The FED kept the rates unchanged in their Policy meeting yesterday while the BOJ went ahead with a 15-bps rate hike to 0.25%, leading to a volatile FX market as anticipated. Dollar Index slipped to 103.86 and if does not rise back above 104 immediately, can target 103 in the near term while Euro needs to rise past 1.0850 to bring 1.09/0950 into picture. USDJPY and EURJPY have plunged and could be vulnerable to test lower supports of 145/144 and 160/158 respectively if the current momentum of fall continues for a few more sessions. USDCNY tested 7.21 before rising back from there. A decisive break past 7.25 will be needed to head towards 7.27/28 on the upside. The Aussie and Pound below 0.66 and 1.29 respectively can be bearish for a fall towards 0.6400 and 1.28. USDINR could see a pull back to 83.67/65 or even 83.60 but it could be short lived. Our medium term view of a rise to 83.80/90 remains intact but. EURINR needs to rise past 91 to turn bullish.

The FED kept the rates unchanged in its Policy meeting but the Dollar Index (103.956) tested 103.86 on the downside as the Yen strengthened post the BOJ meeting and the US ADP employment came lower than expected at 122k (166k). The Index is currently trading near the immediate support around current levels which needs to hold to produce a bounce towards 104.50-105, else it is likely to head towards 103 soon.

EURUSD (1.0828) currently looks stable above 1.08, tested 1.0850 yesterday on the Dollar weakness. A decisive break past 1.0850 will be needed to bring 1.09/0950 into picture. For now, we are not ruling out the possibility of a fall towards 1.0750-1.07.

Dollar-Yen (149.17) and EURJPY (161.52) have plunged after the BOJ announced a 15 bps rate cut to 0.25% in yesterday’s Monetary Policy meeting. Both the pairs are currently trading below our mentioned supports of 152 and 164 respectively. Going further, failure to rise past 150 on USDJPY will drag it lower towards support near 145/142 while EURJPY can test 158 before pausing the current fall.

USDCNY (7.2295) observed a low of 7.21 but has currently recovered from there. The pair may continue to recover towards 1.2480-1.25. However, bullishness towards 7.27/28 will come into the picture only on a decisive break above 7.2550. Below that, we may expect volatility between 7.2550/25-7.21/20.

Aussie (0.6533) and Pound (1.2855) fell to 0.6479 and 1.2819 respectively in line with our expectation before recovering slightly from there. In the medium term, a rise past 0.66 and 1.29 will be needed to make the outlook bullish. Until then a further dip to 0.64 and 1.28 respectively is possible.

USDINR (83.7250) could see a bit of a pullback to 83.67/65 or even 83.60 but the dip could be short lived. While Dollar remains weak, the Dollar Rupee can hold stable above 83.60/65 and can delay our outlook of a rise past 83.75 by a few sessions. Overall we keep intact our bullish view on the pair to see 83.80/90 by mid-August’24.

EURINR (90.6306) rose to the level of 90.82 but could not sustain and has declined a bit. Unless a strong break above 91 is seen, it is likely to fall back towards 90 in the near term.

The US Treasury yields have declined sharply after the US Federal Reserve meeting outcome yesterday. The yields have some support near current levels which must hold to avoid a deeper fall and produce a bounce back. The Fed left the rates unchanged at 5.25%-5.5% and hinted that a rate cut in September is possible if inflation continues to cool down. The German yields continue to fall. The break below their support sustains well and that leaves the outlook bearish now to see more fall from here. The 10Yr and 5Yr GoI remain stable. While the immediate outlook is unclear, a near-term corrective rise is a possibility before the broader downtrend resumes.

The US 10Yr (4.05%) and the 30Yr (4.32%) yields have tumbled. The 10Yr has declined well below the expected level of 4.1%. It can test 4% and the price action thereafter will need a close watch for a reversal. The 30Yr has come down towards 4.3% as expected. It has to sustain above 4.3% to avoid a deeper fall to 4.2% and lower.

The German 10Yr (2.30%) and the 30Yr (2.51%) yield continues to fall. As the break below 2.4% (10Yr) and 2.6% (30Yr) sustains, the view is bearish to see 2.2% (10Yr) and 2.4% (30Y) on the downside now.

