The ECB lowered the deposit facility rate to 3.25% (earlier 3.5%). This led the Dollar Index to strengthen and the Euro to move towards 1.0810 on the downside. USDJPY and EURJPY are struggling to rise and could either from 152-152.50 and 164 or from current levels, can fall towards 146.50 and 160 respectively. Aussie could have a limited upside to 0.68 for now while Pound needs to sustain above 1.30 to rise further. USDCNY will have to rise past 7.1240 to extend the rise towards 7.15/20 else can decline back to 7.08. USDINR is likely to remain ranged within 84.12-83.98 region. EURINR needs to sustain above 91 to prevent a sharp fall to 90 else could be bearish for the next few sessions. Watch out for the US Housing starts data release scheduled today.

Dollar Index (103.705) rose well yesterday after the ECB rate cut and on market speculates of Donald Trump becoming the next President. There is enough room for a rise towards 104-106 in the coming weeks. Overall, the view is bullish above 102.50. Any corrective dip if seen in the near term can be limited to 103.

EURUSD (1.0837) fell as expected after the ECB went ahead with the 25 bps rate cuts, thereby bringing the deposit facility rate to 3.25% (earlier 3.5%). Euro can soon test the support around 1.08-1.0775 region. Thereafter, whether the support holds and pair bounces back or extends the fall further towards 1.07/06 will have to be seen.

Dollar-Yen (149.96) and EURJPY (162.52) tested 150.32 and 162.763 before coming off. We believe that the upside in both the pairs could be limited to 152-153 and 164 respectively in the near term and either from current levels or upon testing the mentioned upside levels, the pairs can eventually resume their long-term downtrend soon targeting 146.50 and 160 initially.

USDCNY (7.1178) tested 7.1270 on the upside before cooling down a bit. A sustained rise above 7.1240 is needed to keep the upside momentum intact and lead to a further rise towards 7.15/20; otherwise a decline to 7.08 cannot be negated.

Aussie (0.6712) could rise to 0.68 where the upside could limit itself in the near term. A strong break past 0.68 will be needed to become bullish again in the medium term. A broad range of 0.66-0.68 may hold for the near term.

Pound (1.3022) looks stable above 1.30 for now. It needs to hold well above current levels and rise back towards 1.31 and higher, else if the fall continues further, it can get extended to 1.2950-1.29 before the expected reversal occurs. Watch price action near current levels.

USDINR (84.0725) observed a high of 84.0775 before closing slightly below it. For now, the range of 84.12/10-84.00/83.98 can hold in the near term.

EURINR (91.0982) had slipped below 91 to the low of 90.8920 before it recovered a bit. Unless a sustained rise above 91 is seen in the near term, it will be difficult for the pair to turn bullish and can drag itself down towards 90. Watch price action near 91.

The US Treasury yields have risen back again indicating that the corrective rise is still alive. A strong follow-through rise can see the extended rise expected earlier before the downtrend resumes. The US Retail Sales growing at a slower pace of 1.59% (YoY) in September compared to the rise of 1.99% (YoY) seen in the previous month has supported the Treasury yields to rise back. The German yields have also risen back above their resistances. While this sustains, the yields can rise further in the coming days. The outlook will then remain bullish. The ECB cut their interest rates by 25 bps yesterday as against our expectation to keep the rates unchanged. The 10Yr GoI is moving up within its narrow range. The sideways consolidation can continue for some time. The bias is bullish to break the range on the upside and move higher eventually.

The US 10Yr (4.09%) and the 30Yr (4.39%) yields have risen back again. Need to see if they can rise past 4.1% (10Yr) and 4.4% (30Yr) in which case the extended rise to 4.2% and 4.5% will still remain alive before a reversal happens. The yields have to fall below 4% (10Yr) and 4.3% (30Yr) to indicate that the broader downtrend has resumed.

The German 10Yr (2.21%) and the 30Yr (2.52%) yields have risen back above 2.2% (10Yr) and 2.5% (30Yr) again. If this sustains, then it will keep alive the chances of the rise to 2.4% (10Yr) and 2.7% (30Yr). We will have to wait and see.

The 10Yr GoI (6.7810%) is moving up within its 6.75%-6.8% range which is likely to remain intact. 6.7%- 6.85% can slightly be a broader range of trade. The bias is bullish for the 10Yr GoI to break 6.85% eventually and rise to 7% over the medium term.

