EU Retail sales and US ADP Employment change data releases yesterday brought in some volatility in the US Dollar movement. FED chair Powell additionally indicated there is no reason to fear a risk of recession in the near term and has more confidence on inflation. Dollar Index could test 103 and Euro could test 1.09-1.0950 which if continues could target 102 and 1.10 respectively in the near term. USDCNY remains stuck below 7.20 while USDJPY and EURJPY have fallen and could test 148 and 161 respectively. Aussie trades within 0.65-0.66 while Pound may test 1.2750 and needs to necessarily break higher to turn bullish. EURINR has scope to rise to 91 while above 89.80. USDINR may test 82.75 while upside could be limited to 82.90. Markets await speech from Fed chair Powell today and US NFP data release tomorrow, both crucial drivers of market direction for the coming week. Volatility could continue for the next 2-sessions of the week.

Dollar Index (103.313) has broken below the 103.50-104.50 range and EURUSD (1.0898) has risen well above 1.0850 (tested 1.0915 yesterday) post EU Retail sales and US ADP data releases yesterday. We may expect the Dollar Index to fall towards 103 and Euro towards 1.0920. Thereafter, if further extension is seen, we may target 102 and 1.0950/1.10 respectively.

EURJPY (162.04) and Dollar-Yen (148.69) have declined sharply on a weaker Dollar. The pairs could test 161 and 148 soon if the dip continues.

USDCNY (7.1977) continues to trade along the upper end of the 7.18-7.20 range.

Aussie (0.6566) has risen well within the 0.65-0.66 range but a decisive break is needed above 0.66 to move higher towards 0.67/68 in the medium term. Watch for a near term rejection from 0.66.

Pound (1.2726) has dipped slightly after testing 1.2762 yesterday. Unless a sustained rise past 1.2750/1.28 is seen, the price may keep coming back towards 1.2650/1.26.

USDINR (82.8275) tested 82.91 yesterday but closed lower at 82.8275. With the Dollar Index trading lower and Euro trading higher, there could be some scope for USDINR to fall today possibly towards 82.75/70 if it breaks below 82.80. However, upside could be limited to 82.90/95 for the day.

EURINR (90.2453) could have immediate support at 89.80 and scope to rise towards 91 on the upside soon.

The US Treasury yields have come down further. There is room to fall further from here and the price action thereafter will need a close watch to see if the yields can bounce back or not. The US Fed Chairman Powell said in his testimony yesterday that rate cuts will begin sometime this year. However, he insisted that the central bank will not be in a hurry to begin the rate cuts unless there is evidence that the inflation is cooling down. The German yields remain stable and can fall if they fail to bounce back from here. The outcome of the ECB meeting today evening will need a close watch which might set the trend for the yields. The 10Yr and 5Yr GoI continue to remain stuck in a narrow range. The bias is bearish to see a fall breaking the range on the downside.

The US 10Yr (4.11%) and the 30Yr (4.24%) yields have come down further. The 10Yr can test 4.1%-4% and the 30Yr can dip to 4.2%-4.15%. The price action thereafter will need a watch to see if the yields are attempting to bounce back or not.

The German 10Yr (2.32%) and the 30Yr (2.46%) yields remain stable. A fall to 2.25%-2.2% (10Yr) and 2.35% (30Yr) is possible if the yields fail to bounce back from here. It will then delay the expected rise to 2.6% (10Yr) and 2.7%-2.8% (30Yr).

Both the 10Yr GoI (7.0548%) and 5Yr GOI (7.0501%) remain stable within their narrow 7.04%-7.08% range. View remains the same. The 10Yr can fall to 7%-6.95% and 6.9%-6.8% while below 7.10%-7.12%. The 5Yr can fall to 7% while it trades below 7.1%.

Dow Jones has recovered slightly but needs to overcome the resistance ahead to reduce the danger of falling again. DAX has scope to see an extended rise while above 17500 but considering the limited upside, we need to remain cautious for a correction rather than being very bullish. Nikkei has managed to hold above the mentioned support and may look to target new highs in the near term. Nifty has recovered sharply yesterday keeping our view intact for a test of 22700, which may or may not extend upto 23000. Shanghai is moving up towards its key resistance zone which might halt the current rally and produce a fall from there.

Dow (38661.05, +0.20%) recovered well. But resistance is in the 38900-39000 region which has to be broken decisively to become bullish again. Else, the fall to 38500-38000 cannot be avoided.

DAX (17716.71, +0.10%) has bounced slightly. We reiterate that though a rise to 17900-18000 is possible while above 17500, we prefer to remain cautious for a reversal anytime and not be very bullish at this point of time.

Nifty (22474.05, +0.53%) has risen back sharply from the low of 22,224. A test of 22700 looks likely now. It has to be seen if the Nifty turns down from around 22700 itself or after an extended rise to 23000.

Nikkei (39779.50, -0.85%) has managed to sustain above 39500. While above 39500-39000, bias is positive for a rise towards 40800-41000.

Shanghai (3055.98, +0.53%) is heading towards its key resistance zone of 3075/3080. If that holds, a fall back towards 3000 could be seen.

Brent to remain ranged below $ 85 for some time. WTI, on the other hand, seems to be moving gradually but could face rejections from $ 82-83. Gold continues to rally and a break above its crucial resistance, if seen, can be highly bullish. Silver to head towards its immediate resistance. Copper remains ranged between 3.80-3.90. Natural Gas has scope to test its immediate resistance before a fallback can be seen.

Brent ($ 82.89) has bounced back again towards $ 84 contrary to our view for a fall towards $ 80. We expect a sideways range of $ 85-80 to hold for some time.

WTI ($ 79.08) has bounced back from $ 78 contrary to our view for a fall towards $ 76. It seems to be moving up gradually but could face resistance at $ 82-83 region. That may hold and lead to a fall towards $ 78-76.

Gold (2153.70) continues to move up and has risen above 2150. A decisive break above 2160, if seen, can take it further towards 2200-2230/2250. That will negate our view for a fall towards 2100 mentioned yesterday.

Silver (24.30) has recovered sharply from a low of 23.79 contrary to our view for a fall towards 23.50-23.00. A test of 25 looks likely on the upside. There could be chances that it may extend the rise further to 25.50-26.00 before a correction can be seen.

Copper (3.8430) has bounced back towards the upper end of the 3.80-3.90 range. The outlook is mixed. It may or may not break below 3.80. We will wait for a decisive breakout on either side of the range to determine if it will rise towards 3.95 or fall towards 3.75-3.70.

Natural Gas (1.9180) is hovering below 2.0. A test of 2.1 looks possible before a corrective dip can be seen towards 1.9-1.8.

0:30 06:00 Australia Trade Balance
Expn – …Expected 11.5 …Previous 11.0

13:15 18:45 ECB Mtg
Expn 4.50% …Expected 4.50% …Previous 4.50%

13:30 19:00 US Trade Balance
Expn – …Expected -63.2 …Previous -62.2

DATA YESTERDAY
—————
22:30 04:00 AU PMI
Expn -15.7 …Expected – …Previous -23.8 …Actual -12.6

0:30 06:00 AU GDP
Expn – …Expected 0.2% …Previous 0.3% …Actual 0.2%

10:00 15:30 EU Retail Sales
Expn 0.0% …Expected 0.1% …Previous -0.6% …Actual 0.1%

13:15 18:45 US ADP Emp
Expn – …Expected 145K …Previous 111K …Actual 140K

14:00 19:30 BOC Meeting
Expn – …Expected 5.00% …Previous 5.00% …Actual 5.00%