade with a weak bias and can pull back towards 3750-3700 while below 3900.
Dow (52325.18, -0.11%) rose to 52790 in line with our expectations. While above 52000, the broad range of 52000-53000 could remain intact in the near term.
DAX (25486.27, -0.13%) briefly broke above 25500 and tested a high of 25654. A sustained break above 25500 is needed to trigger a further rise towards 26000. Otherwise, it remains vulnerable to a pullback towards 25000.
Nifty (23,995.95, +0.96%) moved higher to close near 24000, in line with our expectations. A further rise towards 24100-24150 remains likely in the coming sessions.
Nikkei (62320.36, +0.77%) has fallen well below our expected levels and could extend its bearishness towards 60000 or lower in the near term.
Shanghai (3809.68, -1.25%) remains vulnerable to a pullback towards 3750-3700 while below 3900.
COMMODITIES
Commodities remain mixed, with crude prices weakening on hopes of easing geopolitical tensions. Brent and WTI can decline further towards $80 and $75 respectively. Gold is likely to remain range-bound between $4000 and $4200. Silver can continue to trade within the broad $55-$65 range while support at $55 holds. Copper remains constructive above $6.30 and can rise towards $6.50. Natural Gas has turned weaker after breaking below its earlier range and can decline further towards $2.70-$2.65.
Brent ($86.87) and WTI ($81.08) have fallen sharply to our expected levels amid hopes of easing tensions in the Middle East. A further decline towards $80 and $75 respectively can be seen in the near term.
Gold ($4045.23) is likely to remain within the broad range of $4000-$4200 for some time.
Silver ($57.45) has declined, but while above $55, it can continue to trade within the broad $55-$65 range for some time.
Copper ($6.35) has found support near $6.30. If this level holds, it can rise further towards $6.50.
Natural Gas ($2.7570) has fallen below our earlier mentioned range, contrary to our expectations. A further decline towards $2.70-$2.65 can be seen.
DATA TODAY
12:00 17:30 IN IIP
...Previous 5.1 % ...Expected 5.6%
13:00 18:30 US Case Schiller
...Expected 0.80% ...Previous 1.10
14:00 19:30 US Cons Conf
...Kshitij Expn 94.8 ...Expected 92.1 ...Previous 91.2
DATA YESTERDAY:-
---------------
GER IFO Business Climate
...Expected 86.10 ...Previous 85.60 ...Actual 86.6 ...kshitij Expn86.18
GER IFO Business Situations Index
...Previous 87.0 ...Actual86.5 ...Kshitij Expn.87.0
GER IFO Business Expectations Index
...Previous 84.1 ...Actual 86.7 ...Kshitij Expn.85.8
US Durable Goods Orders
...Expected 1.60 % ...Previous -4.04 % Actual 0.32% ...Kshitij Expn. 0.20%
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 !!
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