The lower US ISM manufacturing data release led the Dollar index to decline and the Euro to strengthen a bit but the movement was short-lived. The Dollar Index and Euro can trade within the range of 106.50-105/104 and 1.0650-1.0750/08 respectively for some time. Dollar-Yen and EURJPY can soon test upper targets of 162 and 174 respectively and can see further extended bullishness in the absence of any intervention from the BOJ. Aussie & Pound have dipped sharply and could fall towards the lower end of their respective ranges of 0.6580-0.6720 and 1.26-1.28. USDCNY can rise towards 7.28 while above 7.27. EURINR can trade within 89.00-90/91 region for some time. USDINR may continue to trade within its range of 83.67-83.40/30 in the near term with possibilities of an eventual upside breakout in the medium term.

The Dollar Index (105.88) had declined a bit to the low of 105.425 as the US ISM manufacturing data came out softer than expected at 48.50. But the index rose sharply to test 105.95 before cooling off a bit. Overall, an immediate range of 106.50-105/104 is likely to hold for a while.

Weakness in the Dollar Index towards 106 led EURUSD (1.0734) to rise sharply to 1.0776 before cooling down. Euro could continue to trade within 1.0650-1.0750/08 for the near term.

Dollar-Yen (161.61) and EURJPY (173.47) surged significantly yesterday. If the Yen weakens further, then a rise to 162 (USDJPY) and 174 (EURJPY) looks likely soon. Thereafter, whether the rise gets halted or extends further will have to be seen. The absence of intervention from BOJ could let the pairs continue bullishness in the coming weeks.

USDCNY (7.2705) can see a rise towards 7.28 while it sustains upward momentum above 7.27. The immediate view is bullish.

Aussie (0.6639) and Pound (1.2636) have fallen sharply and may move down towards the lower end of their respective ranges of 0.6580-0.6720 and 1.26-1.28 in the near term.

USDINR (83.4425) can continue to trade within the range of 83.67-83.40/30 before eventually heading towards 83.70-83.80 in the medium term.

EURINR (89.5962) observed a high of 89.8851 yesterday. Overall, the pair continues to remain volatile within its range of 89-90/91. Only a break below 89 if seen, could open doors for a fall to 88.50-88 in the medium term. Else the range is likely to persist for a while.

The US Treasury yields are moving up in line with our expectation. An extended rise looks possible before a reversal is seen. The German yields have surged. The momentum looks strong which can take the yields further higher in the coming days. The 10Yr and 5Yr GoI are inching up slowly. They have room to rise further from here.

The US 10Yr (4.45%) and the 30Yr (4.61%) yields continue to move up. The 10Yr is heading up towards 4.5% as expected while the 30Yr has already seen 4.6%. A rise above 4.5% can take the 10Yr further up to 4.6%. The 30Yr can test 4.7%-4.75% if it gets a follow-through rise from here.

The German 10Yr (2.60%) and the 30Yr (2.79%) yields have risen to 2.6% (10Yr) and 2.8% (30Yr) much faster than expected. While this momentum sustains, the 10Yr can rise to 2.8% and the 30Yr can test 3% on the upside.

The 10Yr GoI (7.0105%) and the 5Yr GoI (7.0030%) have come-off from their highs but has closed higher. We retain the view of seeing a rise to 7.05%-7.06%.

Dow Jones remains range-bound but has scope to see a breakout on the upside. DAX needs a breakout on either side of its range to get clarity on future direction. Nifty sustained higher above 24000 but needs to rise past 24200 to strengthen the bullish momentum or else can fall back. Nikkei lacks a strong follow through rise above 40000 but bias remains bullish to see further upside while above 39000. Shanghai has risen well to 3000 and has potential rise towards 3050-3100 in the near term.

Dow (39169.52, +0.13%) remains well within the 38900-39600 range. The bias is positive to break 39600 and rise to 40000-40100. We will have to wait and watch.

DAX (18290.66, +0.30%) broke above 18400 but did not sustain. The 18000-18400 range is still intact. We will have to wait for a range breakout to see if the DAX can rise to 18600-18800 or fall to 17700-17600.

Nifty (24141.95, +0.55%) is holding higher. But a strong break above 24200 will be needed to move further up towards 24500-24600. Else a fall below 24000 can drag the Nifty down to 23800-23500.

Nikkei (39752.50, +0.37%) lacks strength to rise above 40000. Key immediate support is at 39000. While that holds, a rise towards 41000 looks possible in the near term.

Shanghai (3002.48, +0.26%) has moved up and is attempting to break above 3000. A rise towards 3050-3100 looks possible on a sustained break above 3000.

Crude prices have risen sharply and looks bullish to target their key resistance in the near term. Gold, Silver and Copper have resistance overhead. Gold can trade sideways below its resistance for a while. Whereas Silver and Copper would remain vulnerable to a fall if the resistance holds. Natural Gas has fallen further below 2.5 and looks bearish towards 2.3-2.0.

Brent ($ 86.83) and WTI ($ 83.54) has risen sharply above $ 86 and $ 82. A further rise towards $ 88-90 (Brent) and $ 84-85 (WTI) looks likely from here.

Gold (2343.50) is hovering below the resistance at 2350-2360. If that holds, narrow range of 2360-2300 can persist for some time. A break above 2360 is needed to move up towards 2400. Overall a ranged momentum can continue between 2300-2400 for a while.

Silver (29.77) is heading up towards the resistance at 30. While that holds, a fall towards 27.50-27.00 cannot be ruled out in the near term.

Copper (4.4250) has moved a bit above 4.4. It has to surpass 4.5 to reduce the downside pressure. Else a fall towards 4.24/4.20 in the near term cannot be ruled out.

Natural Gas (2.46) has fallen further below 2.5 contrary to our view to see a short term rise towards 2.70-2.75. It can fall further towards 2.3-2.0.

9:00 14:30 EU Unemp
Expn 6.5% … Expected 6.4% … Previous 6.4%

13:30 19:00 CA PMI
Expn – … Expected – … Previous 49.3

Data Yesterday
…………..
23:50 05:20 JP Tankan Large Manufacturers Index
Expn – … Expected 11 … Previous 11 …Actual 13

0:30 06:00 JP PMI
Expn 51.0 … Expected 50.1 … Previous 50.4 …Actual 50.0

1:45 07:15 CN PMI
Expn 52.1 … Expected 51.5 … Previous 51.7 …Actual 51.8

5:00 10:30 IN Manufacturing PMI
Expn 57.8 … Expected 58.5 … Previous 57.5 …Actual 58.3

7:30 13:00 CH PMI
Expn 49.8 … Expected 45.2 … Previous 46.4 …Actual 43.9

8:00 13:30 EU PMI
Expn – … Expected 45.6 … Previous 47.3 …Actual 45.8

8:30 14:00 UK PMI
Expn 51.5 … Expected 51.4 … Previous 51.2 …Actual 50.9

14:00 19:30 US Manufacturing ISM
Expn 49.3 … Expected 49.2 … Previous 48.7 …Actual 48.50