Most central bank policy meetings are lined up this week with the RBA and BOJ tomorrow, PBOC and FOMC on Wednesday followed by SNB and BOE on Thursday. While the market expects the central banks to keep rates steady, we may look for an indication on possible rate cuts in the coming quarter keeping the currency pairs volatile this week. Dollar Index and Euro are headed towards 104 and 1.0850/1.08 respectively while EURJPY and USDJPY may test 163/164 and 149.50/150 before halting. Aussie and Pound are down but could hold above respective supports at 0.65 and 1.27. USDCNY needs a break past 7.20 to rise further while EURINR may take support from 90 and move up. USDINR may continue to trade within 82.65-82.95/83.00 for the near term. Possible extension to 83.05/10 cannot be ruled out.

Dollar Index (103.43) and EURUSD (1.0888) look stable for now while we retain our view of Index seeing a further rise to 104 and the Euro coming down towards 1.0850/1.08 in the near term.

EURJPY (162.32) indeed managed to rise past 162 while Dollar-Yen (148.93) is rising as expected. If the rise sustains, we may expect the pairs to extend towards 163/164 and 149.50/150 respectively before halting for a possible reversal.

USDCNY (7.1965) trades below 7.20 but seems that it can soon break on the upside to target 7.22/24.

Aussie (0.6567) faces downward pressure ahead of the RBA policy meet tomorrow. Support at 0.65 is likely to hold well in the near term.

Pound (1.2736) could soon test 1.27 which is expected to hold and produce a bounce back towards 1.29. Immediate range of 1.27-1.29 is expected to hold for some time. Price action around 1.27 would be important to watch.

USDINR (82.8225) tested 82.9550 on Friday but could not sustain higher and fell to close at 82.8825. On the NDF, it currently quotes 82.84 indicating that the pair may continue to trade below 83 for now. We may continue to look for an immediate range of 82.65-82.95 with a possible extension to 83.05/10 only on a sustained break above 83.

EURINR (90.2455) is holding above interim support at 90 and could move up slowly from here towards 90.50-90.80 in the next few sessions. Broad range of 89-91 may hold in the medium term.

The US Treasury yields sustain higher and remain bullish to rise further from here to test their key resistances. Thereafter they can reverse lower again. The US Federal Reserve meeting outcome on Wednesday will be an important event to watch. The German yields continue to move up. Our bullish view is intact, and more rise is on the cards. The 10Yr and 5Yr have moved up above their intermediate resistances. An extended rise is possible in the coming days before the broader downtrend resumes.

The US 10Yr (4.30%) and the 30Yr (4.43%) yields sustain higher. We retain our view of the yields testing 4.4% (10Yr) and 4.6% (30Yr) on the upside. Thereafter we have to look for a reversal.

The German 10Yr (2.44%) and the 30Yr (2.58%) yields have inched up further. The yields can rise to 2.6% (10Yr) and 2.7%-2.8% (30Yr). Key supports are at 2.2% (10Yr) and 2.35% (30Yr).

The 10Yr GoI (7.0644%) has broken above 7.05% and could now see an extended corrective rise towards 7.08%-7.1%. Thereafter the yield can reverse lower and resume the broader downtrend targeting 6.95%-6.9% and even 6.8%.

The 5Yr GOI (7.0572%) on the other hand, can rise to 7.07% and even 7.1% from here before reversing lower again.

Dow Jones has dipped further and could be further bearish if a break below 38500 is seen. DAX struggles to rise past 18000 but has scope to target further upside while it remains above its key support zone. Nifty is vulnerable to a fall while below 22250. Nikkei has risen sharply as expected and can head towards 40K before a pause can be seen. There could be some volatility after the outcome of BOJ meeting which is due tomorrow. Shanghai is attempting to break above its 3050 resistance.

Dow (38714.77, -0.49%) is stuck between 38500 and 39200. A break below 38500 will be bearish for a fall to 38000 and even lower. We will have to wait and watch.

DAX (17936.65, -0.03%) continues to hover near 18000. Bias is positive to see 18200-18500 while the index remains above the 17700-17500 support zone.

Nifty (22023.35, -0.56%) remained stable. Unless a strong rise above 22250 is seen, the danger of a fall to 21500 cannot be ruled out from here.

Nikkei (39538.50, +2.07%) has risen sharply above 39500 as expected. A further rise towards 40000 looks possible before a pause might be seen.

Shanghai (3064.76, +0.33%) has bounced back as it was getting support around 3020 and is attempting to break above 3050 (resistance revised from 3060-3065). This is contrary to our view for a fall towards 3000-2950. If the break sustians, a further rise towards 3150-3200 could be seen in the near term.

Crude Prices look bullish to target their key resistance. Gold and Silver can fall while they remains below 2175 and 25.50 respectively. Copper continues to rally and has room to rise further in the near term. Natural Gas can fall if it fails to rise past 1.8.

Brent ($ 85.62) continues to rise. A rise to $ 87.5 and then $ 90 looks possible while above $ 85-84.

WTI ($ 80.93) remains higher above $ 80. A test of $ 82-83 or even $ 84 looks possible. If $ 83-84 holds, a fall could be seen towards $ 80.

Gold (2156.20) has come down towards the lower end of the 2150-2200 range. Within this, immediate resistance is at 2175. If that holds, Gold may break below 2150 and fall towards 2120-2100. This in turn will negate the chances of seeing a rise towards 2230-2250.

Silver (25.27) rose to 25.66 in line with our expectations for a rise towards 25.50 and has dipped slightly from there. The rise may or may not extend upto 26.00-26.30. If it remains below 25.50, a dip towards 24.85 can be seen before a bounce back can happen towards 26-26.30.

Copper (4.1225) has risen sharply above 4.1 as the support mentioned at 4.01 has held well. There is room to rise further towards 4.20-4.30 in the near term.

Natural Gas (1.7350) is hovering below 1.8. Failure to rise past 1.8 can drag it down towards 1.5. Only a break higher, if seen, could pave the way towards 2.0. Overall a broad range of 1.5-2.0 can hold for some time.

1:30 07:00 CN IIP
Expn – …Expected 5.3 …Previous 6.8

1:30 07:00 CN Retail Sales
Expn – …Expected 5.6 …Previous 7.4

10:00 15:30 EU CPI (YoY)
Expn 2.6% …Expected 2.6% …Previous 2.8%

10:00 15:30 EU Trade Bal
Expn – …Expected 14.2 …Previous 13.0

DATA FRIDAY
—————
13:00 18:30 IN Trade bal
Expn -17.12$ Bln …Expected – …Previous -17.49$ Bln …Actual -18.71$ Bln

13:15 18:45 US Industrial Production
Expn 0.1% …Expected 0.0% …Previous -0.5% …Actual 0.1%

13:15 18:45 US Capacity Utilization
Expn 78.7% …Expected 78.4% …Previous 78.3% …Actual 78.3%