The Dollar Index trades lower after a weaker-than-expected US ISM was released yesterday. While the Dollar Index trades within 101-102, the Euro can trade within 1.10-1.11. USDJPY and EURJPY have fallen sharply after comments from the BOJ Governor that they may continue to raise rates if needed. Aussie and Pound have declined and may continue so in the near term towards 0.6650/0.66 and 1.31/1.3070 respectively. USDCNY may trade within 7.08-7.12/14 while EURINR may sustain above 92.50/55 in the very near term. USDINR can continue to trade between 83.80 and 84.00.

The Dollar Index (101.67) has dipped from the overnight rate of 101.9 after a lower-than-expected US ISM release of 47.2 seen yesterday (market expectation was 47.5). Continued failure to rise past 102 can push the Dollar Index down to immediate support near 101.50.

EURUSD (1.1054) is slightly up from 1.1026 seen yesterday. While above 1.10, we may expect a near-term trade within 1.10-1.11.

The statement of the BOJ Governor in a letter stating that BOJ will continue to raise interest rates ‘if the economy and prices perform as expected seeded bullish sentiments for the Yen and as a result Dollar-Yen (145.45) has fallen sharply from yesterday’s high of 147.21. The corrective rise could be curbed below 148 itself instead of seeing a rise to 150. Now, if 145 breaks on the downside, the medium-term bearishness would resume. Else, above 145, a short-lived range of 145-148 may persist before resuming the longer-term downtrend. Watch price action at 145.

EURJPY (160.74) also needs to sustain above 160 to move up else can fall to 158/157 soon.

USDCNY (7.1091) has dipped again on Dollar weakness. We may expect 7.08-7.12/14 as a broad range for the next couple of weeks to hold.

Aussie (0.6702) has fallen sharply as compared to the Pound (1.3110) as both trade lower from yesterday’s highs of 0.67924 and 1.31487 respectively. We may expect the decline to continue in the near term towards 0.6650-0.66 and 1.31/1.3070 respectively.

USDINR (83.9725) can continue to stay below 84.00 within the range of 84.00-83.80, so long as the RBI wills it. A break above 84.00 can take USDINR much higher. On the other hand, a continued decline in Brent could give the RBI more elbow room to keep Dollar-Rupee steady.

EURINR (92.7823) may sustain above 92.50/55 and move up slowly towards 93-93.50. An initial dip below 92.50 will bring in bearishness.

The US Treasury yields have come down sharply after the PMI data failed to meet the market expectation. The downtrend seems to have resumed, and the yields can fall more in the coming days. The PMI for August came in at 47.2. Market expectation was 47.5. However, the data is relatively better than the previous reading of 46.8 (July). The German yields have also declined sharply indicating the resumption of the broader downtrend. The yields can fall more from here. The Indian 10Yr GoI is stuck in a narrow range. The bias is negative to see a fall eventually. Resistances ahead can cap the upside if there is a rise from here.

The US 10Yr (3.82%) and the 30Yr (4.12%) yields have declined sharply. The downtrend has resumed as expected and the yield can fall to 3.5% (10Yr) and 3.8% (30Yr). Resistance at 4% (10Yr) and 4.3% (30Yr) have held very well.

The German 10Yr (2.27%) and the 30Yr (2.50%) yields have reversed lower again. The bearish view is intact to see a fall to 2% (10Yr) and 2.2% (30Yr) while below 2.4% (10Yr) and 2.6% (30Yr).

The 10Yr GoI (6.8707%) is stuck between 6.86% and 6.88%. The bias is negative while below the 6.88%-6.9% resistance zone. We expect the yield to see a fall to 6.8%-6.75%.

Dow Jones, DAX and Nikkei have fallen sharply after the release of weaker than expected US ISM Manufacturing PMI data. Dow Jones and DAX have crucial supports coming up which if hold can produce a bounce back to our expected levels. Nikkei has room to fall further towards 36000. Nifty may fall today taking cues from global equities but it has support at 25000. Need to see if that breaks or not. Shanghai may bounce back towards 2850 while above 2780-2775.

