GOOD MORNING!
FOREX
Joint US-BOJ intervention has pulled down the Dollar Index and USDJPY sharply and continues to keep the major currencies highly volatile. Supports are seen near 99.50 and 154.60, respectively, which are likely to hold and produce a decent bounce in the near term. Euro could limit its immediate upside to 1.16. EURJPY has plunged to 179.37 too but has moved up above 180 now. Trade above 180 needs to sustain to avoid further decline towards 175. USDCNY is open to see a slow fall towards 6.70 while below 6.7850. Aussie and Pound could attempt to test 0.71 and 1.3550 before falling in the medium term. USDINR could test 95.15/95.00 today.
Dollar Index (99.72) declined as expected to test 99.418, a little lower than our expected 99.50 before bouncing back from there. Having tested a crucial support at 99.50, it is important to see if it manages to rise further from current levels or re-attempts to break below 99.50, which would indicate early signs of a trend reversal. The index will have to rise back above 100 and eventually higher to keep the near-term uptrend intact.
Dollar-Yen (156.47) has tested 155.22 in the morning session on joint intervention by the US and BOJ as news confirms. There is support at 154.60 on the USDJPY below current levels which needs to hold and produce a bounce back towards 158-160 in the coming weeks to prevent further decline below the mentioned support.
EURUSD (1.1532) tested 1.1559 as in line with our mentioned target of 1.1550-1.16 on Friday’s edition. We do not expect an immediate upside from 1.16 and the Euro could reverse from there back towards 1.15/1.14 eventually.
EURINR (109.7828) is likely to trade below crucial resistance at 110.30. The pair could fall towards 109-108.50 in the near term if the Euro remains high and the Indian Rupee also manages to remain strong in the next few sessions.
EURJPY (180.46) plunged to test 179.376 today as an impact of the joint intervention by the US and the Bank of Japan. Below 180 there can be scope for a fall towards 175-172 in the medium term. To prevent this fall the pair will necessarily have to trade and remain above 180.
USDCNY (6.7501) has some scope for a fall towards 6.70 with immediate upside likely to be capped at 6.7850. However, such a decline will gain momentum on an initial break below 6.75.
Aussie (0.7032) and Pound (1.3470) are trading higher with a possible test of 0.71 and 1.3550, respectively, before possibly showing another corrective dip from there in the medium term.
USDINR (95.37) could have scope to see some dip towards 95.10-95.00 before moving up again towards 95.50.
INTEREST RATES
The US Treasury Yields have come down in the early trades as the oil price has come down. But support is there to limit the downside on the yields. The bias is bullish. The yields have room to rise more. The German yields are going up in line with our expectation. Our bullish view remains intact. The 10Yr GoI is holding well above its support. That keeps the upside open to rise more before resuming the broader downtrend.
The US 10Yr (4.7%) and 30Yr (5.24%) yields have come down in the early Asian trades. But while above 4.65%-4.6% (10Yr) and 5.2%-5.15% (30Yr), the bias is bullish. The yields can rise to 4.8% (10Yr) and 5.35%-5.4% (30Yr).
The German 10Yr (3.20%) and 30Yr (3.70%) Yields are moving up as expected. The yields can rise to 3.3%-3.35% (10Yr) and 3.8% (30Yr) from here.
The 10Yr GoI (6.8343%) is holding well above 6.8%. It ca test 6.85% or even 6.9% on the upside. Thereafter the downtrend can resume towards 6.7% and 6.6%.
STOCKS
Dow continues to trade below the key 53000 resistance and remains vulnerable to a decline towards 51000-50000. DAX is testing the crucial 26000 level, with a break higher opening the way towards 27000, while failure could lead to a pullback towards 25000. Nifty may witness a short-term dip towards the 21-day moving average near 24150 before seeing a bounce back towards 24500. Nikkei has turned weaker after failing to break above 66000 and can decline towards 61000-60000. Shanghai is likely to remain range-bound within the 3750-3900 band for some time.
Dow (52880.67, +0.47%) has risen, but while it remains below 53000, the possibility of a decline towards 51000 or even 50000 over the coming weeks remains intact.
DAX (25924.86, +0.83%) is testing the 26000 level in line with our expectations. It remains to be seen whether the index breaks above this level and rises towards 27000 or pulls back towards 25000.
Nifty (24,383.60, +0.27%) attempted to break above 24400 but failed to sustain. While immediate resistance remains at 24400-24500, the index may test the 21-day moving average support near 24150 before resuming its rise towards 24500 and higher in the medium term.
Nikkei (63430.89, +0.16%) has pulled back sharply after failing to break above 66000. A further decline towards 61000-60000 can be seen.
Shanghai (3808.85, -0.60%) can continue to trade within the broad range of 3750-3900 for some time.
COMMODITIES
Brent and WTI are likely to remain within the $80-$100 and $75-$95 ranges respectively until clearer directional cues emerge. Gold can continue to trade within the $4000-$4200 range, while Silver is likely to remain range-bound between $55 and $60. Copper remains bullish and could extend its rally towards $6.70-$6.80 on a sustained break above $6.60. Natural Gas continues to trade sideways but remains vulnerable to a decline towards $2.65 in the near term.
Brent ($83.89) and WTI ($80.27) remain highly volatile and are likely to trade within the broad ranges of $80-$100 for Brent and $75-$95 for WTI until further directional clarity emerges.
Gold ($4114.80) can continue to trade within the broad range of $4000-$4200 for some time.
Silver ($58.29) can continue to trade within the broad range of $55-$60 for some time.
Copper ($6.54) has risen to $6.55 in line with our expectations. A sustained break above $6.60 could trigger a further rise towards $6.70-$6.80.
Natural Gas ($2.7720) is moving sideways, but our view remains intact for a decline towards $2.65 in the near term.
DATA TODAY
0:30 06:00 JP PMI
...Expected 54.7 ...Previous 54.7 ...Actual 54.5
1:45 07:15 CN PMI
...Expected 51.9 ...Previous 51.7 ...Actual 50.9
5:00 10:30 IN Manufacturing PMI
...Expected 53.9 ...Previous 53.9
6:30 12:00 CH CPI
...Expected-0.1 ...Prevvious0.5
7:30 13:00 CH PMI
...Previous 54.3 ...Expected 54.5
8:00 13:30 EU PMI
...Expected 51.5 ...Previous 52.0
8:30 14:00 UK PMI
...Expected 52.0 ...Previous 52.8
14:00 19:30 US Manufacturing ISM
...Kshitij Expn 53.4 ...Expected 54.0 ...Previous 53.3
FRIDAY'S DATA:-
--------------
JP Unemp
...Kshitij Expn 2.5 % ...Expected 2.5 % ...Previous 2.5 % ...Actual 2.5 %
AU PPI
...Expected 0.30 % ...Previous 0.40 % ...Actual 1.30 %
BOJ Meeting
...EXpeccted 1.00 % ...Previous 1.00 % ...Actual 1.00 %
EU CPI Flash Estimate (YoY)
...Expected 2.90 % ...Previous 2.75 % ...Actual 2.92 %
CA GDP
...Expected 0.2 % ...Previous 0.6 % ...Actual 0.3 %
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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