US CPI data came in softer than expected, surprising the markets and leading to sharp depreciation in the Dollar Index against major currency basket. The Dollar Index and Euro may extend to 103 and 1.0950 if current momentum is intact else may face reversal over the next few sessions. EURJPY continues to remain bullish towards 165/166. USDJPY is holding below resistance at 152 and could bounce from 150. Failure to bounce from 150 can drag it towards 148. Aussie has risen sharply from 0.6350 itself and could trade within 0.6350-0.6550. Pound could decline from 1.2550/1.26 in the near term. USDCNY is bearish towards 7.22/20 while below 7.28/30. USDRUB can bounce from 90/89 towards 93/94 else a break below 89 is needed for further bearishness. EURINR can be bullish towards 91/92. USDINR should fall below 83.10 today on strength in the Euro and Chinese Yuan but we need to see if the RBI allows the fall to happen.
Dollar Index (104.10) fell sharply post the lower then expected US CPI data release. There could be some more scope for a fall towards 103 if it manages to break below 104 else an immediate bounce back can still take it higher to 106-107 levels in the near term.
EURUSD (1.0878) rose sharply post US CPI release yesterday, breaking past 1.08. It is likely that it may hold below 1.09 and fall back to 1.08 or lower in the next few sessions. Else an extension to 1.0950 may be possible before a dip is seen.
EURJPY (163.88) has risen well and could target 165/166 before pausing.
Dollar-Yen (150.64) has decline sharply after testing 151.908 as resistance at 152 seems to be holding well. The pair needs to fall below 150 to extend further towards 148 in the medium term. Else a short bounce from 150 could be seen.
USDCNY (7.2482) is falling sharply as we write the comments. 7.30 has held as crucial resistance, reducing chances of a possible rise to 7.35/40 on the upside. The pair can continue to fall towards 7.22/20 eventually while below 7.28.
Aussie (0.6502) rose sharply contrary to our expected fall to 0.63. Broad range of 0.6550-0.6350 may hold for the near term.
Pound (1.2493) has also risen sharply and could test 1.2550/1.26 before coming off again.
USDRUB (90.5135) has finally come down towards our expected 90 levels. A break below 90/89 is needed for the pair to turn further bearish else a bounce back from 89/90 can again take it higher to 93/94. Watch price action near 89/90.
USDINR (83.3375) should break below 83.10 level especially on a strong Euro and Chinese Yuan. But we will have to see if the RBI allows an appreciation in the Rupee today. NDF quotes 83.00 just now.
EURINR (90.6791) has risen well and has scope to rise towards 91/92 on the upside before pausing.
The US Treasury yields have come down sharply after the inflation data release yesterday. The US Headline CPI rose 3.23% (YoY) in October, down from 3.69% a month ago. The Core CPI rose 4.02% (YoY) down from 4.13% over the same period. Key supports are coming up for the yields which can be tested. The price action thereafter will need a close watch for a reversal. The German yields have declined sharply and have more room to fall from here. The 10Yr GoI remains vulnerable to fall while it remains below its immediate resistance. The 5Yr GoI looks mixed and can oscillate in a narrow range.
The US 10Yr (4.44%) and the 30Yr (4.60%) yields fell sharply. The expected fall to 4.4% (10Yr) and 4.55% (30Yr) is happening. The price action thereafter will need a close watch as a bounce back move is possible.
The German 10Yr (2.60%) and the 30Yr (2.81%) failed to sustain higher and have declined sharply again. This keeps alive the chances of seeing 2.5% (10Yr) and 2.6%-2.5% (30Yr) on the downside.
The 10Yr GoI (7.2828%) broke above 7.3% on Monday but did not sustain. Unless a sustained rise above 7.3% is seen, a fall to 7.2%-7.15% cannot be avoided.
The 5Yr GOI (7.2540%) remains mixed and can remain in a narrow range of 7.2%-7.3% for some time.
