The Dollar Index has risen well and if sustained, can rise back towards 107-108. Euro is unable to see a strong break past 1.06 but we have a bullish bias above 1.0550-1.0500. A break past 1.0650 can take it higher to 1.0750 eventually. Since we are bullish on the Dollar Index and the Euro at the same time, one of the views will go wrong to give directional clarity. EURINR can remain ranged within 88-90 for now. Aussie has risen past 0.64 again but a break past 0.6450-0.65 will be needed to make the outlook further bullish. Until then, a fall to 0.6350-0.6300 cannot be ruled out. The pound needs to hold above 1.27 and rise past 1.28 to head towards 1.28-1.30, else can continue to fall within its range of 1.2770-1.2450. USDCNY has slipped below 7.25 as the markets took the China’s loose monetary policy news positively. If the fall continues, it can get extended to 7.22-7.20 in the near term. USDJPY can attempt to rise towards 152-154. EURJPY remains bullish towards 162-163, while above 156. USDINR on the NDF rose sharply to the high of 84.8670 as Sanjay Malhotra has been appointed as the new RBI governor, but the RBI might be active today to protect Rupee depreciation. For now a range of 84.85-84.65 is projected to hold.

Dollar Index (106.158) has bounced well from the support around 105.50. If the rise sustains, it can get extended to 107-108 in the near term. The index will have to decisively break below 105.50 to turn further bearish.

EURUSD (1.0554) is unable to see a strong break past 1.06. But while the support around 1.0550-0500 holds, we retain our bullish bias for the near term. Although both the Dollar Index and the Euro look bullish above 105.50 and 1.05 respectively (which is contradictory), we might have to wait for the view to turn wrong on one of them to get further directional clarity.

EURINR (89.5341) continues to remain volatile within its range of 88-90 which is likely to persist in the near term.

Dollar-Yen (151.17) has risen well above the 150 level and can get extended to 152-154 in the coming sessions. Bearishness will strike in on a decisive break below 150. Else, its old range of 150-155 can hold for some time.

EURJPY (159.55) is rising in line with our bullish view. Overall, it remains bullish towards 162-163, while the cross trades above the support at 156-157.

USDCNY (7.2467) started coming off sharply from the high of 7.2802 itself contrary to our view of seeing a rise towards 7.30/35. Markets seem to have reacted positively to indications that China might loosen its monetary policy. Outlook appears a bit uncertain for the time being but if the fall continues further, it can test 7.22-7.20 on the downside.

Aussie (0.6419) witnessed a low of 0.6379 before rising past 0.64, the reason being the anticipated shift in China’s policy which is likely to bolster Australia’s exports to China. Still, a rise past 0.645-0.650 will be needed to make the outlook bullish on AUDUSD. Until then, the expected fall to the next immediate support around 0.6350-0.6300 cannot be fully ruled out.

Pound (1.2742) needs to see a strong break past 1.28 to bring 1.30 back into the picture. Else, a break below 1.27, if seen, can drag it further within its earlier range of 1.2750/70-1.2450.

USDINR (84.7940) after closing at 84.7350 in the onshore markets, rose sharply to the high of 84.8670 on the NDF before coming down to 84.7940 now. The RBI might be active today to sell Dollars and protect the Rupee from depreciating significantly. For now, we expect a range of 84.85-84.65 to hold on the onshore market. Watch out for volatility today.

The US Treasury yields have risen back. But resistances are ahead which will have to be broken to gain momentum and rise further. Else the yields can still fall more to test their support and then possibly rise back again. The US CPI data release tomorrow will be important to watch. The German yields are turning around from well above their support. The bias is bullish for the yields to rise either from here itself or after testing their support. The 10Yr GoI has come down. A strong rise above the immediate resistance is needed to go further higher. Else it can fall in the near-term and then rise back.

The US 10Yr (4.20%) and 30Yr (4.38%) have risen back well. But a sustained rise above 4.25% (10Yr) and 4.45% (30Yr) may be needed to negate the fall to 4% (10Yr) and 4.2% (30Yr). Only then the rise to 4.4%-4.5% (10Yr) and 4.65%-4.7% (30Yr) can happen straight away from here.

