Powell yesterday commented that the central bank may not wait too long for a rate cut which sent the Dollar Index down, but markets recovered overnight. Dollar Index can bounce higher while above 104, the Euro on the other hand can move within the earlier range of 1.09-1.07. USDJPY and EURJPY are holding well above their respective supports of 157-156 and 171/170.50 and can rise back in the coming sessions. USDCNY above 7.26, can head towards 7.28 in the medium term. Aussie and Pound are hovering below their resistance at 0.68 and 1.30 respectively. USDINR can continue to trade between 83.35-83.65 region with bias to the upside. EURINR has risen past 91 and if sustained can extend it further towards 91.50-92 while above support at 90.80.

Dollar Index (104.32) declined a bit yesterday after Jerome Powell’s comments that the central bank will not wait until inflation hits 2% to cut interest rates and if they wait until inflation gets all the way down to 2%, they have probably waited too long. The index has risen overnight from 104, and while the index holds above 104, we are keeping our view intact to see a rise towards 104.50-105 in the coming sessions. A decisive break below 104 is needed for a sharp decline to set in.

Initial Dollar weakness yesterday led EURUSD (1.0891) to test 1.0922 before cooling down. Now while below 1.09, it can continue to fall within our earlier range of 1.09-1.07. Above 1.09, a maximum extension to 1.0950/60 could be possible in case the Euro rallies in the near future.

Dollar-Yen (158.62) and EURJPY (172.78) seems to be holding well above our mentioned supports at 157-156 and 171/170.50 respectively. While these supports hold, both pairs can attempt to rise back towards earlier levels of 161/162 and 175/176 respectively in the near term.

USDCNY (7.2647) has risen well above 7.26 and if sustained, can head towards 7.27/28 in the medium term. Overall, our view remains bullish above 7.24/250.

Aussie (0.6745) is coming off from around 0.68 levels, while Pound (1.2963) has dipped slightly below its resistance of 1.30. Overall, a range of 0.68 -0.67 (Aussie) and 1.30-1.28 (Pound) can persist for a while.

USDINR (83.6025) tested 83.60 yesterday but immediate upsie could be capped at 83.65 for this week. We may expect a higher opening on the onshore markets today but the 83.30-83.65 range is likely to remain intact for the current week before it eventually starts rising higher towards 83.75 in the upcoming weeks.

EURINR (91.0543) rose sharply yesterday to the high of 91.2994 before cooling down. Currently it is holding well above 91 and if sustained, can rise towards 91.50-92 in the coming sessions. Immediate support is seen near 90.80.

The US Treasury yields have bounced back. Need to see if this bounce sustains in order to avoid the extended fall from here. The German yields have dipped slightly. Supports are there to limit the downside and keep the broader uptrend intact. The 10Yr and 5Yr GoI are coming down inline with our expectation. They have room to fall further from here.

The US 10Yr (4.21%) and the 30Yr (4.44%) yields have bounced. A strong follow-through rise from here is needed to avoid the extended fall to 4.1% (10Yr) and 4.3% (30Yr). It is a wait and watch.

The German 10Yr (2.47%) and the 30Yr (2.65%) yields have dipped slightly. While above 2.4% (10Yr) and 2.6% (30Yr) the outlook is bullish to see a rise to 2.8% (10Yr) and 3% (30Yr).

The 10Yr GoI (6.9803%) is struggling to breach 7%. This keeps intact our view of testing 6.96%-6.95% on the downside. Failure to rise back thereafter can drag it to 6.9% also.

The 5Yr GoI (6.9373%) has come down sharply and is heading towards 6.9% in line with our expectation.

Dow Jones has moved up again after FED chair Powell’s comment, who said that the US CPI readings over the Q2 have showed more progress and have provided confidence to policymaker that inflation is headed down to the Fed’s 2% target. The Dow Jones need a sustained break above 40250 to strengthen the bullish case and to avoid the danger of seeing a corrective fall. DAX has fallen back but has near term support, while above which, bias will remain positive to see a rise towards 19000-19200. Nifty sustains higher above 24500 and remain bullish to target news highs. Nikkei sustains above 41000 and while above it, chances of rise towards its key resistance cannot be ruled out. Shanghai lacks follow through rise but still has potential to rise towards 3000.

Dow (40211.72, +0.53%) has moved up. A sustained break above 40250 will boost the bullish momentum and take it up to 41000 and higher. That will avoid the danger of falling back to 39500.

DAX (18590.89, -0.84%) has come down below 18600. But support is there in the 18400-18300 region. While above this support, the bias will remain bullish to rise back above 18600 and target 19000-19200 on the upside.

Nifty (24586.70, +0.35%) sustained higher but stable. Bias is bullish to see a rise to 24700 and higher. Immediate support is at 24500. Below that 24250 and 24000 are strong supports.

Nikkei (41433.00, +0.58%) sustains above 41000. While above 41000, a rise towards 43000-44000 is still possible. After that, a fall towards 40000 can be seen.

Shanghai (2961.52, -0.42%) lacks a strong follow through rise but bias is positive for a rise towards 3000 soon. Thereafter, a further break above 3000, if seen, could be bullish towards 3050 or higher.

Crude prices have dipped and remains bearish to come down further from here. Gold has scope to test 2460-2500 before a corrective fall occurs. Silver remains subdued whereas Copper has fallen back but both have near term supports coming up which may hold and lead to a bounce back. Natural gas is heading towards 2.1-2.0 as expected from where a bounce back can be seen.

Brent ($ 84.61) has declined below $ 85 and might come down further towards $ 84-83.

WTI ($ 80.66) trades lower below $ 81. A fall towards $ 80-79 looks possible while below $ 82.

Gold (2431.90) is heading up towards the resistance at 2460. A break above 2460, if seen, could lead to an extended rise to 2500. Both 2460-2500 are key resistance which can hold and lead to a corrective fall towards 2380-2360.

Silver (31.03) is hovering above 30.50, the lower end of the 30.50-32.00 range. Support is seen at 30-29.50, while above which, chances of rise towards 33.00 cannot be ruled out.

Copper (4.5140) has fallen back failing to rise past 4.6 but has key support coming up at 4.4. While that holds, chances of rise 4.7 cannot be ruled out.

Natural Gas (2.1640) has declined below 2.2. A test of 2.1-2.0 looks likely on the downside before a bounce back towards 2.5 can be seen.

{9:00 14:30 EU Trade Bal}
Expn – …Expected – …Previous 19.4 EUR bln

{12:30 18:00 US Retail Sales (YoY)}
Expn 2.49% …Expected – …Previous 2.04%

{12:30 18:00 CA Inflation Y/Y}
Expn – …Expected – …Previous 2.9%

Data Yesterday
…………..
{IN Trade bal}
Expn -23.35 $ bln …Expected – …Previous -23.78 $ bln …Actual -20.98 $ bln