The Dow Jones continues its upward momentum, maintaining a bullish outlook with a target of 44000. The DAX has climbed above 19500 but a sustained rise is needed to mitigate downside risks and aim for the projected target of 19800-20000. Nifty slipped below 24900 but closed above critical support near 24650; price action around current levels will be important for confirming the next directional move. Nikkei advanced past 39000, and the price behavior at this level will be crucial in assessing the prevailing trend. Shanghai broke below 3180 and fell to a low of 3152.82, before rising back towards 3200. Watch if it rises above 3200 or heads back towards 3100/3050.

The Dow (43239.05, +0.37%) has moved up further. Our bullish view is intact to see a rise to 44000. A break above 43450 can accelerate the rise.

DAX (19583.39, +0.77%) has risen back well. The uptrend is intact for a rise to 19800-20000. Support is in the 19200-19000 region.

Nifty (24,749.85, -0.89%) has a crucial support at 24650 which if broken can drag it down to 24500-24300. A strong bounce from around 24650 and a subsequent rise above 25000 will be needed to bring back the positive sentiment. The price action and closing today will be very important.

Nikkei (39058.27, +0.82%) has risen and is currently holding above 39000. A continued rally could extend towards 40,000 or higher. Conversely, a break below 39000 again would likely lead to a decline toward the 38000-support level. Stay out and watch price action around 39000.

Shanghai (3192.33, +0.74%) , after falling to a low of 3152.81, has climbed above 3180. An interim resistance at 3250 can be tested while the price trades above 3180.

Crude prices recovered slightly on strong US economic data and a fall in weekly EIA crude supplies. But the outlook remains weak to see a fall towards 71/70 on Brent and 68/67 on WTI. Gold has broken above 2700 and could head towards 2750-2770. Silver has also moved up and can test 33.0-33.5 soon. Copper could trade within 4.50-4.25 for the next few sessions, 4.25 being crucial near-term support. Natural Gas needs to rise immediately from current levels to move up towards 2.50/60 else can be bearish on a break below 2.35.

Brent ($ 74.68) tested a low of $ 73.42 and has bounced back from there after strong US economic data and a fall in weekly EIA crude supplies. While below $ 75, it can test $ 71/70 in the near term before a bounce back to $ 75-78 takes place.

WTI ($ 70.36) has also risen slightly but the outlook remains bearish towards $ 68/67 in the near term.

Gold (2722.10) has broken above 2700, and if sustained can head towards 2750-2770 in the next 1-2 sessions.

Silver (32.11) has moved up well as expected and could now head towards 32.5-33.0-33.5 in the near term. Afterwards, if 33.0-33.5 holds, Silver can fall back to 32.

Copper (4.3425) fell to 4.2915 as expected but has bounced back well from there. An immediate range of 4.40/50-4.30/25 can hold for the near term.

Natural Gas (2.3480) fell to a low of 2.3450 but has bounced back slightly from there. A sustained break trade below 2.35, if seen, can lead to a fall towards 2.2-2.1. To avoid this the price must rise immediately from current levels which can then take it towards 2.5-2.6 on the upside. Watch price action near current levels.

23:30 05:00 JP CPI
Expn 3.0 … Expected – … Previous 3.0

2:00 07:30 CN IIP (YoY)
Expn – … Expected 4.6 … Previous 4.5

2:00 07:30 CN Retail Sales
Expn – … Expected 2.5 … Previous 2.1

9:00 14:30 EU GDP
Expn – … Expected – … Previous 0.2%

12:30 18:00 US Housing Starts
Expn 1286K … Expected 1350K … Previous 1356K

DATA ON YESTERDAY:
—————
1:30 07:00 Australia Labour Force
Expn – … Expected 25.2K … Previous 42.6K …Actual 64.1K

9:00 14:30 EU CPI (YoY)
Expn 2.0% … Expected 1.8% … Previous 2.2% …Actual 1.7%

11:45 17:15 ECB Mtg
Expn 3.65% … Expected 3.40% … Previous 3.65% …Actual 3.40%

12:30 18:00 US Retail Sales (MoM)
Expn 0.1% … Expected 0.3% … Previous 0.1% …Actual 0.3%

12:30 18:00 US Philifed Index
Expn – … Expected 4.2 … Previous 1.7 …Actual 10.3

13:15 18:45 US Industrial Production
Expn 0.3 % … Expected -0.1% … Previous 0.8% …Actual -0.3%

13:15 18:45 US Capacity Utilization
Expn 78.0% … Expected 77.9% … Previous 78.0% …Actual 77.5%

13:00 01:30 US TICS (Net foreign purch of long-term Sec)
Expn – … Expected – … Previous 135.4