The Dollar Index continued to rise on strong US Retail sales data but could face rejection near 107.50 in the near term, while the Euro is headed towards 1.06-1.055 from where a short bounce can be possible. EURJPY trades higher within the 162-165 region while USDJPY has risen above our expected resistance at 154 and is now likely to test 155-156 in the near term. Aussie and Pound are nearing their supports at 0.64 and 1.24 respectively from where they could move up in the coming sessions. USDCNY remained flat during the day. EURINR could bounce towards 89.50 in the next few sessions while above 88. USDINR may remain below 83.50 on RBI’s intervention else a weaker Euro below 1.06, if seen, could drag USDINR above 83.50 soon.

Dollar Index (106.369) continues to extend its rally after a strong US Retail sales data yesterday. A pause can be seen around interim resistance near 107.50.

EURUSD (1.0607) is nearing our expected reversal level of 1.06 but whether it will bounce back towards 1.07 or will continue to decline further towards 1.055-1.05 will have to be seen.

EURJPY (163.70) is headed towards the upper end of its 162-165 range which is expected to hold in the near term.

Dollar-Yen (154.33) has broken above 154 contrary to our expectation of a possible pause there. Now, while above 154, there is scope for a rise to 155/156.

USDCNY (7.2356) remained flat, but the overall view remains intact to see a rise towards 7.24. Thereafter, a sustained break above 7.24 is needed for further bullishness, or else the pair can come down towards 7.23/22.

Aussie (0.6413) is declining as expected and either from 0.64 or 0.635, a short rise to 0.65 or higher could be seen in the medium term.

Pound (1.2423) is gradually coming down towards 1.24, which may hold in the near term and produce a bounce towards 1.25/2550 in the next few sessions. Failure to do so can drag the pair further towards 1.22 in the medium term. Watch price action around 1.24.

USDINR (83.4550) closed below 83.50 yesterday but if continued Euro weakness is seen below 1.06, USDINR could rise above 83.50 soon. RBI’s intervention near 83.50, if any needs to be observed and can be the only factor that could keep USDINR below 83.50, in a strong global dollar environment.

EURINR (88.6721) seems to be holding well above our expected level of 88.50/88.00 and while above it, a bounce towards 89/89.50 could be seen in the near term.

The US Treasury yields have surged back again. A strong break above the immediate resistances can take the yields further higher in the coming days. The German yields have also risen back sharply and are now poised at the upper end of their range. We will have to wait and watch if the yields are making a bullish range breakout from here. The 10Yr and 5Yr GoI remained higher but stable. The outlook is bullish, and the yields can rise more from current levels.

The US 10Yr (4.59%) and the 30Yr (4.71%) yields have surged back again. The 10Yr can rise to 4.75%-4.8% on a break above 4.6%. The 10Yr on the other hand is heading up towards 4.8% on the upside.

The German 10Yr (2.44%) and the 30Yr (2.59%) yields have risen back again and are now poised at the upper end of their range. Need to see if they can breakout on the upside which can take them up to 2.6% (10Yr) and 2.75%-2.8% (30Yr) going forward.

The 10Yr GoI (7.1779%) is holding higher. The outlook is bullish to see 7.2% now. The upside can extend even up to 7.3% with intermediate dips.

The 5Yr GOI (7.1590%) has dipped slightly. But supports are in the 7.12%-7.10% region while above which the outlook is bullish to see 7.3% and even 7.4% on the upside over the medium-term.

Dow Jones and Nikkei remains bearish for the near term. DAX and Shanghai look mixed and range bound. Nifty indeed broke below its support of 22500 as expected and has scope to test 22000 on the downside.

Dow (37735.11, -0.65%) has come down further. It keeps intact the bearish view of seeing 37200-37000 on the downside.

DAX (18026.58, +0.54%) looks mixed and range-bound between 17800 and 18200 over the last few days. Need to wait for a breakout on either side to see if the DAX will fall to 17600-17500 or rise back to 18500.

Nifty (22272.50, -1.1%) is declining towards 22200 as expected. While below 22500, the downside can extend even upto 22000 this week. The price action thereafter will need a watch to see if a reversal is happening or not.

Nikkei (38408.50, -2.04%) has declined sharply below 39000. It can fall towards 38000. A break below 38000, if seen, can trigger a further fall towards 37500-37300.

Shanghai (3025.09, -1.06%) looks mixed. We can expect a sideways range of 3000-3100 to hold for some time. Only a decisive break lower, if seen, can drag it down to 2950.

Crude prices looks range bound. Metals have recovered well contrary to our view to see a fall in the near term. There is room to rise more from here for Metals. Natural Gas can trade sideways within 2.00-1.50 with a bearish view.

Brent ($ 90.73) fell to a low of $ 88.73 contrary to our view that the support at $ 89.50 will hold and lead to a bounce towards $ 92.50-92.65. It now looks range bound within $ 92/92.50-88.

WTI ($ 86.06) remains stuck within $ 88-84 range.

Gold (2400.30) has bounced back after testing a low of 2340. We had expected to see a dip towards 2350-2300. It looks likely to rise towards 2450-2500.

Silver (28.88) bounced back from a low of 27.67 contrary to our view to see a fall towards 27.00-26.50. It may now rise towards 30.00-30.50.

Copper (4.3550) bounced back sharply from a low of 4.2705 contrary to our view to see a fall towards 4.20. It looks likely to rise further towards 4.45-4.50.

Natural Gas (1.6910) has broken below 1.70. It can now come down towards 1.6-1.5. A Fall below 1.5 looks unlikely. We expect a broad range of 1.5-2.00 to hold for some time.

6:00 11:30 UK Unemp
Expn 4.0% …Expected 4.0% …Previous 3.9%

9:00 14:30 EU Trade Bal
Expn – …Expected 27.3 …Previous 28.1

12:30 18:00 US Housing Starts
Expn 1497K …Expected 1480K …Previous 1521K

12:30 18:00 CA Inflation Y/Y
Expn – …Expected – …Previous 2.8%

13:15 18:45 US Industrial Production
Expn 0.1% …Expected 0.4% …Previous 0.1%

13:15 18:45 US Capacity Utilization
Expn 78.4% …Expected 78.5% …Previous 78.3%

Data Yesterday
…………
6:30 12:00 IN WPI
Expn 0.15% …Expected 0.51% …Previous 0.20% …Actual 0.53%

9:00 14:30 EU Ind Prodn (MoM)
Expn 1.3% …Expected 0.8% …Previous -3.1% …Actual 0.8%

10:00 15:30 IN Trade bal
Expn -18.63 …Expected -18.78 …Previous -18.71 …Actual -15.60

12:30 18:00 US Retail Sales (MoM)
Expn -0.4% …Expected 0.4% …Previous 0.6% …Actual 1.4%