The 10Yr GoI (6.9255%) is stuck between 6.91% and 6.94% now. While the broader downtrend is intact, a corrective rise to 6.96%-6.98% is a possibility before the fall resumes targeting 6.85% and lower levels.

The 5Yr GoI (6.8393%) remains stable. The view remains bearish to see 6.75%-6.7% on the downside over the medium term. But a corrective rise to 6.9% is possible before the fall happens.

Dow Jones, DAX and Nikkei rose after the FED chair Powell has signaled that rate cut could be on the table at the September FOMC meeting. However, Dow Jones and Nikkei have come off failing to sustain a rise. Nifty upside could be limited to 25150-25200. Shanghai can fall back while the resistance at 2950 holds.

Dow (40842.79, +0.24%) spiked to a high of 41198 and has come-off from there. Bias is positive while above the 40200-40000 support zone to see 42000 on the upside over the medium-term.

DAX (18508.65, +0.53%) holds above 18400 and keeps intact our view of a rise to 18600-18800 in the near-term.

Nifty (24,951.15, +0.38%) continues to oscillate between 24750 and 25000. The upside could be limited to 25150-25200 from here after which a corrective fall to 24500 can be seen.

Nikkei (37937.00, -3.03%) rose sharply to test 39188 before falling back from there. The resistance at 39000 seems to be holding well. This keeps our bearish view intact to see a fall towards 37000-36000.

Shanghai (2938.03, -0.03%) indeed rose to test 2948 in line with expectations for a rise towards 2950 and has dipped slightly from there. While 2950 holds, a fall towards 2900 or even lower to 2850-2800 could be seen.

Brent, WTI, Gold, Silver and Copper have risen sharply after FED indicated that rate cut could be on the table at the September FOMC meeting and looks likely to target their key resistance. Natural gas looks mixed just now but as long as it holds above 2.0-1.9, our view will remain bullish.

Brent ($ 81.15) has risen sharply above $ 81 and looks bullish to test $ 83-83.30. Thereafter we need to see if it falls back to $ 80 from there or break higher towards $ 86.

WTI ($ 77.36) has surged above $ 77 and can rise further to $ 79-$ 80. After that we need to see if it fall back from there or breaks higher towards $ 82.

Gold (2499.80) has risen sharply to 2503 as expected and can rise further towards 2530-2550 before a pause can be seen.

Silver (29.21) has risen above 29 and can rise further to 30.00 before a fall back can be seen towards 29 or lower.

Copper (4.2025) has risen sharply to 4.2235. It may rise further towards 4.3-4.4 from here. After that a fall back might be seen towards 4.0 or lower.

Natural Gas (2.05) has fallen back from a high of 2.15. It looks mixed just now but as long as it holds above 2.00-1.9, a rise towards 2.4-2.5 can still be seen.

0:30 06:00 JP PMI
Expn 49.4 …Expected 49.2 …Previous 50.0

1:30 07:00 Australia Trade Balance
Expn – …Expected 5.0 …Previous 5.8

1:45 07:15 CN PMI
Expn 52.0 …Expected 51.6 …Previous 51.8

5:00 10:30 IN Manufacturing PMI
Expn 59.0 …Expected – …Previous 58.3

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

8:30 14:00 UK PMI
Expn 51.5 …Expected 51.8 …Previous 50.9

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

11:00 16:30 BOE Mtg
Expn – …Expected 5.00% …Previous 5.25

11:00 16:30 UK BOE Minutes
Expn – …Expected 0-6-3 …Previous 0.2-7

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

14:00 19:30 US Manufacturing ISM
Expn 49.3 …Expected 48.8 …Previous 48.5

Data Yesterday
…………..
1:30 07:00 AU CPI
Expn 3.6% …Expected 3.8% …Previous 3.6% …Actual 3.8%

3:00 08:30 BOJ Meeting
Expn – …Expected 0.10% …Previous 0.10% …Actual 0.25%

9:00 14:30 EU CPI Flash Estimate (YoY)
Expn 2.7% …Expected 2.5% …Previous 2.5% …Actual 2.6%

12:15 17:45 US ADP Emp
Expn – …Expected 166K …Previous 150K

12:30 18:00 CA GDP
Expn – …Expected 0.2% …Previous 0.3%

18:00 23:30 US FOMC Meeting
Expn 5.50% …Expected 5.50% …Previous 5.50%