The Dollar Index can bounce back towards 107-108 in the near term while above 105.50. Euro and EURINR have interim resistances at 1.06 and 89.50 and higher at 1.07 and 90 respectively which suggests limited upside for both the pairs. Aussie and Pound need to see a rise past 0.6550 and 1.28 to become further bullish in the coming sessions. USDCNY and USDJPY has been coming off but if the Dollar Index rises back, then both pairs may rise back towards 7.25 and 152-154 respectively. EURJPY is coming off in line with our view and can soon test 158-156, while below 164/162. USDINR can see a gradual rise towards 84.60 in the upcoming weeks with the downside limited to 84.30.
Dollar Index (106.225) tested the low of 105.615 before closing above it. While the support around 105.50 holds, it may rise towards 107-108 in the coming sessions. Only if the index slips strongly below 105, it can make the outlook further bearish.
EURUSD (1.0527) and EURINR (89.0667) rose to the high of 1.0597 and 89.5350 respectively before both the pairs started coming off. While the interim resistances around 1.06 and 89.50 and higher resistances at 1.07 and 90 respectively holds, we are not very bullish on the Euro. Our overall view remains bearish towards 1.04 and 88 for now. Watch price action closely around current levels.
Dollar-Yen (150.54) observed a low of 149.46 on Friday. The Dollar Index has support around 105.50 above which the index can rise and take USDJPY towards 152 or higher. Only if the Dollar Index slips below 105.50, it can drag USDJPY further to 148-145 in the near term.
EURJPY (158.46) is gradually falling in line with our bearish view. It can soon test our mentioned targets of 158-156 on the downside. Thereafter, whether the support holds and the cross bounces back again or extends the fall further will have to be seen.
USDCNY (7.2418) tested the low of 7.2271 before closing higher on Friday. A further dip to 7.22-7.20 is possible but looks a bit uncertain. If the Dollar Index turns bearish below 105.50 then a fall to 7.18 can happen, else it could limit its fall to 7.23-7.22 and can start rising higher.
Aussie (0.6495) needs to rise past its channel resistance near 0.655 to become further bullish towards 0.67. Else, while below 0.655, it can either remain ranged within 0.640-0.655 region or can extend the fall towards 0.635.
Pound (1.2687) tested our target of 1.2750 before declining a bit from there. Now, a strong break past 1.28 will be needed to make the outlook bullish further. Else while below it, a broad range of 1.2750/70-1.2450 can hold for a while.
USDINR (84.4875) remained ranged within a narrow region of 84.840-84.50 over the last couple of sessions. This suggests that even if a dip happens, the downside could be limited. For the upcoming weeks, we believe that USDINR can gradually rise towards 84.60 and limit the downside to 84.30.
The US Treasury yields have bounced back from lows seen on Friday. Failure to sustain the rise could lead to a fall from here. Outlook is bearish. The German yields continue to fall and are keeping intact our bearish view. The yields can come down further. The 10Yr GoI has declined, breaking the range on the downside. This is contrary to our expectation to see a bullish breakout. The near-term view has turned negative, and the yield can fall more from here. Our earlier bullish view has been negated for a while now and the rise can get delayed.
The US 10Yr (4.219%) and 30Yr (4.399%) had declined sharply below 4.2% and 4.4% respectively but have recovered a bit. Failure to sustain above 4.20% and 4.4% in the next few sessions can drag them to 4% (10Yr) and 4.2% (30Yr) eventually.
The German 10Yr (2.083%) and the 30Yr (2.318%) yields have come down further. The bearish view is intact to see 2% (10Yr) and 2.2% (30Yr) on the downside.
The 10Yr GoI (6.7745%) has declined below 6.8% contrary to our expectation. A fall to 6.7%-6.65% looks likely. The expected rise to 6.9%-7% is not happening now.
The Dow Jones has come off from 45071.29 keeping our bearish outlook targeting a decline toward 43000 intact. A sustained move above 45000 would negate this view. DAX has successfully breached the 19600 mark as expected. The view is bullish towards 20000–20300. The Nifty had managed to close above 24100 but could open with a gap down on the back of a weak GDP data release on Friday. A decisive break above 24400 is required to invalidate the downside risks. Otherwise, a retest of 23800 looks possible. The Nikkei saw a low of 37958.55 before recovering to current levels. To sustain its upward momentum, the index needs to overcome interim resistance at 38500, which could pave the way for a rise toward 39500. Shanghai remains firm above 3300 and is trading near 3350. The index could extend its gains to test the resistance level of 3400.
