US GDP growth in Q2 has reduced the earlier doubts of a possible recession in the US, taking the Dollar higher towards 102. This combined with a 25bps rate hike from the European Central Bank and indication of a 50-50 chances of rate hike in September-23 has taken Euro sharply down below 1.10. However, we may look for a reversal from 102 on the Dollar Index and 1.0950 on the Euro respectively. Aussie and Pound have fallen sharply to re-test supports near 1.27 and 0.66 from where they can bounce back next week. USDCNY and USDRUB have bounced back from immediate supports and could trade within 7.10-7.20 and 89-92 for the near term. EURJPY fell sharply towards 152, breaking below 155 and could trade within 152-154 for a few sessions while USDJPY may remain above 138. EURINR looks bullish above support near 90. USDINR moved up to 82.15 on the NDF last night. The pair has scope to move up towards 82.50, on a break above 82.20/30.
Dollar Index (101.698) has risen back after a brief fluctuation within 100.55-101.65 region the last couple of days. The index may hold below immediate resistance near 102-102.50 and fall back towards 101 or lower again in the early sessions of next week.
EURUSD (1.0982) has fallen sharply from 1.1150 seen yesterday to current levels below 1.10. Euro may not sustain below 1.10 for long and can instead rise back towards 1.1050 and higher eventually over the next 1-week.
EURJPY (152.90) broke below 155 to fall sharply towards 152 as mentioned yesterday. While above 152, the pair may trade in a sideways range of 152-154 for a few sessions.
Dollar-Yen (139.22) has fallen but may remain above 138 for the next few sessions. 138-140 could hold as an immediate trade region.
USDCNY (7.1638) bounced back sharply from 7.12 and trades slightly higher just now. A range of 7.10-7.20 may hold for the near term.
Pound (1.2794) and Aussie (0.6682) fell sharply on Dollar strength and can test support near 1.27 and 0.66 before again rising back towards 1.29/30 and 0.68 respectively.
USDRUB (90.6957) bounced back sharply from 89, keeping our broad range of 89-92 intact.
USDINR (81.9350) closed at 81.9350 yesterday on the onshore market but has moved up sharply to 82.15 on the NDF after the US GDP release that showed growth in Q2. A gap up opening could be possible today and if spot does not come down from 82.20/30, it could rise towards 82.50 in the coming week.
EURINR (90.3151) is holding above support at 90 and can slowly move up towards 91 in the early sessions next week.
The US Treasury yields have surged following the strong US GDP data release. The advance estimates showed the US grew at a rate of 2.4 per cent in the second quarter. If the momentum sustains, the Treasury yields can rise further from here. The German yields remain stable within their sideways range. The ECB raised the rates by 25-bps but had hinted about a possible pause in the next meeting. The 10Yr and 5Yr GoI have risen above their resistances as expected. The broader picture is looking bullish with a cup and handle pattern formation on the charts.
The US 10Yr (3.99%) and the 30Yr (4.04%) have surged. A strong break above 4% will be very bullish for the 10Yr to see 4.1%-4.2%. The 30Yr can test 4.1% now and a break above it will see an extended rise to 4.2%-4.3%.
The German 10Yr (2.47%) and the 30Yr (2.53%) remain stable. The 10Yr is just below the upper end of its 2.1%-2.5% range. It will have to be seen if it can break the range on the upside or not. The 30Yr is inching up slowly towards the upper end of its 2.1%-2.65% range.
The 10Yr GoI (7.1227%) has risen above 7.1% as expected and can now test 7.2%. Intermediate resistance is at 7.14%.
The 5Yr GOI (7.1112%) has broken above 7.1% as expected. While this break sustains a further rise to 7.15%-7.2% is possible.
Dow has fallen back sharply failing to break above the resistance at 35550. DAX has surged above 16400 after the ECB meeting where the central bank raised the interest rate by 25 bps. Nifty looks bearish for the near term. Nikkei and Shanghai is to remain range bound while below the resistance at 33000 and 3250.
Dow (35282.72, -0.67%) has declined sharply, failing to breach 35550 contrary to our expectation. A further fall from here can drag it down to 34800-34600 and then a rise is possible.
DAX (16406.03, +1.70%) has surged breaking the 16000-16250 range on the upside as expected. 16400 has been tested and a further rise to 16600 is possible now.
Nifty (19659.90, -0.6%) is struggling to get a strong follow-through rise above 19800. This keeps alive the chances of seeing 19500-19400 and then possibly reverse higher again.
Nikkei (32459.73, -1.31%) is facing rejections from 33000. Our view will remains the same to see a sideways trade between 33000-32000 for a while.
Shanghai (3245.39, +0.89%) is holding well below the resistance at 3250. While below 3250, we expect it to trade within the broad sideways range of 3250-3150 in the near term.
Brent and WTI remain bullish for a test crucial resistance at $ 85 and $ 82-83 before a possible reversal sets in. Gold outlook is mixed. Silver has declined sharply below 24.50 and has room to come down further from here. Copper is likely to trade within 3.95-3.78 in the near term. Natural Gas looks vulnerable to declined towards 2.5-2.4.
Brent ($ 83.22) remains higher. A test of $ 85 looks likely before any reversal can be seen from there.
WTI ($ 79.61) is on its way towards $ 82-83. While these hold, a corrective dip might be possible towards $ 79-77.
Gold (1989.60) fell sharply to 1942 after the ECB meeting and today it opened higher above 1980. Outlook is mixed. A broad range of 2000-1940 could hold for some time.
Silver (24.32) has declined sharply below 24.50 contrary to our view for a rise towards 25.50-26. It can come down further to 23.70-23.50 from here.
Copper (3.8630) couldn’t break above the resistance at 3.95 and has come down below 3.90. While below 3.95, it is likely to trade in a range of 3.78/3.80-3.95 for some time.
Natural Gas (2.6060) is attempting to break below the support at 2.6. It may come down towards 2.5-2.4 in the near term while it remains below 2.8. This will negate our bullish view for a rise towards 2.9-3.0.
1:30 7:00 AU PPI
Expn – …Expected 0.9% …Previous 1.0%
3:00 8:30 BOJ Meeting
Expn – …Expected -0.10% …Previous -0.10%
9:00 14:30 EU Biz Climate
Expn – …Expected 95.0 …Previous 95.3
12:30 18:00 US Personal Income
Expn 0.4% …Expected 0.5% …Previous 0.4%
12:30 18:00 US PCE Price Index M/M
Expn 0.4% …Expected 0.2% …Previous 0.1%
12:30 18:00 CA GDP
Expn – …Expected 0.3% …Previous 0.0%
12:15 17:45 ECB Mtg
Expn – …Expected 4.25% …Previous 4.00%
12:30 18:00 US Durable Goods Orders
Expn 1.2% …Expected 0.9% …Previous 1.7%
12:30 18:00 US GDP
Expn – …Expected 1.7% …Previous 2.0%