RBA kept rates unchanged and hinted that a rate cut is far away while the BoJ Deputy Governor Shinichi Uchida indicated that they would not raise rates in an unstable market which led the USDJPY to rise further. Dollar Index, USDJPY, EURJPY and USDCNY saw some recovery yesterday and if sustained above current levels, can rise in the near term. Euro has been coming off as expected and while below 1.10, it can fall towards 1.09-1.0850 in the near term. Aussie is rising higher within 0.64-0.66 range while Pound has slipped slightly below 1.27 contrary to our expectation of rising to 1.29/30. Any further break below current levels can drag the pair further towards 1.26. USDINR tested 83.9575 yesterday but while below resistance at 84, it is likely to fall back towards 83.75/70 in the near term. EURINR above 91 can attempt to rise back towards 92-93 in the near term. Only a decisive break below it can drag the pair towards 90.

Dollar Index (103.16) had recovered well yesterday from 102.16 and now if sustained higher, can head towards 104 in the near term. Overall, the view is bullish above 102.

EURUSD (1.0919) fell from 1.1009 yesterday, holding well below the mentioned resistance of 1.10/11. While the resistance holds, it can push the pair back towards 1.0900-1.0850 in the coming sessions.

The overall carry trade unwinds cooled a bit yesterday as the Dollar-Yen (146.68) and EURJPY (160.08) rose to the level of 146.37 and 160.23 respectively before slightly coming down. If the Dollar strengthens further, then the pairs can head towards 150 and 165 respectively in the medium term. For now, we expect the downside to be limited to 140 and 155 respectively.

USDCNY (7.1803) has sustained well above the support around 7.12/11 and can rise back towards 7.20 soon.

Pound (1.2703) has slipped slightly below 1.27, contrary to our expectation of seeing a rise towards 1.29-1.30. Now any further break below current levels can make the pair vulnerable to test 1.26 on the downside before attempting to rise back.

RBA kept the interest rates unchanged at 4.35% yesterday but the Aussie (0.6544) had risen yesterday on hawkish comments from Reserve Bank of Australia Governor Michele Bullock, who suggested rate cuts were still far away. Currently, it is headed towards the upper end of its 0.64-0.66 range which can be tested soon before possibly topping out.

USDINR (83.9575) closed higher at 83.9575 yesterday. The crucial resistance still lies at 84, which if held; can push the pair back towards 83.75-83.70 in the near term.

EURINR (91.5943) failed to sustain its rise past 92 and declined to the low of 91.5023. The pair needs to necessarily break below 91 to head towards 90, else while above 91, it can attempt to rise back towards 92-93 again in the near term.

The US Treasury yields have risen further. The expected corrective rise is happening. There is room to rise further before the yields fall back again and resume the downtrend. The German yields continue to remain lower and stable. The view remains bearish and there is room to fall more from here. The 10Yr and 5Yr GoI can see a near-term corrective rise before resuming their broader downtrend. The outcome of the RBI meeting outcome tomorrow will be important to watch.

The US 10Yr (3.90%) and the 30Yr (4.19%) yields have risen further. As mentioned yesterday, a corrective rise to 4% (10Yr) and 4.3% (30Yr) can be seen before the fall resumes towards 3.5% (10Yr) and 3.8% (30Yr).

The German 10Yr (2.19%) and the 30Yr (2.40%) yields continue to remain stable at lower levels. The view remains bearish to see a fall to 2% (10Yr) and 2.2% (30Yr).

The 10Yr GoI (6.8767%) has bounced well. If this bounce sustains, a corrective rise to 6.9% is possible before the downtrend resumes towards 6.8%-6.75%.

The 5Yr GoI (6.7992%) on the other hand can test 6.82%-6.84% from here before falling back to 6.7% eventually.

Dow Jones attempted to bounce back but the broader view will remain bearish while below 39300. Nikkei extended the recovery further as expected and looks bullish while above 31000. Nifty has fallen back after failing to sustain the bounce, which makes it vulnerable to a fall towards 23500-23300 now. DAX and Shanghai may see a short term rise before resuming the fall again.

Dow (38997.66, +0.76%) bounced but has come down from a high of 39449. A sustained break above 39300 is needed to get a recovery rise to 40000-40200. While below 39300, the bias is bearish to see a fall to 38200.

DAX (17354.32, +0.09%) is attempting to bounce. As mentioned yesterday, a corrective rise to 17500-17700 is possible before a fall to 17000-16800 happens eventually.

Nifty (23,992.55, -0.26%) has failed to sustain the bounce and has come down sharply from the high of 24382. That leaves the bias negative for a fall to 23500-23300 now.

Nikkei (34848.71, +0.50%) extended the recovery for the second day. A rise towards 35500 or even higher towards 37000 (revised from 36000-38000) might be seen while above 31000.

Shanghai (2870.97, +0.13%) has bounced a bit after testing a low of 2845. Immediate support is seen at 2840. If that holds, a short term rise towards 2900-2920 might be seen. But the broader view remains bearish for a fall towards 2800.

Crude prices have fallen back but while above their key immediate support levels, they can potentially bounce back towards $ 75-76 (WTI) and $ 80 (Brent). Gold continues to fall and can dip towards 2400-2375-2350. Silver and Copper can test their key support at 26 and 3.85-3.80 before a bounce back can take place. Natural Gas can potentially rise 2.2-2.5 while above 1.9.

Brent ($ 76.46) fell back to $ 75.58 yesterday from a high of $ 77.85. While the support at $ 75 holds, Brent can bounce back towards $ 80.

WTI ($ 72.39) has fallen back after seeing a high of $ 73.77 yesterday. A rise towards $ 75-76 remains intact while it sustains above $ 71-70.

Gold (2424) continues to fall and is coming off towards 2415. It may fall towards 2400-2375-2350 in the near term. After that we need to see if it bounces back towards 2450-2500 or falls further towards 2320-2300.

Silver (27.12) saw a dip to 26.86 in line with our expectation and can test 26 before a potential rise to 28-28.50 is seen.

Copper (4.0060) is hovering around 4. A fall towards 3.85-3.80 looks possible and then a bounce back towards 4.2-4.3 could be seen.

Natural Gas (2.0310) has bounced back sharply to 2.0380 after testing the support at 1.90. It can rise further towards 2.2-2.5.

22:30 04:00 AU PMI
Expn – …Expected 47.4 …Previous -26.5

Data Yesterday
…………..
4:30 10:00 RBA Meeting
Expn – …Expected 4.35% …Previous 4.35% …Actual 4.35%

9:00 14:30 EU Retail Sales
Expn 0.3% …Expected 0.0% …Previous 0.1% …Actual -0.3

12:30 18:00 US Trade Balance
Expn -75.04 ($ bln) …Expected -72.5 ($ bln) …Previous -75.01 ($ bln) …Actual -73.11 ($ bln)