The Dollar Index fell sharply below the support of 100.50 after the weaker US Consumer Confidence release at 98.70. Needs to see whether the rise further gets extended to 99.50 or gets halted near the current levels. Watch out for the US New Home sales release today. Euro is nearing the immediate resistance at 1.12. USDJPY and EURJPY have upside limited to 144-145 and 161/162 respectively from where they are likely to fall back towards 142-140 and 158-157 respectively in the medium term. Aussie tested 0.69 but a sustained rise past it will be needed to bring 0.70 into the picture. Immediate support is seen around 0.6850 region. The pound has surpassed our target of 1.34 and if it rises past 1.3450, it can target higher levels of 1.36-1.3650. USDCNY has tested below the support of 7.0250 and if the fall extends further, a test of 6.97/94 looks likely. It needs to bounce back immediately to avoid further decline. EURINR could trade within 92-94 region for a few sessions. USDINR may dip from 83.70 towards 83.60/50 today on stronger Euro and Yuan.
The weaker-than-expected US Consumer Confidence data release at 98.70 (103.90) led Dollar Index (100.263) to slip sharply below 100.50. If the fall sustains and the index breaks below 100, it could head towards 99.50. Else a bounce back from 100 itself can be possible. Watch the US New Home sales release scheduled today.
EURUSD (1.1194) is nearing the immediate resistance at 1.12. The Dollar weakness post lower US Consumer Confidence data has supported the rise. A decisive break past 1.12 will be needed to test 1.1250 in the near term. Else, if the resistance holds, it can fall back towards 1.11-1.1050 in the medium term.
The Dollar-Yen (143.36) and the EURJPY (160.45) are attempting to rise back but the upside could be limited to 144-145 and 161/162 respectively. Thereafter, while the resistance holds, they are likely to fall back towards 142-140 and 158-157 respectively in the medium term.
USDCNY (7.0228) broke below the expected support of 7.0250 to test 7.0165 as the Yuan strengthened post the news of new stimulus measures which includes a planned 50 bps rate cuts, injecting more funds into the economy and an easing of mortgage repayments for households. However, a slight bounce is seen from the day’s low so far. The pair needs to necessarily rise past 7.025 and sustain to move up, else it would be vulnerable to test 6.97/94 on a sustained trade below 7.0250.
RBA kept the rates unchanged at 4.35% as expected. Aussie (0.6880) tested 0.69 on the upside but could not sustain and has declined a bit from there. A sustained break past 0.69 will be needed to head towards 0.70. Support is seen around 0.6850, but whether it holds and bounces back or extends the fall further will have to be seen.
Pound (1.3416) has exceeded our target of 1.34 and looks strongly bullish. If the current momentum continues above 1.345, it may head towards 1.36-1.3650 soon before pausing. Alternatively, a break below 1.34 if seen, can drag the pair to the lower levels of 1.32 in the near term.
USDINR (83.6750) rose well to close above 83.60 yesterday but given the fresh strength in the Euro and Chinese Yuan, the Rupee could have some scope for strengthening today. While below 83.70, there could be a pullback towards 83.50 today.
EURINR (93.5698) continues to remain volatile within its range of 92-94 which is likely to persist for a while.
The US Treasury and the German yields remain stable. The broader view remains bearish. Both the US Treasury and the German yields have room to fall further from here. Any intermediate bounce can be short-lived, and their resistances can cap the upside. The 10Yr GoI has dipped slightly within its consolidation range. Bias is negative to break the range on the downside and fall eventually.
The US 10Yr (3.74%) and the 30Yr (4.09%) yields remain stable. While below 3.8% (10Yr) and 4.1% (30Yr) the view will remain bearish for a fall to 3.5% (10Yr) and 3.8% (30Yr).
The German 10Yr (2.14%) and the 30Yr (2.48%) yields are also stable. The view is bearish to see a fall to 2% (10Yr) and 2.2% (30Yr). Resistance at 2.3%-2.4% (10Yr) and 2.5%-2.6% (30Yr) can cap the upside if there is a rise.
The 10Yr GoI (6.7604%) has dipped slightly within its 6.75%-6.8% consolidation range. The bias is bearish to see a break below 6.75% and a fall to 6.7%. Thereafter a bounce is possible.
