GOOD MORNING!
FOREX
Most currency pairs are likely to trade within a range. The Dollar Index may continue trade within 98-101 region while Euro has broken above 1.16 and could extend to 1.1650-1.17 before coming off. EURINR has risen sharply on Euro strength and Rupee weakness seen together. It may test 110 before a dip sets in. EURJPY could continue to hold within 182-185 while the USDJPY may trade within 157-160 region.
USDCNY remains intact within the 6 88-6.92 region. Aussie and Pound can trade within 0.69-0.72 and 1.32-1.35 region respectively. The USDINR is likely to fall soon towards 93.25-93.00 while upside is capped near 94.
Dollar Index (99.161) has been ranged within the broad 98-101 region with the index currently trading above 99. But still the EURUSD (1.1618) has managed to rise above 1.16 contrary to our expectations and could have scope to test 1.1650-1.17 before pausing for a correective dip.
EURINR (109.1821) has risen sharply and is headed towards 110. While both the Euro and the USDINR rise, EURINR can sharply move higher. It would be crucial to see if the rise in Euro can bring some strength in the Rupee too in the near term.
EURJPY (184.34) is rising within the 185-182 range and may continue to hold for the near term.
Dollar-Yen (158.68) is holding well below 160 but downside is likely to be limited to 158-156. Unless a breakout on either side is seen, it is difficult to project which way it will move in the medium to long term.
USDCNY (6.8852) has risen slightly. A range of 6.88-6.90/92 may hold for the near term.
Aussie (0.6990) is fluctuating in the 0.69-0.72 eegiyans unless a breakout on either side is seen, it is difficult to preject which way it will turn towards in the medium term.
Pound (1.3426) has moved up within the 1.32-1.35 region. A break above 1.35 if seen would take it higher towards 1.36 before pausing for a correction.
USDINR (93.87) has not been able to see a significant fall yesterday and instead the pair moved up after testing 93.60. However, we cannot fully negate a possible fall towards 93.25-93.00 in the coming days.
INTEREST RATES
The US Treasury Yields remain higher but stable. Supports are there to limit the downside and keep the broader uptrend intact. We expect the yields to rise again after a near-term dip/consolidation. The German Yields can see a corrective dip before resuming their broader upmove. The 10Yr GoI continues to move up. An intermediate resistance is coming up from where a dip is possible before rising further.
The US 10Yr (4.36%) and 30Yr (4.93%) Treasury yields remain higher but stable. Support at 4.3% (10Yr) and 4.9% (30Yr) can be tested in the near term. But while above this support the outlook is bullish to see 4.6% (10Yr) and 5.05%-5.1% (30Yr).
The German 10Yr (3.02%) and 30Yr (3.49%) yields sustain lower. An intermediate dip to 2.9% (10Yr) and 3.45%-3.4% (30Yr) is likely. After that the yields can rise back to 3.2% (10Yr) and 3.65% (30Yr).
The 10Yr GoI (6.8681%) has moved up further and can test 6.9%. Thereafter a corrective dip to 6.8%-6.75% is possible before targeting 6.95%-7% on the upside.
STOCKS
Global equities have bounced back on easing Middle East tensions but key resistances still cap upside. Dow has rebounded but while below 47000 the risk of a fall towards 45000 remains. DAX has moved above 23000 but needs a break above 23500 to reverse higher, else downside towards 22000 persists. Nifty failed near 22950 and needs a break above 23000 to rise towards 23500-24000, otherwise it may fall towards 22000 and lower. Nikkei has gained but remains bearish below 54000 with downside towards 50000-48000. Shanghai can extend the rise towards 4000-4100 in the near term.
Dow (46804, +0.78%) has bounced back on news of easing tensions in the Middle East. However, as long as it holds below 47000, the chances of a decline towards 45000 remain intact.
DAX (23140, +1.34%) has risen above 23000 but needs a sustained break above 23500 to reverse the downtrend and move higher towards 24000-25000. Otherwise, it remains vulnerable to a decline towards 22000.
Nifty (22912.40, +1.78%) moved higher but failed to sustain above 22950, the key resistance, and closed below it. A break above 22950-23000 is required to trigger a rise towards 23500-24000. Otherwise, as mentioned earlier, it can decline towards 22000 in the near term and eventually towards 21500-21000 over the medium term.
Nikkei (53,455, +1.91%) has risen after Trump's remarks on an Iran ceasefire eased tensions. However, while it holds below 54000, our earlier bearish view of 50000-48000 remains intact. Only a sustained break above 54000 will negate this bearish outlook.
Shanghai (3,922.90, +1.07%) has bounced back contrary to our expectations as easing tensions in the Middle East have pushed crude prices lower. A further rise towards 4000-4100 can be seen in the near term.
COMMODITIES
Crude prices are weakening on easing geopolitical tensions and need key breaks for further downside. Brent can fall towards $90-$85 if it breaks below $95, while WTI may decline towards $82-$80 if it sustains below $90-$88. Precious metals have bounced back with Gold likely to rise towards $4800-$5000 and Silver towards $78-$80 in the near term. Copper remains weak below $5.70 and can fall towards $5.00. Natural Gas is approaching support near $2.80 and may stay within a $3.30-$2.80 range if the support holds.
Brent ($97.94) has fallen below $100 as reports suggest Washington is actively pursuing diplomatic efforts to end the ongoing war with Iran. A sustained break below $95 is needed to see a decline towards $90-$85.
WTI ($87.49) is trading below $90 and needs to sustain below $90-$88 to see a further fall towards $82-$80.
Gold ($4597.40) and Silver ($74.40) have bounced back sharply as mentioned earlier. While tensions in the Middle East appear to be easing, a further rise towards $4800-$5000 and $78-$80 respectively can be seen in the near term.
Copper ($5.5435) remains likely to fall towards $5.00 in the near term while below $5.70.
Natural Gas ($2.8350) is falling and can test the support near $2.80 in the coming sessions. While this holds, a range of $3.30-$2.80 can persist for some time.
DATA TODAY
GMT 7:00 IST 12:30 UK CPI Y/Y
...Expectations 3.0 ...Previous 3.0
GMT 9:00 IST 14:30 GER IFO Business Climate
...Expectations 86.3 ...Previous 88.6
GMT 9:00 IST 14:30 GER IFO Business Situations
...Expectations 86.0 ...Previous 86.7
GMT 9:00 IST 14:30 GER IFO Business Expectations
...Expectations 86.0 ...Previous 90.5
GMT 12:30 IST 18:00 US Current Account Balance
...Previous -226.4
DATA YESTERDAY
==============
GMT 0:30 IST 06:00 JP CPI
…Expectations 1.7 …Previous 1.5
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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