Crucial to watch the FOMC and ECB policy statements scheduled tonight and tomorrow. Although the central banks may hike rates, their stance for future months would be important to watch which can bring in some volatility into the currency markets. Dollar Index holds within 101-102 while Euro has fair scope to test crucial support at 1.10 from where a decent bounce can be expected. EURJPY and USDJPY could trade within 155-158 and 142-139 respectively while Aussie and Pound could trade within 0.67-0.68 and 1.29-1.28 respectively. USDCNY and USDRUB may trade within 7.10-7.25 and 89-92 region respectively while EURINR can soon rise while above support at 90. USDINR has seen RBI buying below 81.70 which could keep the pair higher towards 81.90-82.00 today. But it would be important to see how far the pair can remain raged thus.
Dollar Index (101.369) tested 101.64 before slightly coming off. A re-test of 102 or higher could be possible while above 101.
EURUSD (1.1045) tested 1.1021 before bouncing back to current levels. View is slightly bearish for a test of 1.10 followed by a rise towards 1.11 or higher in the medium term.
EURJPY (155.79) continues to trade within 155-158 which may hold for the near term.
Dollar-Yen (141.08) is stuck in the middle of the 142-139 range. There is scope for the pair to test 142. Thereafter, a break on the upside if seen would take it towards 143-143.20.
USDCNY (7.1604) could trade above 7.10 for a while with upside limited to 7.20-7.25.
Pound (1.2886) is trading within 1.28-1.29 region and needs to break above 1.29 to move up further towards 1.30 or higher. Failure to sustain trade above 1.29 can take it down towards 1.28/27 soon.
Aussie (0.6757) tested 0.68 and faced rejection, falling to current levels. Near term range of 0.67-0.68/69 could hold for the medium term.
USDRUB (90.2013) fell to 89.20 before rising back to current level. Note that 89.20-89.00 is an important near term support above which the pair can rise back towards 92 in the next few sessions.
USDINR (81.8750) fell sharply yesterday to test 81.6650 but rose back sharply to close at 81.8750 possibly on RBI buying at lower levels. Clearly the central bank does not seem to allow for a stronger Rupee and if it does not strengthen beyond 81.60, it may move back to 82.00 or lower again. It would be important to see the policy statements coming from FED today and ECB tomorrow as they could bring in some volatility in the market. Overall, USDINR needs to break below 81.60 to show signs of bearishness. Else we may expect a rise towards 82.
EURINR (90.4696) fell to test 90.26 but has bounced slightly from there. Crucial lower support is seen at 90 above which the pair has fair chances of moving back towards 91-92 again.
The US Treasury yields continue to move up. The outcome of the US Fed meeting tonight will be key to watch. Market expects a 25-bps rate hike tonight. The German yields remain stable. They can come down within their sideways range. The 10Yr and 5Yr GoI have risen well. They can move further higher from here.
The US 10Yr (3.90%) and 30Yr (3.94%) yields are heading up towards 4% and 4%-4.1% in line with our expectation. The Fed meeting outcome tonight is important.
The German 10Yr (2.42%) and the 30Yr (2.46%) yields remain stable. They can fall within their 2.1%-2.5% (10Yr) and 2.1%-2.65% (30Yr) range.
The 10Yr GoI (7.1030%) has risen above 7.1%. While this sustains, a rise to 7.2% is possible. Intermediate resistance is at 7.14%.
The 5Yr GOI (7.0938%) has risen sharply. It is likely to breach 7.1% and rise to 7.15%-7.2% in the coming days.
Dow and DAX remain higher but have to breach above 35550 and 16250 to strengthen the bullish momentum further. Nifty has bounced back a bit but bias remains bearish to see a further dip in the near term. Nikkei and Shanghai may remain range bound while below the resistance at 33000 and 3250.
Dow (35438.07, +0.08%) is holding higher. We repeat that 35550 has to be breached to see 35800-36000 on the upside. Else a corrective fall to 34800-34600 is possible.
DAX (16211.59, +0.13%) continues to inch up. It is a wait and watch to see if the index is breaking above 16250 and clear the way for 16400-16500 or not.
Nifty (19680.60, +0.04%) has bounced from near 19600 yesterday. But while below 19800 a fall to 19500 is likely and then a reversal is possible again.
Nikkei (32658.50, +0.05%) remains stable above 32500 over the last 3 days. View remains the same to see a sideways range between 33000-32000 for some time.
Shanghai (3225.08, -0.20%) has come down a bit after testing a high of 3232. Resistance is at 3240/3250. While below 3250, we expect a broad range of 3250-3150 to hold for some time.
Brent and WTI are on their way to test key resistance before a reversal sets in. Gold and Silver would remain vulnerable to a decline while below the resistances at 1970/1980 and 25 respectively. Copper upside is likely to be capped at 3.95-4.00. Natural Gas may continue to remain range bound for a while before breaking on the upside. The FOMC meeting tonight would be crucial to watch as it could bring volatility in the commodity prices.
Brent ($ 83.24) continues to move up. Bias remains positive for a test of $ 85 before a reversal can be seen from there.
WTI ($ 79.26) continues to rally. View remains bullish for a rise towards $ 82-83 before a fall back can be seen from there.
Gold (1963.90) is hovering below the resistance at 1970. As mentioned, a rise past 1970-1980 is needed to see a target of 2000. Else it would remain vulnerable to a decline towards 1950-1940.
Silver (24.76) lacks strength to move up above the resistance at 25. Failure to break above 25 could see a fall back to 24 or even lower towards 23.50.
Copper (3.9020) rose sharply to 3.9415 in line with our expectations and has dipped slightly from there. 3.95-4.00 are key resistances. While these hold, we can expect a range of 4.00/3.95-3.80 to hold for some time.
Natural Gas (2.7370) consolidates within 2.65-2.80 (revised from 2.60/2.67-2.80). As long as it holds above 2.65-2.60, there is scope to break above 2.80 and rise towards 2.9-3.0 in the near term.
1:30 7:00 AU CPI
Expn 6.6% …Expected 6.2% …Previous 7.0%
14:00 19:30 US New Home Sales
Expn 717K …Expected 722K …Previous 763K
18:00 23:30 US FOMC Meeting
Expn – …Expected 5.50% …Previous 5.25%
8:00 13:30 GER IFO Business Climate
Expn – …Expected 88.0 …Previous 88.6 …Actual 87.3
8:00 13:30 GER IFO Business Situations
Expn – …Expected 93.0 …Previous 93.7 …Actual 91.3
8:00 13:30 GER IFO Business Expectations
Expn – …Expected 83.0 …Previous 83.8 …Actual 83.5
13:00 18:30 US Case Schiller
Expn -1.0% …Expected -1.6% …Previous -0.9% …Actual -1.7%
14:00 19:30 US Cons Conf
Expn 107.6 …Expected 112.1 …Previous 109.7