GOOD MORNING!
FOREX
The Dollar Index rose well and if sustained above current levels can rise towards 104-105 in the near term while the Euro, if falls further can test 1.08-1.0770 before attempting to rise back. USDJPY and EURJPY can have upside limited to 152 and 164 respectively. Aussie and Pound look bearish towards 0.6650-0.66 and 1.2950-1.29 respectively in the coming sessions. USDCNY has risen well but still needs to see a rise past 7.1240 to head towards 7.14-7.15. USDINR is likely to remain ranged within 83.98-84.12 region. EURINR slipped below 91 and failure to rise past it can make it vulnerable to test 90.50-90 in the near term.
Dollar Index (103.95) limited the fall to 103.42 and has risen again from there. While the rise sustains, it can extend towards 104-105-105.50 in the near term. For now, we expect the downside to be limited to 103.
EURUSD (1.0818) observed a high of 1.0871 before coming down sharply from there. Immediate support is spotted around 1.08-1.0770 region which can be tested if the fall continues further. The pair will need to see a strong rise past 1.0900-1.0950 to turn bullish again.
Dollar-Yen (150.79) and EURJPY (163.12), contrary to our expectations of seeing a fall towards 148.8 and 161.80, have risen on Dollar strength. The immediate upside seems limited to 152 and 164 respectively. We need to observe the price action around current levels to see whether the rise extends further or both the pairs start coming down towards 148 and 161 respectively.
USDCNY (7.1223) limited the fall to 7.0989 and started rising from there. China has cut rates by 25bps yesterday. A sustained rise past 7.1240 if seen, can take it higher towards 7.14-7.15 in the coming sessions.
The fall in Aussie (0.6668) happened much sooner than expected and if the overall downtrend continues, then our mentioned targets of 0.6650-0.66 can be achieved soon. Overall, the broad range of 0.68-0.66 continues to hold for now.
The expected rise to 1.31 did not happen and instead Pound (1.2988) started coming off from the high 1.3057. The pair has immediate support around 1.2950-1.29 which can be tested before attempting to rise back. Overall, a range of 1.3150-1.2950 can hold for some time.
USDINR (84.07) can rise towards 84.10-84.12 while sustains above 84-84.02. We continue to look at 83.98-84.12 range to hold for the very near term.
EURINR (90.9560) has slipped slightly below 91. Watch price action closely around current levels as any fall below current levels can make it vulnerable to test 90.50-90 on the downside. The Cross needs to rise past 91 again to move higher towards 91.50-92.
INTEREST RATES
The US Treasury yields have surged. Looks like there can be an extended rise from here before the broader downtrend resumes. The German yields have risen back sharply. That keeps alive our bullish view. More rise is on the cards. The 10Yr GoI is moving up towards the upper end of its broad range. The bias is bullish to break the range on the upside and see more rise, if not immediately but eventually.
The US 10Yr (4.19%) and the 30Yr (4.49%) yields have surged towards 4.2% (10Yr) and 4.5% (30Yr) much faster than expected. Looks like there can be an extended rise to 4.4% (10Yr) and 4.6% (30Yr) before the yields turn down to resume the downtrend and fall back to 4% (10Yr) and 4.3% (30Yr) and lower.
The German 10Yr (2.28%) and the 30Yr (2.59%) yields have risen back sharply above above 2.2% (10Yr) and 2.5% (30Yr). While this sustains, the yields can rise to 2.4% (10Yr) and 2.7% (30Yr) in the coming weeks.
The 10Yr GoI (6.8293%) sustains above 6.8% and continues to move up towards the upper end of its broad 6.7%- 6.85% range. The bias is bullish to break 6.85% and rise to 7% eventually.
STOCKS
Major equity indices closed lower as key levels held firm. The Dow Jones failed to break above its interim resistance of 43400 and dropped to close below 43000, opening the possibility of testing the supports of 42700 and 42500 before moving higher towards 44000. Similarly, the DAX reversed from 19645 and slipped below 19500; however, while it sustains above 19400 and 19200–19000, a rise towards 19800–20000 remains on the table. The Nifty is also under pressure, struggling to move past 25000, and may test support near 24600. Meanwhile, the Nikkei sharply fell below 39000, reaching a low of 38200 before a modest recovery. Shanghai continues to oscillate between 3300 and 3200, showing signs of an attempt to break above 3,300.
The Dow (42931.60, -0.80%) has come-off from the high of 43310. It can possibly fall back to 42700. But while above 42500, the broader view is bullish to see a rise to 44000 eventually.
DAX (19461.19, -1%) has come down sharply. But supports are at 19400 and then in the 19200-19000 region which can limit the downside. While above 19000, the broader trend is up and the view of seeing a rise to 19800-20000 will remain intact.
Nifty (24,781.10, -0.29%) had come-off from the high of 24978. Immediate view mixed. 24600-25000 looks likely to be the range. Need to wait for a breakout on either side to get clarity on whether the Nifty can rise to 25200-25300 and higher or fall to 24500-24300.
Nikkei (38399, -1.43%) failed to hold above 39000 and sharply declined below 38500. If it remains below 38500, further downside towards the support zone of 38000–37500 looks likely before an upward move.
Shanghai (3279.0101, +0.34%) can test the upper end of the sideways range around 3300.A rejection from this level could push the index down to 3250–3200. Alternatively, a rise past 3300 would bring the target of 3400 into the picture.
COMMODITIES
Crude prices recover after China cut rates by 25bps. While the respective support levels hold, Brent can rise towards $75-76 and WTI can rise towards $70-72 in the near term. Gold and Silver retain bullishness and can target 2800 and 35 respectively on the higher side. Copper has dipped but near-term looks ranged between 4.55-4 30/25. Natural Gas can rise towards 2.4-2.5 while above 2.3.
Brent ($73.99) has bounced back slightly after China cut their benchmark lending rates by 25 bps, which may spur economic growth that could boost energy demand in China. While above the immediate support at $71 it can rise towards 75-76 in the near term.
WTI ($69.77) has bounced slightly from a low of 68.46 and it can rise towards $70-72 in the near term. The immediate downside could be limited to $68.
Gold $2742.30) tested $2755.40 yesterday as expected. While above $2700 it can rally higher towards $2780-2800 before pausing for a slight corrective dip.
Silver (34.09) has risen sharply and holds well above $34. It can continue to rise towards its trend resistance at $35 in the near term before a slight corrective dip can be seen.
Copper (4.3605) tested a high of 4.45 before coming off to 4.35. A rise to 4.5-4.55 can be possible while above 4.3.
Natural Gas (2.3590) tested a low of 2.21 but has bounced back sharply from there to close above the earlier trend support at 2.3 yesterday as forecasts shifted cooler for the US from October 26-20, which would boost heating demand for nat-gas. While above 2.30-2.35, it can rise towards 2.4-2.5 or higher in the upcoming sessions.
DATA TODAY
No major data release today.
DATA ON 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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