GOOD MORNING!
FOREX
The Dollar Index is struggling to break above 102 and could ease towards 100, while EURUSD is expected to stay within 1.1370-1.1470 until a clear breakout. EURINR holds support near 109/108.70 and may rise towards 109.50-110. USDJPY could dip towards 161 before resuming its broader upside towards 163/165, while EURJPY may remain confined within 183-186 unless a decisive breakout occurs. USDCNY is declining towards 6.78, with a break lower opening chances of 6.77/6.75. Aussie and Pound are likely to remain range-bound within 0.69-0.70 and 1.33-1.34, respectively, while USDINR looks bullish above the 95-94.90 floor, targeting 96.
Dollar Index (100.78) has dipped as the tensions in the Middle East cool down a bit. On the charts, it seems that the 102 level is proving to be an important resistance just now, which the index is struggling to break on the upside. While 102 holds, an initial dip back to 100 could come into the picture.
EURUSD (1.1442) may continue to trade within the 1.1370-1.1470 for the very near term. A break on either side would open chances of testing either 1.1350/1.13 or 1.15. While the Euro is struggling to break lower, we need to wait for a breakout of the mentioned range for clarity on direction from here for the coming week.
EURINR (109.0978) has immediate support near 109 and lower near 108.70, above which the chances are high for a rise towards 109.50-110.
Dollar-Yen (161.89) has fallen too along with the dip in the Dollar Index, and could possibly test 161 or slightly lower initially before resuming its upmove later. That said, if the spot does not bounce back immediately in the next few sessions, our expected target of 163/165 could get delayed.
EURJPY (185.16) has held the resistance at 186 and may continue to decline within the 183-186 region. This region is likely to hold strong unless we see a clear, decisive breakout on either side of the range.
USDCNY (6.7835) is declining towards 6.78, as mentioned yesterday. A further dip below 6.78 would reinforce 6.77/75 soon.
Aussie (0.6945) and Pound (1.3426) are likely to remain range-bound for the very near term between the 0.69-0.70 and 1.33-1.34 region till a clear decisive breakout is seen.
USDINR (95.3975) looks intrinsically bullish for the near to medium term for a rise to 96. We may expect a price floor of 95-94.90 in the near term.
INTEREST RATES
The US Treasury Yields have come off slightly. But support can limit the downside and take them higher again. The German Yields sustain higher and have room to go up. The 10Yr GoI remains higher but stable. It can test the upcoming resistance and then possibly turn down again.
The US 10Yr (4.54%) and 30Yr (5.05%) yields have come down but may get support at 4.5% and 5% respectively. While these support hold, a test of 4.6% (10Yr) and 5.15% (30Yr) is still possible.
The German 10Yr (3.08%) and 30Yr (3.62%) Yields remain higher and stable. The upside is open to see 3.15%-3.2% (10Yr) and 3.75% (30Yr) from here.
The 10Yr GoI (6.7517%) sustains higher. A test of 6.8% is likely before turning down again. As mentioned yesterday, a rise above 6.8% is needed to negate the deeper fall to 6.5%-6.4%.
STOCKS
Global equities have recovered on optimism over limited escalation in the Middle East. Dow remains below 53500 and can remains vulnerable for a fall towards 52000-51800 while below this level. DAX has bounced back and can rise towards 25500. Nifty remains volatile and could trade within the 23800-24200 range for some time. Nikkei is likely to remain within the broad 68000-72000 range. Shanghai has turned positive again and can rise further towards 4100 while holding above 4000.
Dow (52733, -0.05%) has bounced back on optimism over limited escalation between the US and Iran. However, while it remains below 53500, our view stays intact for a further decline towards 52000-51800 in the near term.
DAX (25254.44, +0.11%) has bounced back after the support near 25000 held, in line with our expectations. A further rise towards 25500 can be seen in the coming sessions.
Nifty (23,962.80, +0.34%) moved higher but failed to sustain above 24100 and reversed to close below 24000. The market remains highly volatile and could trade within the 23800-24200 range for some time before further directional clarity emerges. As optimism over limited Middle East tensions has improved market sentiment, the index could see a gap-up opening above 24100 today.
Nikkei (69075.68, -0.01%) has bounced back, contrary to our expectations, keeping alive our earlier view of a broad 68000-72000 range. Only a sustained break below 68000 would trigger a decline towards 66000.
Shanghai (4062.90, +0.65%) has bounced back sharply from levels near 3938, contrary to our expectations, amid optimism over limited escalation in the Middle East. While above 4000, a further rise towards 4100 remains likely.
COMMODITIES
Commodities are showing mixed trends as easing geopolitical concerns have weighed on crude prices, while metals have stabilized. Brent and WTI can recover towards $85 and $80 respectively while holding above key support levels. Gold and Silver are likely to remain range-bound between $4000-$4250 and $55-$65 respectively. Copper faces resistance near $6.30 and may trade within the $6.00-$6.30 range. Natural Gas continues to remain range-bound within the broader $3.00-$3.50 band.
Brent ($76.36) fell on Thursday after the US refrained from targeting Iran's energy infrastructure. Comments from President Trump also eased concerns over further escalation, as he said he does not want a return to full-scale war, raising hopes that shipping through the Strait of Hormuz will normalize. While Brent holds above $70, our view remains intact for a rise towards $85 in the coming sessions.
WTI ($72.09) has fallen sharply on hopes of limited escalation between the US and Iran. However, our view remains intact for a rise towards $80 in the coming sessions while it holds above $68.
Gold ($4135.40) has bounced back. While the support near $4000 holds, a range of $4000-$4250 could persist for some time.
Silver ($60.65) has risen and could trade sideways within the broad range of $55-$65 for some time.
Copper ($6.30) has bounced back to our previously mentioned target, contrary to our view yesterday. Immediate resistance is seen near $6.30. While this level holds, a range of $6.00-$6.30 could persist for the next few sessions.
Natural Gas ($3.0140) has fallen sharply towards $3.00 as above-average weekly US natural gas storage levels weighed on prices. It can continue to trade within the broad $3.00-$3.50 range for some time.
DATA TODAY
GMT 12:30 IST 18:00 CA Labour Force
...Market 10.0 ...Previous 87.80
DATA YESTERDAY
==============
GMT 1:30 IST 07:00 CN CPI (YoY)
...Market 1.1 ...Previous 1.2 ....Actual 1.0
GMT 1:30 IST 07:00 CN PPI
...Market 4.2 ...Previous 3.9 ....Actual 4.1
{GMT 14:00 IST 19:30 US Existing Home Sales
...Kshitij 4153 ...Market 4200 ...Previous 4190 ...Actual 4090
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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