The Dollar Index tested 109.50 as expected and now if the rise continues further, can test the resistance coming around 110-111 region in the near term. Meanwhile Euro has slipped below 1.03 on weaker PMI and Dovish ECB outlook. If the fall extends, pair could be vulnerable to test 1.01-1.00 on the downside. EURINR and USDJPY can trade sideways between 89.5-88.5/88, 156-158 respectively for the near term. Pound and EURJPY has slipped below 1.24 and 162 and failure to rise back again can drag them lower to 1.22-1.20 and 160-158/57 in the coming sessions. Aussie looks stable above 0.62 but immediate upside could be capped at 0.6250-0.6300. USDCNY is closed today. USDINR can extend further towards 85.90-86.00 in the coming weeks. Watch out for the US Manufacturing ISM data release scheduled today.

Dollar Index (109.160) tested 109.533 as expected, on the Euro weakness post weaker PMI, before coming down. While the index sustains the ongoing rise, it has the scope to test the resistance coming at 110-111 on the upside in the near term. US Manufacturing ISM is scheduled today.

The EU PMI came out slightly lower than expected at 45.1 (45.2) and the rise in speculation of more rate cuts by ECB than FED led EURUSD (1.0271) to test 1.0223 on the downside. The crucial support at 1.03 has been broken and while the Euro trades below it, the outlook appears bearish towards 1.01-1.00 in the near term but we would wait for a confirmed break below 1.02.

EURINR (88.1426) also slipped below 88 to the low of 87.77 but has again risen past 88. It will have to decisively break below 88 to bring 87-86 into the picture. Until then, a broad range of 90-88 can hold for now.

Dollar-Yen (157.27) continues to trade higher within its narrow range of 156-158. A break past 158 can bring the target of 160 or even 162 back into the picture. Overall, downside is expected to be limited to 155-154. Watch price action closely around 158.

EURJPY (161.59) broke below 162, witnessed a low of 160.907 before recovering a bit from there. If the cross fails to see a rise past 162 again, then it would be vulnerable to test 160-158/57 on the downside in the near term. Watch price action closely around current levels.

USDCNY (7.2989) is closed today but looks bullish towards 7.35 while above support around 7.28-7.29.

Aussie (0.6212) looks stable above 0.62 for now. Still, the upside looks capped at 0.6250-0.6300. Any decisive break below 0.62 if seen can indicate medium-term bearishness for the pair with an initial target of 0.61-0.60. Only a sustained rise past 0.63 can negate the bearish view.

Pound (1.2391) as feared has slipped below 1.24. Now while below 1.25/24, the fall can get extended to 1.22 or even 1.20 in the near term. Only an immediate bounce back if seen from current levels, thereby rising past 1.24 again can negate the fall.

USDINR (85.7750) witnessed a dip yesterday but was limited to 85.6750 and it again rose sharply to the high of 85.7950. On the NDF it has observed the high of 85.80 and in onshore markets while the rise sustains, a test of 85.80/90 or even 86 can happen in the coming sessions. An immediate downside could be limited to 85.65/60 for now.

The US Treasury yields remain stable. The outlook is bullish to see more rise in the coming days. The German yields are coming close to their crucial resistance. They have to breach their resistance to go up further. Else they can fall back. We will have to wait and see. The 10Yr GoI is coming down inline with our expectation and has room to fall more.

The US 10Yr (4.56%) and 30Yr (4.78%) remains stable. While above 4.5%-4.45% (10Yr) and 4.7%-4.65% (30Yr), the outlook is bullish to see 4.8% (10Yr) and 5% (30Yr) on the upside.

The German 10Yr (2.37%) and the 30Yr (2.61%) yields have inched up slightly. We repeat that the yields have to breach the 2.4%-2.45% (10Yr) and 2.6%-2.65% (30Yr) resistance to go up to 2.6% (10Yr) and 2.8% (30Yr). Else they can fall back to 2.2% (10Yr) and 2.4% (30Yr). Wait and watch.

The 10Yr GoI (6.7891%, 06.79 GS 2034) can fall to 6.7% while below 6.8%. A strong rise above 6.84% is needed to negate this fall and take the yield up to 6.9% and higher.

The Dow Jones continues to remain bearish and could extend the fall towards 42000-41800. DAX, on the other hand, has risen above 20000. It needs to break above 20200 to turn further bullish else can fall back to 19500. Nifty surged above 24150 but a follow-through rise would be needed to take the index higher towards 24400, or maybe higher to 24800. Nikkei is closed today. Shanghai has breached the support of 3300 and trades near 3250. While below 300, it looks bearish towards 3200-3150.

The Dow (42392.27, -0.36%) has begun the New Year on a negative note. Bearish view is intact to see 42000-41800 on the downside.

DAX (20,024.66, 0.58%) is trying to move up. But resistance is around 20200 which has to be broken to turn bullish. While below 20200, the view will remain bearish to see 19600-19500 on the downside.

Nifty (24188.65, 1.88%) has risen sharply, breaking above 24000. While this sustains a further rise to 24500 is possible in the near-term. The danger of the fall to 23200-23000 has reduced now.

Nikkei (39894.32, -0.96%) will resume trading from tomorrow. Below 40,000, the index is expected to hold the range of 38,000- 40,000. A decisive break above 40,000 is necessary to invalidate this view. Alternatively, it could come down to 39000 before rising towards 41000.

Shanghai (3252.1284, -0.32%) has fallen below the support of 3300 and trades near 3250. While below 3300, it could come down to 3200-3150.

Crude prices have risen sharply due to signs of US economic strength. The prices can rise further towards 77-78 (Brent) and 74-75 (WTI) in the near term. Gold, Silver and Copper can rise towards 2700-2750, 30.5-31.0 and 4.10-4.15 in the upcoming sessions. Natural Gas looks bullish towards 3.8-4.0.

Signs of strong US economy has pushed Brent ($ 76.03) price higher towards 76.55 yesterday. A further rise towards 77-78 can be seen in the near term.

WTI ($ 73.27) has broken sharply above 72 contrary to our expectations and tested a high of 73.73 yesterday. While above 72 it can rise further towards 74-75 in the near term.

Gold ($ 2673.30) has broken above 2650 and surged to a high of 2674.20 yesterday as expected. While above 2650/2630 it can move further up towards 2700-2750 in the upcoming sessions.

Silver (29.98) rose to 30.04 in line with our expectations. A further rise towards 30.5-31.0 can take place in the near term while above 29.5.

Copper (4.033) is holding above 4.0 and while this level holds, a rise towards 4.10-4.15 looks likely in the near term.

Natural Gas (3.65) remains bullish towards 3.8-4.0 for the near term while above 3.5/3.4.

8:30 14:00 CH PMI
… Exp – … Expected 48.4 … Previous 48.5

14:00 19:30 US Manufacturing ISM
… Exp 47.4 … Expected 48.3 … Previous 48.4

DATA YESTERDAY:
————-
1:45 07:15 CN PMI
… Exp – … Expected 51.6 … Previous 51.5 …Actual 50.5

5:00 10:30 IN Manufacturing PMI
… Exp 55.5 … Expected 57.4 … Previous 56.5 …Actual 46.4

9:00 14:30 EU PMI
… Exp 2.3 … Expected 45.2 … Previous 45.2 …Actual 45.1

9:30 15:00 UK PMI
… Exp 48.6 … Expected 47.3 … Previous 47.3 …Actual 47

14:30 20:00 CA PMI
… Exp – … Expected 51.9 … Previous 52.0