US Philifed Index came out stronger than market expectations, taking Dollar Index above 104. Euro on the other hand slipped sharply below 1.09. USDJPY and EURJPY have recovered well above their respective supports of 157-156 and 171/170.50 but still needs to see a strong rise past current levels to turn bullish in the coming sessions. USDCNY has risen past 7.26 and if sustained, can head towards 7.28 in the medium term. Aussie and Pound have declined a bit and any break below current levels can take it further down towards 0.66 and 1.28 respectively. USDINR on the offshore is trading higher within the range of 83.35-83.65 which can continue to hold for the day. EURINR has reversed from the high of 91.53 and any further break below 91 if seen, can drag it further towards 90-89 in the coming sessions.

The ECB kept rates unchanged yesterday in line with market expectations while market experts expect higher chances of a possible rate cut in September now. Stronger than expected US Philifed Index at 13.9 (expected 2.7) led Dollar Index (104.24) to rise sharply above 104 as EURUSD (1.0890) dipped below 1.09. While the Dollar Index still needs a strong rise past 104.50 to establish near term bullishness, Euro has to break below immediate support at 1.0870/0850 to fall further towards 1.08 else can bounce back in the next few sessions towards 1.0950/0960. However, we are not looking for a break above 1.10 in Euro within the current movement.

Dollar-Yen (157.42) and EURJPY (171.46) looks stable above our mentioned supports 156 and 170.50 respectively. The Japan CPI came lower than the market expectations at 2.6% (expected 2.7%) but no impact is seen on the Yen. If the current rise sustains, both can head towards 159 and 173 initially in the near term.

USDCNY (7.2663) continues to remain volatile within its range of 7.25/24-7.28. Overall, view remains bullish towards 7.28 medium term.

Aussie (0.6702) and Pound (1.2943) could not sustain their rise past 0.67 and 1.30 respectively and started to decline. Any further break below current levels in Aussie if seen could make it vulnerable to test 0.66 on the downside. Similarly, Pound can also move towards the lower end of its 1.30-1.28 range in the near term.

USDINR (83.6550) has risen a bit on the offshore markets as the Dollar strengthened post stronger Philifed data release. Currently, it is trading near the upper bound of the mentioned range of 83.30-83.65. There are chances of higher opening in onshore markets as well. For now, we are retaining our view of range to remain intact before eventually rising towards 83.75/80 in the coming weeks. A confirmed and sustained break above 83.65/67 would be strongly bullish for USDINR in the near to medium term.

EURINR (91.1163) could not sustain its rise past 91.50 and reversed from 91.53 itself. Any break below 91 if seen, could make it bearish towards 90-89 in the near term. It needs to sustain above 91 to head towards 91.50-92 in the coming sessions.

The US Treasury yields remain lower. A strong follow-through rise from here is needed to ease the downside pressure. Else an extended fall cannot be ruled out in the coming days. The German yields have bounced. The supports are holding well inline with our expectation. That keeps intact the broader bullish view. The ECB left the interest rates unchanged yesterday. The Indian 10Yr and 5Yr GoI remain lower and are looking vulnerable to fall more from current levels.

The US 10Yr (4.18%) and the 30Yr (4.4%) yields remain lower but stable. The yields have to get a strong follow-through rise above 4.2% (10Yr) and 4.4% (30Y) to avoid the fall to 4.1% (10Yr) and 4.3% (30Yr).

The German 10Yr (2.43%) and the 30Yr (2.62%) yields have bounced. The support at 2.4% (10Yr) and 2.6% (30Yr) is holding well as expected. While above these support the bullish view of seeing the rise to 2.8% (10Yr) and 3% (30Yr) will remain intact. Only a break below those supports will take it down to 2.3%-2.2% (10Yr) and 2.5%-2.4% (30Yr).

The 10Yr GoI (6.9674%) is managing to hold above 6.96%. But while below 6.98%, the view of seeing 6.95%-6.94% on the downside remains intact. Failure to rise back thereafter can drag it down to 6.9%.

The 5Yr GoI (6.9148%) remains lower. A strong bounce from here is needed to go up to 7%. A break below 6.9% can take the yield down to 6.8%.

Dow Jones, DAX and Nikkei have fallen as sell-off in mega-cap technology stocks are weighing on the rest of the market. Dow Jones might bounce back if the near term supports holds. DAX has fallen below 18400 and might come down further to 18200-18100 and Nikkei can also fall to 39000. Nifty has key resistance overhead which if hold can lead to a correction. Shanghai looks mixed.

Dow (40665.02, -1.29%) has come down sharply. But support is at 40300-40200 which is likely to hold and trigger a reversal again. While above 40200 the bullish view will be intact to see 42000 on the upside.

DAX (18354.76, -0.45%) looks likely to test 18200-18100 before rising back again towards 18500-18600.

Nifty (24800.85, +0.76%) has risen sharply. A pull-back to 24700-24600 today cannot be ruled out on the back of the sell-off in the global markets. But while above 24500, the upside is open to test 25000-25150. Thereafter a reversal is possible.

Nikkei (40092.50, -0.07%) has dipped further and looks likely to come down towards 39000 while below 41000.

Shanghai (2963.24, -0.47%) looks mixed. A sideways trade between 2900-3000 can be expected for a while.

Crude prices are likely to be range bound for a while. Metals fell after ECB kept the rates unchanged at 4.25% and said that September rate cut decision is wide open and will be determined by the data that they will be receiving. Gold continues to fall whereas Copper has fallen sharply breaking below its crucial support. Both the Metals look further bearish for the near term. Silver has declined towards its immediate support. Need to see if that holds and produces a bounce or not. Natural gas has recovered as the mentioned support at 2.0 held well.

Brent ($ 84.56) has fallen back after testing a high of $ 85.81 contrary to our expectation to see a rise towards $ 87. Outlook is mixed. A broad range of $ 87-83 can hold for a while.

WTI ($ 81.92) has fallen back after testing $ 82.26 contrary to our view for a rise to $ 83-84. We can expect a sideways trade between $ 84-79 for a while.

Gold (2427.30) continues to fall as the resistance at 2500 seems to be holding well and can dip towards 2400 or even lower to 2380-2360.

Silver (29.75) has fallen towards 29.50 as expected. If 29.50 holds, a bounce back towards 31-32 could be possible. Else it can break lower towards 28.50. It is a wait and watch now.

Copper (4.2765) tumbled to 4.25 breaking below the support at 4.4. A further dip to 4.1-4.0 looks possible in the near term.

Natural Gas (2.0990) has bounced back a bit as the support at 2.0 held well as expected. A rise towards 2.4-2.5 can be seen in the near term while above 2.0-1.9.

23:05 04:35 UK Cons Conf
Expn -14 …Expected -12 …Previous -14

23:30 05:00 JP CPI
Expn 3.0 …Expected – …Previous 2.9

Data Yesterday
…………..
1:30 07:00 Australia Labour Force
Expn – …Expected 19.9K …Previous 39.5K …Actual 50.2K

6:00 11:30 UK Unemp
Expn 4.5% …Expected 4.4% …Previous 4.4% …Actual 4.4%

11:45 17:15 ECB Mtg
Expn 4.25% …Expected 4.25% …Previous 4.25% …Actual 4.25%

12:30 18:00 US Philifed Index
Expn 1.9 …Expected 2.7 …Previous 1.3 …Actual 13.9

13:00 18:30 US TICS (Net foreign purch of long-term Sec)
Expn – …Expected – …Previous 123.1$ Bln