Merry Christmas

Lower than expected US GDP dragged down the Dollar Index below 102 and could soon take it down to support near 101.50 which needs to hold to produce a bounce back else could make the index vulnerable to further fall. Euro has moved up to 1.10 and we need to see price action here if it sustains or comes off in the near term. EURJPY and USDJPY continue to remain bearish. Aussie has faced rejection near resistance at 0.68 and could now dip towards 0.6750-0.67. Pound has held quite well above its support of 1.26 and could trade within 1.26-1.27 for some time. USDCNY seems to be rising slowly. A rise past 7.15 is needed to be further bullish. USDRUB rose past our expectations of 92-92.50 and is expected to rise further towards 94 before eventually coming down. USDINR rose to 83.28 yesterday before coming down. Need to see if it falls back towards 83.20/10 or attempts to break higher eventually. EURINR has risen sharply, contrary to our expectations of seeing a fall towards 90.50 and is currently near its resistance of 91.50.
Note that the markets will go on Christmas holiday and could face low volatility next week.

As mentioned yesterday, Dollar Index (101.85) could not sustain above 102 and was dragged down after lower than expected GDP data released yesterday. The index is now headed towards 101.50 which needs to hold to produce a bounce back towards 102.50 else can make it vulnerable to a sharp fall below 101.50.

EURUSD (1.10) has risen well and needs to sustain rise above 1.10 now to head higher in the near term. Failure to hold above 1.10 could again bring it down towards 1.0950-1.09 by end of next week.

EURJPY (156.60) continues to fall towards the lower end of the 159-154 range but within that could find an interim support at 156 which could hold for a few sessions before the fall resumes.

Dollar-Yen (142.43) tested 141.86 before rising back slightly. If the rise holds, we may expect a test of 143 before resuming the fall, else continued fall could take it down to 141 within the next few sessions.

USDCNY (7.1468) seems to be slowly rising back to 7.15 where the pair has been facing rejection over the past few sessions. A rise past 7.15 is needed for a rally to 7.18/20.

Aussie (0.6783) tested 0.6803 before coming off. If resistance holds well, a dip to 0.6750-0.67 looks possible by end of next week.

Pound (1.2686) has risen back while above support at 1.26. Immediate trade is possible within 1.26-1.27.

USDRUB (92.9707) has risen above our expected level of 92-92.50 and a further rise to 94 could be seen soon before it starts to decline again.

USDINR (83.2738) made a high of 83.28 yesterday as expected. It would be important to see if the resistance at 83.30 holds and produces a fall towards 83.20/10 again or attempts to break higher towards 83.40/50 eventually.

EURINR (91.5334) has risen sharply to 91.72, just below resistance at 92, contrary to our expectations of seeing a fall towards 90.50. While the resistance holds, a fall to 91-90.75 could be seen in the coming sessions.

The US Treasury yields have bounced back. But resistances ahead can cap the upside and keep them under pressure. View remains bearish and more fall is on the cards. The US PCE data release today is important to watch. The German yields remain lower and stable. Outlook is bearish as the key supports are broken and the yields can fall further. The 10Yr and 5Yr GoI can consolidate in a narrow range before resuming their fall.

The US 10Yr (3.90%) and the 30Yr (4.04%) yields have bounced. Immediate resistance is at 4% (10Yr) and 4.2% (30Yr). Higher hurdles are at 4.2% (10Yr) and 4.4% (30Yr). Broader view remains bearish to see 3.6% (10Yr) and 3.8% (30Yr) on the downside.

The German 10Yr (1.96%%) and the 30Yr (2.17%) yields remain lower and stable. View is bearish to see a fall to 1.8%-1.7% (10Yr) and 1.9% (30Yr) while below 2% and 2.2% respectively.

The 10Yr GoI (7.1897%) has bounced well. But resistance at 7.2%-7.22% can cap the upside. For now, 7.15%-7.2%/7.22% can be the range for some time before a fall to 7.1% happens eventually.

The 5Yr GOI (7.1053%) can be in the range of 7.06%-7.12% before falling to 7%-6.95%. Higher resistance is at 7.2%.

Dow Jones has risen back as the support at 37000 has held well and is likely to be range bound for some time before a break on the upside is seen. DAX will remain bullish as long as it holds above 16500. Nifty has bounced back sharply keeping the chances alive to see a rise towards our mentioned level. Shanghai has bounced back but upside looks capped at 2950-2960. Nikkei has scope to fall while below the resistance at 33800-34000.

Dow (37404.35, +0.87%) has held well above 37000 and risen back. 37000-37600 can be the range for some time before a fresh rise to 38000 and higher levels is seen.

DAX (16687.42, -0.27%) hovers above the 16600-16500 support zone. While above 16500 the bullish view will remain intact to see 17000-17400 on the upside.

Nifty (21255.05, +0.5%) has risen back well from the low of 20976. A further rise above 21300 can take it back up to 21500. The chances of seeing 21700 is still alive as the index is getting support in the 21100-21000 region.

Nikkei (33217.50, +0.23%) is stable between 33000-33500. However, a test of 32700-32500 is possible while below 33800-34000.

Shanghai (2913.05, -0.2%) has bounced back from yesterday’s fall to 2882. But the upside is likely to be capped at 2950-2960. While below 2960, outlook remains bearish for a fall towards 2850.

Crude prices are hovering below their key resistances and need a decisive break above them to continue the rally further. Gold has risen above its upper end of the range and has scope to move up further from here. Silver and Copper remains bullish for the near term. Natural Gas is stuck in a narrow range.

Brent ($ 80.00) remains higher above $ 78 and is hovering below $ 80. A decisive break above $ 80 is needed to see a rally towards $ 84. Else can fall back towards $ 76-75.

WTI ($ 74.46) is trading within a narrow range of $ 72-76. A clear breakout above $ 75-76 is needed to open doors towards $ 78-80. Else can dip towards $ 70.

Gold (2061.90) has broken above the upper end of the 2060-2020 range. It may rise further towards 2085-2090.

Silver (24.77) continues to rise. View remains bullish for a rise towards 25.00-25.30-25.50.

Copper (3.9285) is gradually inching up. View remains bullish for a rise towards 4.00 in the near term.

Natural Gas (2.4720) is stuck within 2.40-2.60. A decisive break on either side of the range will decide if it will fall towards 2.20 or rise towards 2.80-2.90.

23:30 05:00 JP CPI
Expn – …Expected – …Previous 3.3

7:00 12:30 UK GDP
Expn – …Expected 0.0% …Previous0.1%

13:30 19:00 US Personal Income
Expn 0.3% …Expected 0.4% …Previous 0.2%

13:30 19:00 US PCE Price Index M/M
Expn 0.2% …Expected 0.3% …Previous 0.2%

13:30 19:00 US Durable Goods Orders
Expn 1.4% …Expected 2.7% …Previous -5.4%

13:30 19:00 CA GDP
Expn – …Expected 0.0% …Previous 0.0%

15:00 20:30 US New Home Sales
Expn 675K …Expected 687K …Previous 679K

DATA YESTERDAY
—————
13:30 19:00 US Philifed Index
Expn – …Expected -3.3 …Previous -5.9 …Actual -10.5

13:30 19:00 US GDP
Expn – …Expected 5.2% …Previous 5.1% …Actual 4.8%