Dow Jones, DAX and Nifty continues to rise but all have resistance overhead which needs to be cleared for increased bullishness or else they might fallback. Nikkei has fallen back a bit but has near term support which if holds can produce a bounce back. Shanghai has seen a strong rise breaking above its resistance at 2800 after People’s Bank of China reduced its medium-term lending facility rate by 30 bp to 2%. If the break sustains, Shanghai might rally further in the near term.
Dow (42208.22, +0.22%) has closed just above 42200. A strong follow-through rise from here will clear the way for 42700-42750. Supports are at 41900 and 41700.
DAX (18996.63, +0.80%) has moved up further. A strong break above 19100 will boost the momentum for a rise to 19700-19800. Else it may fall back to 18800-18700
Nifty (25,940.4, +0.01%) rose to a high of 26011 and has come down from there. Bias remains bullish to see 26200 while above 25900. Lower support is at 25800. After that if 26200 holds as resistance, a corrective fall towards 25500-25400 could be seen.
Nikkei (37,990.50, -0.04%) has fallen back after testing a high of 38427 but has support at 37800. While the support holds, a rise towards 39000-39500 could be seen.
Shanghai (2929.10, +2.30%) broke sharply above 2800 and moved up to a high of 2952.45. This is contrary to our view that the resistance at 2800 will hold and lead to a fall back towards 2750. If the rise sustains, the index may target 3000 or even higher level of 3100 in the near term.
Brent and WTI have scope to test their key resistance. After that we need to see if the resistance holds and lead to a fall from there or the crude prices are able to break higher. Gold, Silver and Copper have risen sharply in line with expectations for have key resistances overhead which they have to surpass for increased bullishness or else the Metals could witness a fallback. Natural Gas has dipped below 2.85 and might come down further while below the resistance at 2.9-3.0.
Brent ($ 74.21) looks ranged between $ 73-75.20. It can test the resistance at $ 76. If that holds, a fall towards $ 73-72 or lower might be seen. In case a decisive break above $ 76, if seen, can be bullish towards $ 78-80.
WTI ($ 71.39) lacks strength to rise past $ 72. It may test $ 74 on the upside. After that a fall could be seen towards $ 71-70. In case a break above $ 74 happens, then a further rise towards $ 76 could be seen.
Gold (2687.50) has risen sharply to 2689 so far in line with expectation to see a rise towards 2670-2700. A break above 2700 is needed for further bullishness towards 2800. Else there could be chances of seeing a fall towards 2650-2600.
Silver (32.39) has risen to 32.61 so far in line with expectations to see a rise towards 32-32.50. A decisive break above 33 is needed for to become further bullish towards 34. Else there could be chances of seeing a fall back to 31.50.
Copper (4.5250) has risen to a high of 4.5535 so far in line with expectations for a rise towards 4.5 or higher. Immediate resistance is coming at around 4.56-4.60. It has to rise past 4.60 to strengthen the bullish momentum further towards 4.7-4.8. Else there could be chances of seeing a fall back towards 4.4.
Natural Gas (2.8230) tested a high of 2.8950 yesterday and has come down below 2.85. Resistance is at round 2.9-3.0 while below which a fall towards 2.8-2.6 could be seen.
14:00 19:30 US New Home Sales
Expn 703K …Expected 693K …Previous 739K
DATA YESTERDAY:-
————–
4:30 10:00 RBA Meeting
Expn – …Expected 4.35% …Previous 4.35% …Actual 4.35%
8:00 13:30 GER IFO Business Climate
Expn 87.0 …Expected 86.1 …Previous 86.6 …Actual 85.4
8:00 13:30 GER IFO Business Situations
Expn – …Expected 86.0 …Previous 86.4 …Actual 84.4
8:00 13:30 GER IFO Business Expectations
Expn – …Expected 86.3 …Previous 86.8 …Actual 86.3
13:00 18:30 US Case Schiller
Expn – …Expected 5.9% …Previous 6.5% …Actual
14:00 19:30 US Cons Conf
Expn 101.1 …Expected 103.5 …Previous 103.3 …Actual