The Dow (44910.65, +0.42%) has come-off from the high of 45071.29. While below 45000 we retain our bearish view of seeing a fall to 43000 first and 42000-41000 eventually. A sustained rise above 45000 will prove this bearish view wrong.
DAX (19626.45, +1.03%) has risen above 19600 as expected and is showing momentum. Our bullish view of seeing a rise to 20000 remains intact.
Nifty (24131.10, 0.91%) can open with a gap-down on the back of the weak GDP data release. But, need to see if the fall is extending beyond 23800 or not. 23800-24400 can be the broad trading range for now. We will have to wait and watch.
Nikkei (38219.96, +0.03%) declined to a low of 37958.55 before reversing and stabilizing above 38200. To maintain its upward trajectory, the index must break through the interim resistance at 38500, targeting a rise to 39500. Support is seen at 37800.
Shanghai (3352.4701, +0.78%) has risen well above 3300 and trades near 3350. The index has the potential to extend its gains further toward the resistance level at 3400.
Crude prices trade lower and can remain in a narrow range of 73-71 (Brent) and 70-67 (WTI) respectively for the near term. Gold is currently in a wait and watch scenario as a break above 2700 is needed to see a rise towards 2750-2800 or else can fall back to 2600. Silver can rise towards 32 in the near term. Copper can remain narrowly ranged between 4.2-4.05 for some time. Natural Gas has opened lower but the outlook remains bullish towards 3.6-3.8.
Brent ($ 72.57) remains weaker below 73 due to weak chinese energy demand. A narrow range of 73-71 can hold for the near term.
WTI ($ 68.19) holds below 70 and can trade within 70-67 in the near term.
Gold ($ 2658.60) holds below 2700 but a sustained break above 2700 is needed to see a rise towards 2750-2800. Else it can fall back to immediate support at 2600. It is a wait and watch scenario for now.
Silver (30.78) rose to 31.48 on Friday in line with our expectation. It can rise towards 32 in the upcoming sessions.
Copper (4.1205) rose to 4.1650 on Friday. A range of 4.2-4.05 can hold for some time.
Natural Gas (3.1920) surged to 3.48 on Friday due to colder US forecasts. Today it has opened lower with a gap down at 3.22. Immediate support is near 3.15 and while it holds, a bounce back towards 3.6-3.8 looks likely in the upcoming weeks.
0:30 06:00 JP PMI
… Exp 49.4 … Expected 49.0 … Previous 49.2
1:45 07:15 CN PMI
… Exp 49.2 … Expected 50.6 … Previous 50.3
5:00 10:30 IN Manufacturing PMI
… Exp 57.4 … Expected 57.3 … Previous 57.5
8:30 14:00 CH PMI
… Exp 50.7 … Expected 49.6 … Previous 49.9
9:00 14:30 EU PMI
… Exp – … Expected – … Previous 46.0
9:30 15:00 UK PMI
… Exp 54.3 … Expected 48.6 … Previous 49.9
10:00 15:30 EU Unemp
… Exp 6.4% … Expected 6.3% … Previous 6.3%
14:00 19:30 US Manufacturing ISM
… Exp 46.0 … Expected 47.7 … Previous 46.5
14:30 20:00 CA PMI
… Exp – … Expected 50.8 … Previous 51.1
DATA FRIDAY:-
—————
3:30 05:00 JP Unemp
… Exp 2.5% … Expected 2.5% … Previous 2.4% …Actual 2.5%
8:00 13:30 CH GDP
… Exp – … Expected 0.4% … Previous 0.6% …Actual 0.4%
10:00 15:30 EU CPI Flash Estimate (YoY)
… Exp 2.0% … Expected 2.3% … Previous 2.0% …Actual 2.3%
12:00 17:30 IN GDP
… Exp 7.7% … Expected 6.5% … Previous 6.7% …Actual 5.4%
13:30 19:00 CA GDP
… Exp – … Expected 0.3% … Previous 0.0% …Actual 0.1%