Dow Jones looks bullish for the near term. DAX has surged above 15500 and a further rise above 15650 is needed to negate our bearish view. Nifty can rise back taking cues from the global markets. Nikkei has entered into the crucial resistance zone and can witness a fall if that holds well. Shanghai has risen back as the support at 3025 held well and looks bullish to target further highs.
Dow (34827.70, +1.43%) is heading up towards 35000 much faster than expected. An extended rise to 35400-35500 looks possible before a reversal is seen.
DAX (15614.43, +1.76%) has surged above 15500. A further rise above 15650 will negate our bearish view of seeing 15000. It will then be bullish to see 16000-16500 on the upside.
Nifty (19443.55, -0.42%) can rise back taking cues from the global markets. Need to see if it is getting a strong follow-through rise above 19600 to see 19800 on the upside and negate the fall to 19000.
Nikkei (33444.50, +2.32%) has risen sharply towards the key resistance at 33500 as expected. While that holds, a fall back towards 32500 can be seen.
Shanghai (3073.17, +0.56%) has risen above 3070 as the support at 3025 has held well. View remains bullish for a rise towards 3100-3125 in the near term.
Brent and WTI have come down after facing their immediate resistance at $ 84 and $ 80 respectively and while below these resistance, prices can dip further. Gold, Silver and Copper have surged after the release of lower than expected US CPI which came in at 3.23% for Oct-23 than market expectation of 3.78%. Natural Gas is to remain ranged while below 3.30.
Brent ($ 82.72) indeed tested $ 84 as expected and has come off from there. A strong break above $ 84-85 is needed to see a rally towards $ 88. Else it can fall towards $ 80-79.
WTI ($ 78.48) rose to $ 79.77 in line with our expectation for a rise towards $ 80 and has turned down. A strong rise past $ 80 is needed to open doors towards $ 84. Else can fall towards $ 75-74.
Gold (1966.80) has risen back well from a low of 1935.60. However, immediate resistance is seen at 1980. A rise past 1980 can strengthen the momentum towards 2000-2020.
Silver (23.17) tested 22 as expected and has risen back sharply from there. It may rise further towards 24.
Copper (3.6810) has bounced back sharply from a low of 3.58 contrary to our view for a fall to 3.55-3.50. Immediate resistance is seen at 3.72 and then at 3.75. It has to rise past these hurdles to target 3.80. Else can fall back towards 3.65-3.60.
Natural Gas (3.0940) has come down from a high of 3.2640. Failure to rise past 3.3 can keep it ranged within 3.3-2.9 for some time.
23:50 5:20 JP GDP
Expn – …Expected-0.1% …Previous1.2%
7:00 12:30 UK CPI Y/Y
Expn 6.1% …Expected 4.7% …Previous 6.6%
9:00 14:30 IN Trade bal
Expn -22.18 …Expected – …Previous -19.37
10:00 15:30 EU Ind Prodn (MoM)
Expn 0.4% …Expected -0.9% …Previous 0.6%
10:00 15:30 EU Trade Bal
Expn – …Expected 12.3 …Previous 11.9
13:30 19:00 US PPI
Expn 0.3% …Expected 0.1% …Previous 0.5%
13:30 19:00 US PPI ex Food & Energy (MoM)
Expn 0.5 …Expected 0.3 …Previous 0.3
13:30 19:00 US Retail Sales (MoM)
Expn 1.0% …Expected -0.3% …Previous 0.7%
6:30 12:00 IN WPI
Expn -0.67% …Expected -0.20% …Previous -0.26% …Actual -0.52%
7:00 12:30 UK Unemp
Expn 4.1% …Expected 4.2% …Previous 4.2% …Actual 4.2%
10:00 15:30 EU GDP
Expn – …Expected -0.1% …Previous -0.1% …Actual -0.1%
13:30 19:00 US CPI (MoM)
Expn 0.4 …Expected 0.1 …Previous 0.4 …Actual 0.04%
13:30 19:00 US Core CPI (MoM)
Expn 0.3% …Expected 0.3% …Previous 0.3% …Actual 0.23%