The German 10Yr (2.12%) and the 30Yr (2.34%) yields seem to be rising back well ahead of their support at 2% (10Yr) and 2.2% (30Yr). A rise to 2.3% (10Yr) and 2.5% (30Yr) is likely to be seen either from here itself or after a test of 2% (10Yr) and 2.2% (30Yr).

The 10Yr GoI (6.7547%) has come down. As mentioned yesterday, a rise above 6.8% is needed to go up to 6.85%-6.9%. Else it can fall back to 6.7%-6.65% which is what seems to be happening now.

Dow Jones looks bearish towards 43000 while below 44500. DAX faced rejection at 20461.85 but while above 20200, it could still rise to 20500-20700. Thereafter a deeper correction towards 20000 could be possible eventually. Nifty is likely to rise while above 24400-24500. Nikkei tested the resistance of 39500 and closed just below it. A rise past 39500 would take the index higher towards 40000-42000. Shanghai has risen above 3400 which if sustained could extend the rise towards 3500 else could bring it down to 3350. Watch price action near 3400.

The Dow (44401.93, -0.54%) has declined below 44500 as expected. That keeps intact our bearish view of seeing a fall to 43000 first and then to 42000-41000 eventually.

DAX (20345.96, -0.19%) has come-off slightly. Support is at 20200 while above which there is room to see 20500-20700 or even 21000. But need to be cautious as a strong correction to 20000 and lower is possible after the rise to 20500-20700.

Nifty (24619, -0.24%) may test 24500 and then possibly rise back again. A decisive break above 24700 will clear the way for the rise to 25000. The outlook remains bullish while above 24400.

Nikkei (39216, +0.02%) has closed below 39500. A decisive rise past 39500 could push the index higher towards 41000–42000. Alternatively, a break below 39000 could extend its decline towards 38500-38000.

Shanghai (3461.6562, +1.74%) closed above the critical level of 3400. As this, a further rise toward 3500 is probable. However, failure to hold above 3400 could lead the index to retest the support at 3350.

Crude prices have risen slightly but the near term remains narrowly ranged between 73-71 (Brent) and 69-67 (WTI). Gold, Silver and Copper have broken above their immediate resistance levels. Gold needs a sustained rise above 2700 to see higher levels of 2750-2770, whereas Silver and Copper look bullish towards 33.5-34.0 and 4.35-4.40 respectively in the near term. Natural Gas remains bullish towards 3.4-3.6.

Brent ($ 71.96) tested a high of 72.65 as China vows to increase the economic stimulus. A range of 73-71 is expected to hold for the near term until a breakout takes place.

WTI ($ 68.18) rose slightly to 68.88 yesterday. A sustained break above 69 is needed to see a rise towards 71-73, else it can trade between 69-67 for a few more sessions.

Gold ($ 2691.20) has risen slightly above the immediate resistance at 2680 but holds below 2700. A sustained break above 2700 is needed to take it higher towards 2750-2770 in the upcoming weeks. Else while below 2700, a fall back to 2650-2600 cannot be negated.

Silver (32.59) broke above 32 and surged to a high of 32.95 yesterday. A further rise towards 33.5-34.0 looks likely in the near term.

Copper (4.2635) has broken the immediate resistance at 4.2 and tested a high of 4.2960 yesterday. While above 4.2 it can rise towards 4.35-4.40 in the near term.

Natural Gas (3.1670) rose sharply to 3.37 after the below-normal US temperature forecast but has fallen sharply from there to close below 3.2. As long as it holds above 3.1 the view remains intact to see a rise towards 3.4-3.6.

3:30 09:00 RBA Meeting
… Exp – … Expected 4.35% … Previous 4.35%

DATA ON YESTERDAY:-
—————
23:50 05:20 JP GDP
… Exp – … Expected 0.3% … Previous 0.2% …Actual 0.3%

1:30 07:00 CN CPI (YoY)
… Exp – … Expected 0.4 … Previous 0.3 …Actual 0.2

1:30 07:00 CN PPI
… Exp – … Expected -2.8 … Previous -2.9 …Actual -2.5