The lower-than-expected US PPI release at 0.10% (M/M%) yesterday took the Dollar Index below 103 and Euro towards the crucial resistance at 1.10. The USDJPY and EURJPY while below 148/148.50 and 162/163 respectively, can resume their downtrend in the medium term. Pound and Aussie have risen past 1.28 and 0.66 respectively and now if sustained, can extend their rise further to 1.29/30 and 0.6650/67 respectively. USDCNY fell sharply yesterday and any break below 7.14 if seen, can make the pair vulnerable to test 7.12/10 on the downside. EURINR has surged past 92 and if sustained can test 93 before topping out. USDINR on the Offshore is trading lower on a strong Euro and a weak Dollar and we are retaining our view of the pair seeing a dip to 83.85/80 initially before attempting to rise back towards 84 or higher again in the medium term. Watch out for the US CPI release scheduled today.

Dollar Index (102.58) fell sharply post weaker than expected US PPI release at 0.10% (0.20%) yesterday. Currently, the pair is trading near the immediate support around 102.50-102, above which it can bounce back towards 103.70-104 in the near term. Also watch US CPI today as that could keep the volatility intact in the Dollar. Higher CPI activity could lead to a rise in the Dollar Index else a fall towards 102 can be seen.

EURUSD (1.0991) has surged significantly on Dollar weakness. Currently, it is trading below the crucial resistance at 1.10, a break past which will be needed to maintain the bullishness in the trend. Else, while the resistance holds, a fall back to 1.09-1.0850 can be seen. Watch for price volatility before and after the US CPI release scheduled today.

Dollar-Yen (146.09) and EURJPY (160.59) rose to 147.95 and 161.80 respectively before coming down. While the pairs trade below 148/148.50 and 162/163 respectively, the view remains bearish to see a fall back to 145 and 158/157 in the medium term.

The USDCNY (7.1462) has declined below our narrow range of 7.18-7.16 and is currently nearing the lower end of our broader range of 7.20-7.14. Any break below 7.14 can trigger a fall to 7.10/08 in the medium term. The pair must sustain above 7.14 and bounce back higher to negate such a fall. Watch price action near 7.14.

Aussie (0.6628) and Pound (1.2859) have risen past 0.66 and 1.28 respectively and now need to sustain higher to head towards 0.6650-0.67 and 1.29-1.30 respectively. Else failure to move up further can turn bearish and drag them back towards 0.65 and 1.26 respectively in the medium term.

USDINR (83.9750) observed a high of 83.98 yesterday. Currently, it is trading lower on the offshore market. There could be chances of lower opening in onshore markets as well on Dollar weakness and Euro strength. For now, we are retaining our view of seeing a near-term dip to 83.85/80 before it attempts to rise back towards 84+. The US CPI scheduled today will be important to watch for near term directional clarity. Indian markets are closed tomorrow for Indian Independence Day.

EURINR (92.2294) rose significantly yesterday, surpassing our mentioned target of 92. A resistance can be spotted around 93 which suggests limited upside for the pair in the near term which can take the pair down to 92-91.50 in the medium term.

The US Treasury and German yields have dipped and have some more room to continue decline in the near term keeping our bearish view intact. The US CPI data release today will be important to watch. The 10Yr GoI is still stuck inside the narrow range of 6.85-6.90/92% but the bias remains bearish while below resistance at 6.92%. The 5Yr yield too can fall from immediate resistance at 6.92%.

The US 10Yr (3.856%) and the 30Yr (4.168%) yields have dipped slightly. The resistances at 4% (10Yr) and 4.3% (30Yr) seem to be holding well for now and while the resistances hold, we may expect a further dip to 3.80/3.50% and 4.10% either from current levels or after a short corrective rise in the next few sessions. Overall near term view looks slightly bearish.

The German 10Yr (2.188%) and the 30Yr (2.428%) yields have also dipped. The trend looks bearish for the near term as the yields can fall to 2% (10Yr) and 2.2% (30Yr) on the downside. Resistances are at 2.4% (10Yr) and 2.6% (30Yr) respectively.