Dow (40936.93, -1.51%) has come down sharply. Crucial support is at 40600-40500 which must hold in order to keep alive the chances of a rise to 41800-42000. We will have to wait and watch.

DAX (18747.11, -0.97%) has declined sharply. Support is around 18650. While that holds, the bullish view of a rise to 19500 is still possible. Only a fall below 18650 will prove the bullish view wrong and drag the DAX lower.

Nifty (25279.85, 0%) can fall taking cues from global equities. But we need to see if it breaks below 25000. Only then the outlook will turn negative and will negate our bullish view of seeing 25500-25600 on the upside.

Nikkei (37,311.50, -3.66%) has tumbled below 38000 contrary to our view to see a rise towards 39500. While below 38000, it may fall towards 36000.

Shanghai (2793.55, -0.34%) tested a low of 2781.94 so far and has bounced a bit from there. If the support near 2780-2775 holds, a rise towards 2850 could be seen. Only a decisive break below 2775, if seen, can target 2700.

Crude and Metal prices have fallen sharply due to the lower than expected US ISM Manufacturing PMI released yesterday. Brent and WTI have interim support at $ 72 and $ 66/65 respectively. While these levels holds, a bounce could be possible. Gold, Silver and Copper looks vulnerable for a fall towards 2450, 27 and 4.0/3.9 respectively. Natural gas can rise towards the upper end of the 1.9-2.3 range.

Brent ($ 73.24) has crashed, breaking below our first crucial support of $ 75. Our second Support is at $ 72. There needs to be a strong bounce from here for our current forecast of sideways range trade between $ 72-85 to remain intact. A break below $ 72 would prove us wrong and our alternative bearish forecast of $ 65-62 would start kicking in.

WTI ($ 69.81) has a broken below its key support at 71 due to weaker US ISM. Further support can be seen at 66-65 which is expected to hold and produce a bounce back towards 70-75 in the near term. Alternatively, if it happens to break below 65, then it would be bearish for WTI towards 62 to 60.

Gold (2527.40) fell to a low of 2507 yesterday and has bounced back a bit from there. It may break below 2500 and fall towards 2450 while it stays below 2550. The chances of seeing a rise towards 2600 may get delayed.

Silver (28.31) saw a low of 28.06 yesterday. It looks vulnerable for a further fall towards 27.

Copper (4.0850) has tumbled below the support of 4.1. If the fall sustains, a dip towards 4.0-3.9 could be seen. A break above 4.2 is now needed to bring back the bullishness for a rise towards 4.4.

Natural Gas (2.1970) fell to a low of 2.0750 yesterday but managed to bounce back above 2.19. This keeps our view intact to see a rise towards the upper end of the 2.0-2.3 range.

22:30 04:00 AU PMI
Expn – … Expected 48.7 … Previous -19.5

1:30 07:00 AU GDP
Expn – … Expected 0.2% … Previous 0.1%

5:00 10:30 IN Services PMI
Expn 59.8 … Expected 60.4 … Previous 60.3

12:30 18:00 US Trade Balance
Expn -75.0 … Expected -78.4 … Previous -73.1

14:00 19:30 BOC Meeting
Expn – … Expected 4.25% … Previous 4.50%

Data on Yesterday
———————-
6:30 12:00 CH CPI
Expn 1.0 … Expected 0.1 … Previous 1.2 …Actual 1.0

7:00 12:30 CH GDP
Expn – … Expected 0.5% … Previous 0.5% …Actual 0.7%

13:30 19:00 CA PMI
Expn – … Expected 0.0 … Previous 47.8 …Actual 49.5

14:00 19:30 US Manufacturing ISM
Expn 47.9 … Expected 47.5 … Previous 46.8 …Actual 47.20