Recovery is seen from yesterday’s movement in most currencies post US Industrial Production and Retail sales data release yesterday that came out higher than market expectations. Dollar Index may hold below 104 in the near term to fall towards 102.50 while Euro can rise to 1.0950 before falling back from there. EURJPY has risen past 161 but can face rejection from 162-162.50 while USDJPY could be capped at 148/150 on the upside before falling in the medium term. USDCNY is headed towards 7.20/22. Aussie could bounce from support at 0.65 while Pound has risen from 1.26 as expected and could rise to 1.2750-1.28. USDRUB could trade within 90-88/86 region for the medium term. EURINR can test and bounce from 90-89.60 initially. USDINR could rise initially to 83.20/25 from where rejection is possible back towards 83-82.90/80.

Dollar Index (103.27) tested 103.6920 before falling from there. The index may hold below 104 for the near term. It could see an initial fall to 102.50 followed by a bounce back towards 104 in the coming sessions.

EURUSD (1.0896) bounced back from 1.08447 itself without falling lower to 1.08 as mentioned yesterday. The Euro could rise to 1.0950 before attempting to fall back towards 1.0850-1.08 in the medium term. Note that 1.08 is an important near term trend support.

EURJPY (161.28) has managed to rise above 161. Next decent resistance can come up near 162-162.5 from where a dip can be possible.

Dollar-Yen (148.03) tested 148.5263 before coming off slightly from there. We may expect 148-150 to cap the near term upside for USDJPY before seeing an eventual decline towards 147-145 in the coming weeks.

USDCNY (7.1955) seems to be slowly rising towards 7.20/22.

Aussie (0.6555) has immediate support at 0.65 which if hold can produce a bounce back towards 0.66 in the near term.

Pound (1.2686) has managed to bounce back from 1.26, negating an immediate fall to 1.25/24. While above 1.26, a rise to 1.2750-1.28 could be on the cards.

USDRUB (88.5150) could trade within 90-86 region for the near term within which an initial dip to 88-87.60 can be possible before rising higher.

USDINR (83.1425) rose as expected to test 83.1675 before closing just below 83.15. We may expect 83.20/25 to cap the upper limit for the near term while there is scope for the pair to fall back towards 83.00-82.90 in the coming sessions.

EURINR (90.5730) could fall to support near 90-89.60 before bouncing back in the near term.

The US Treasury yields continue to move up. Further rise can be seen in the coming days. Strong Retail Sales numbers released yesterday had supported the yields to move up. The US Retail Sales rose 4.78% (YoY) in December, much higher than the 2.95% rise seen in November. The German yields are coming close to our targets. The price action in the coming days will need a close watch to see if the up move is extending or a reversal is happening. The 10Yr and 5Yr GoI have bounced. But resistances ahead can cap the upside and keep the overall bearish view intact.

The US 10Yr (4.10%) and the 30Yr (4.32%) yields have risen to 4.1% and 4.3% respectively. Further rise to 4.2% (10Yr) and 4.4% (30Yr) is possible now.

The German 10Yr (2.31%) and the 30Yr (2.46%) yields continue to move up and are coming closer to our expected levels of 2.35% (10Yr) and 2.5%-2.6% (30Yr). The price action thereafter will need a close watch for a reversal.

The 10Yr GoI (7.1642%) has risen above 7.16. Need to see if this sustains. However, the view remains bearish to see 7.1% on the downside while below 7.2%.

The 5Yr GOI (7.0586%) has risen further. As mentioned yesterday, the resistance 7.06% can cap the upside. View is bearish to see a fall to 7%-6.95% and then a reversal is possible.

Dow Jones dipped further but bounced back from a low of 37132.89. It might see an intermediate bounce to 37500 before resuming the fall. DAX has broken below the lower end of the range and looks vulnerable to come down further from here. Nifty has declined sharply and a break below 21500-21400 can drag it further down. Nikkei is holding well below the resistance 36000 and is bearish for a fall towards 35000-34500. Shanghai has plunged below 2800 and is heading down towards its key immediate support at 2750-2700, which may hold and produce a bounce back from there.

Dow (37266.67, -0.25%) has bounced from the low of 37132.89. An intermediate bounce to 37500 is possible before the Dow breaks below 37000 and falls to 36500.

DAX (16431.69, -0.84%) has broken the 16500-17000 range on the downside. Outlook is bearish to see 16000-15800.

Nifty (21571.95, -2.09%) has declined sharply. 21500-21400 is going to be a crucial support. A break below it can drag the Nifty down to 21200-21000.

Nikkei (35553, +0.21%) is holding well below the resistance at 36000 as expected. Outlook is bearish for a fall towards 35000-34500 before a pause can be seen. A further break below 34500, if seen can extend the fall to 34000 before a bounce can happen.

Shanghai (2769.25, -2.31%) has plunged, breaking below the lower end of the 2850/2865-2905 range. It is now heading down towards its key immediate support at 2750. Lower support is seen at 2700. It can either bounce back from 2750 or come down to test 2700 before bouncing back from there. Only a strong break below 2700 can see a deeper fall to 2500.

Brent remains mixed and range bound. WTI has bounced back as the support at $ 70 has held well as expected and can continue to trade sideways within $ 68/70-76 for a while. Gold and Silver have declined and remain vulnerable to fall towards their key support before a bounce back can happen. Copper can fall to 3.70-3.65 in the near term. Natural gas has recovered from yesterday’s low but could face resistance at 3.0. That may hold and lead to a fall towards our expected level.

Brent ($ 78.00) remains mixed and range bound. It can continue its sideways consolidation within $ 75/76-82 for some time before breaking higher towards $ 85.

WTI ($ 72.72) has bounced back above $ 72.50 as the support mentioned at $ 70 has held well. It can continue to trade sideways within $ 68/70-76 for some more time before an eventual break above $ 76 and rise towards $ 78-80 is seen.

Gold (2011.16) has declined towards 2000 as expected. It may come down further to 1970-1960 before a bounce back can be seen.

Silver (22.76) has fallen below 23 as expected. Outlook remains bearish for a fall towards 22-21.80 and then a bounce back can be seen.

Copper (3.7475) is gradually coming down. View remains bearish for a test of 3.70-3.65 while below 3.78-3.80. Thereafter, a bounce back is possible. Only a break below 3.65 can see an extended fall to 3.60 before a fresh rally can begins.

Natural Gas (2.8890) has recovered well from a low of 2.7560. Immediate resistance is seen at 3.0. While that holds, a test of 2.60 is possible before a bounce back can happen.

0:30 06:00 Australia Labour Force
Expn – …Expected 15.4K …Previous 61.5K

13:30 19:00 US Philifed Index
Expn – …Expected -6.6 …Previous -10.5

13:30 19:00 US Housing Starts
Expn 1437K …Expected 1430K …Previous 1560K

DATA YESTERDAY
—————
7:00 12:30 UK CPI Y/Y
Expn 4.0% …Expected – …Previous 3.9% …Actual 3.9%

10:00 15:30 EU CPI (YoY)
Expn 2.6% …Expected – …Previous 2.4% …Actual 2.9%

13:30 19:00 US Retail Sales (MoM)
Expn -0.5% …Expected – …Previous 0.1% …Actual 0.6%

14:15 19:45 US Industrial Production
Expn -0.6% …Expected – …Previous 0.0% …Actual 0.1%

14:15 19:45 US Capacity Utilization
Expn 78.3% …Expected – …Previous 78.6% …Actual 78.6%