The 10Yr GoI (6.8864%) has moved up within its 6.85%-6.9% range to close above 6.88%. A test of 6.9-6.92% looks possible if the rise continues before topping out in the near term. Overall trend looks bearish while below 9.2% for a fall to 6.86% and then towards 6.84/82%.

The 5Yr GoI (6.911%) has crucial near term resistance just above current levels at 6.92% which if holds can push it back towards 6.86-6.82% in the coming days. Immediate view is bearish below 6.92%.

Dow Jones has gained positive momentum after a softer US PPI data. DAX continues to inch up. Both Indexes could target 39800-40000 and 18000-18200 before turning lower from there. Nifty has fallen sharply within the 24500-24000 range and might break on the downside and fall towards 23500 while it remains below 24500. Shanghai remains bearish for a fall towards 2825-2800.

Dow (39765.65, +1.04%) has bounced back and can target 39800-40000 on the upside before turning lower towards 39000.

DAX (17812.05, +0.48%) continues to inch up. A rise to 18000-18200 looks possible before it can resume the downtrend towards 17000-16800 in the coming weeks.

Nifty (24139, -0.85%) fell sharply from 24359.95 to 24139. The range of 24500-24000 remains intact. It can break below 24000 and fall towards 23500 while below 24500.

Nikkei (36,102.50, -0.36) rose to 36693 today in line with expectations for a rise towards 37000 and is coming off from there. It may see a fall towards 35000 while below 37000.

Shanghai (2857.28, -0.35%) remains lower and can fall towards 2825-2800 in the near term.

Crude prices have fallen back and might come down further from here. Gold, Silver and Copper lack a strong follow through rise but overall view remains bullish for the near term. Natural Gas has scope to rise towards 2.4-2.5 while above 2.1-2.0.

Brent ($ 81.36) fell to $ 80.55 yesterday and has bounced back a bit from there. It may come down further to $ 80-79 while it remains below $ 82.50.

WTI ($ 78.83) has fallen back as the resistance at $ 80 held well. A fall towards $ 76 can be seen while below $ 80.

Gold (2506.10) hovers above 2500. A rise towards 2550-2580-2600 looks possible while above 2450. After that, a fall back might be seen towards 2500.

Silver (27.88) lacks strength to rise above 28. But bias remains positive to see a rise towards 29.00-29.50 while above 26.50-26.00.

Copper (4.0605) lacks a follow through rise but while above the support at 3.90-3.85, a rise towards 4.2-4.3 can be seen.

Natural Gas (2.1650) trades below 2.25. Immediate support is seen near 2.1-2.0 region. If that holds, a break above 2.25 and rise towards 2.4-2.5 could be seen.

6:00 11:30 UK CPI Y/Y
Expn 1.8% …Expected 2.3% …Previous 2.0%

6:30 12:00 IN WPI
Expn 1.35% …Expected 2.39% …Previous 3.36%

8:45 14:15 IN Trade bal
Expn -19.5$ Bln …Expected – …Previous -21.0$ Bln

9:00 14:30 EU GDP
Expn – …Expected 0.3% …Previous 0.3%

9:00 14:30 EU Ind Prodn (MoM)
Expn 0.2% …Expected 0.4% …Previous -0.6%

12:30 18:00 US CPI (MoM)
Expn 0.1 …Expected 0.2 …Previous -0.1

12:30 18:00 US Core CPI (MoM)
Expn 0.2% …Expected 0.2% …Previous 0.1%

Data Yesterday
…………..
6:00 11:30 UK Unemp
Expn 4.6% …Expected 4.5% …Previous 4.4% …Actual 4.2%

12:30 18:00 US PPI
Expn 0.2% …Expected 0.2% …Previous 0.2% …Actual 0.1%

12:30 18:00 US PPI ex Food & Energy (MoM)
Expn 0.5 …Expected 0.2 …Previous 0.3 …Actual 0.0