The Dollar Index came down sharply as the Euro rose post the ECB meeting wherein a 25bps rate cut was seen on the deposit rates and a 60bps cut in the Money Refinancing Rate. Any break below 101 on the Dollar Index, if seen can extend the fall towards 100.50. Similarly, Euro above 1.1050 can rise towards 1.11-1.1150. USDJPY and EURJPY continue to fall but we expect the downside to be limited to 140-139 (USDJPY) and 156-154 (EURJPY) respectively in the near term. Aussie and Pound have risen past 0.67 and 1.31 respectively and if sustained can make the outlook bullish further in the near term, else are likely to fall back towards 0.66 and 1.30-1.2950. USDCNY is coming off, overall; we expect the range of 7.14-7.08 to hold in the near term. EURINR has risen past 93 but watch price action closely to see whether the rise sustains or not. USDINR can continue to trade between 83.90/95 and 84.00.

The ECB in its yesterday’s meeting went ahead with a 25-bps rate cut in deposit rate and added a spread of 15bps between the deposit rates and the Money Refinancing rate (MRO), taking down the MRO to 3.65% from 4.25% earlier. EURUSD (1.1088) rose against the Dollar as Christine Lagarde dampened expectations for another cut next month. Now while the pair sustains above 1.1050, it can extend its rise further towards 1.1150-1.12 in the coming sessions. Immediate support near 1.10 seems to be holding well for now.

The Dollar Index (101.04) fell sharply to 101.22 yesterday and is continuing the fall to current levels as the Euro strengthened post the ECB meeting. Now, the index can fall further towards 101-100.5 in the coming sessions.

The Yen continues to strengthen further. For now, we expect the downside in the Dollar-Yen (140.97) and EURJPY (156.32) to be limited to 140-139 (USDJPY) and 156-154 (EURJPY) respectively from where a bounce is possible.

USDCNY (7.1078) failed to sustain its rise past 7.12 and started coming off from the level of 7.1238. Further, if the fall continues, it can extend to 7.10 or lower. Overall, a near-term range of 7.12/14-7.08 can hold for some time.

Aussie (0.6723) and Pound (1.3143) have finally risen past 0.67 and 1.31 respectively. Both the pairs need to sustain above the current levels to extend their rise towards 0.68 and 1.32-1.3250 respectively in the near term. Failure to sustain the rise can make the outlook again bearish to 0.66 and 1.30.

USDINR (83.97) can continue to trade within the narrow 84.00-83.95/90 region for the near term with higher chances of seeing a break above 84 and rise towards 84.10/12. For now, we expect the downside to be limited to 83.90/80.

EURINR (93.0794) has risen past 93 and can test 93.0-94. Watch price action closely around the current levels. A dip below 93 will be needed to bring back 92.50-92 into the picture.

The US Treasury yields have come down after witnessing an intraday rise. The broader view remains bearish, and the yields can fall more from here. The German yields have bounced after the ECB meeting outcome yesterday. Though there is room to rise further from here, the upside will be capped. The broader trend is down, and the yields are likely to resume it. The ECB cut their deposit facility rates by 25 bps. The Main Refinancing Rate is now at 3.65%, down 60 bps as the spread between this rate and the deposit rate has been reduced to 15 bps from 50 bps earlier. The Indian 10Yr GoI has declined sharply. The downtrend is intact and there is room to fall more.

The US 10Yr (3.64%) and the 30Yr (3.97%) yields have come down after rising to 3.7% and 4.02% respectively. The broader bearish view is intact to see a fall to 3.5% (10Yr) and 3.8% (30Yr). Resistances are at 3.8% and 4% (10Yr) and 4.1% and 4.3% (30Yr).

The German 10Yr (2.15%) and the 30Yr (2.42%) yields have bounced. But the broader trend is still down to see 2% (10Yr) and 2.2% (30Yr). Any rise will be capped at 2.3%-2.4% (10Yr) and 2.5%-2.6% (30Yr).

The 10Yr GoI (6.8054%) has declined sharply and come down towards 6.8% as expected. The view remains bearish, and the yield can fall further towards 6.75%-6.7% going forward.

Decent rise is seen in Dow Jones and DAX after the hawkish Rate cut from ECB. Nifty has seen a solid rise towards 25450. A further break above it can take it upto 25700-25800. Nikkei has fallen back a bit as the resistance at 37000 held well and while below that, it may trade sideways between 37000-35000 for some time. Shanghai has scope to bounce back towards 2750-2765 while it remains above 2700.

Dow (41096.77, +0.58%) has risen above 41000 as expected. That brings back the earlier bullish view of seeing 42000 on the upside. Support is around 40500.

DAX (18518.39, +1.03%) is attempting to rise. As we have been mentioning, a strong rise above 18700 is needed to clear the way for a rise back to 19000 and higher. Only then the danger of the fall to 18000 will reduce. We will have to wait and watch.

Nifty (25,388.90, +1.89%) has surged above 25200. A further break above 25450 can take it up to 25800. Support will now be in the 25150-25000 region.

Nikkei (36523.50, -0.90%) has fallen back a bit as the resistance at 37000 is holding well for now. Only a decisive break above it could see a rise towards 38000-38500. Else it may trade sideways between 37000-35000 for some time.

Shanghai (2712.74, -0.16%) remains weak. If the support at 2700 holds, a rise towards 2750-2765 could be seen. In case of any break below 2700, if seen, can extend the fall towards 2680-2650.

Commodities have risen sharply after the ECB Hawkish Rate cut on Thursday. Brent and WTI have extended the recovery further but needs to overcome the resistance at $ 74-75 and $ 70-71 for increased bullishness. Gold and Silver have risen sharply but have key resistance ahead at 2610/2620 and 31 which may halt the current rally and lead to a fallback from there. Copper and Natural Gas looks bullish towards 4.4 and 2.5 respectively.

Brent ($ 72.23) has moved up well towards $ 73. It has to rise past the resistance at $ 74-75 for increased bullish towards $ 77. Else it could trade sideways between $ 75-69 for a while.

WTI ($ 69.27) has risen well towards $ 70 as expected. Key resistance is at $ 70-71. A break above $ 71 is needed to strengthen the bullish case towards $ 74-75. Else it may trade sideways between $ 71-65 for a while.

Gold (2593.20) has risen sharply towards 2600 as expected. Key resistance is at 2610/20. While that holds it may fall towards 2550.

Silver (30.31) has risen well above our expected level of 30 to a high of 30.41. It may test key resistance at 31 before a fallback can be seen towards 30.50-30.00

Copper (4.2235) has broken sharply above the upper end of the 4.00-4.20 range as expected. While above 4.2, a rise towards 4.4 looks possible.

Natural Gas (2.3610) has seen a high of 2.3940 so far. Can rise further to 2.5.

9:00 14:30 EU Ind Prodn (MoM)
Expn -0.5% …Expected-0.3% …Pfrevious-0.1% –

13:00 18:30 IN Trade bal
EXpn -24.4 $ Bln …previous -23.5 $ bln

DATA YESTERDAY:-

ECB Mtg %
EXpn 4.20 % …Expected 4.00 % …Previous 4.25 %

IN IIP
Expn 4.9% …Expected 4.7%…Previous 4.7% …Actual 4.8 %

IN CPI
EXpn 4.00 …EXpected 3.55 …Previous 3.54 …Actual 3.65

US PPI
Expn 0.3 % …Expected 0.2 % …Previous 0.0% …Actual0.2 %

US PPI ex Food & Energy (MoM)
Expn 0.4 …Expected 0.2 …previous -0.2 …ACtual0.3