The Higher US NFP and lower US Unemployment data on Friday led to significant strength in the Dollar. As a result, the Dollar Index rose to the high of 109.966 and has a scope to test 111 on the upside before getting topped out. The Euro on the other hand slipped below 1.03 and can fall further towards 1.02-1.01 in the near term. EURINR needs to see a decisive break on either side of its range of 90-88 for further directional clarity. USDJPY is back within its earlier range of 158-156. AUDUSD, Pound and EURJPY appear bearish towards 0.61-0.60, 1.20 and 160 respectively in the near term. USDCNY can gradually head towards 7.35. USDINR has moved in line with our bullish view. For the current week, we expect the rise to extend towards 86.25 and the pair to oscillate within 85.80-86.25 region keeping the current upside momentum intact. Watch out for the IN-CPI data release scheduled today.

Higher than expected US NFP and lower US Unemployment at 256k(150k) and 4.1% (4.2%) respectively led the Dollar Index (109.64) to move sharply to 109.966 and EURUSD (1.0244) to test 1.02128 on the downside on Friday. The Index has further room to test 111 on the upside before getting peaked out. If so, the Euro can fall towards 1.01 in the near term before attempting to rise back.

While EURUSD has slipped below 1.03 again, EURINR (88.1955) is holding well above 88. Immediate upside is capped at 89. A decisive break on either side of its broad range of 90-88 is needed for further directional clarity.

Dollar-Yen (157.55) is back within its earlier range of 158-156, despite the Dollar strength. We are uncertain at the moment on whether the BOJ is preventing Yen from depreciating past 158 or not. For now, the downside can be limited to 156-155 and a sustained rise past 158 can take it higher to 160-162 in the coming sessions.

EURJPY (161.40) is coming off as expected and can soon test 160 on the downside. Thereafter, whether the fall halts at 160 or extends further to 157-156 will have to be seen. Only a rise past 164-165 can negate the expected fall and take it higher to 167 or even 170 in the medium term. Else, the view remains bearish for now.

USDCNY (7.3307) continues to trade flat since the last couple of sessions, thereby delaying our targets. For now, we retain our upside target of 7.35. Thereafter, an extended rise to 7.40 can happen but needs confirmation above 7.35. Overall, the view is bullish for now.

Aussie (0.6157) and Pound (1.2186) witnessed a low of 0.6139 and 1.2190 respectively on Friday in line with our bearish view. Further, if the fall continues, it can extend to 0.61-0.60 and 1.20 in the near term. Overall, the view remains bearish below 0.6250-0.6300 and 1.24/26 respectively.

USDINR (85.97) witnessed a high of 85.9750 in line with our view of testing 86. The overall trend for the pair looks bullish. For the current week, a high of 86.25 can be tested and is anticipated to oscillate within 85.80-86.25 region. On the NDF, the pair has tested 86.15/16 and currently quotes 86.0850 in line with our bullish view. It is to be seen if the pair opens with a gap up above 86 today on the onshore or opens below 86 to gradually move higher during the week.

The US Treasury yields continue to sustain higher. Key resistance is ahead which has to be broken to move further higher. Else a corrective fall is possible before the overall uptrend resumes. The US CPI data release tomorrow will be important to watch. If the data shows an uptick in inflation, then that can aid the yields to go higher. The German yields have risen just above their immediate resistance. A strong follow-through rise from here can take them further higher. The 10Yr GoI has risen sharply, breaking above its resistance. The outlook has turned bullish. The yield can rise more. The fall that we have been expecting has been negated.

The US 10Yr (4.77%) and 30Yr (4.95%) yields remain higher and stable. 4.8% (10Yr) and 5% (30Yr) are key immediate resistance which have to be broken to see an extended rise to 5% (10Yr) and 5.2% (30Yr) straightaway. Else a corrective fall to 4.6% (10Yr), 4.8% (30Yr) can happen first before the up move resumes.

The German 10Yr (2.61%) and the 30Yr (2.81%) yields have moved just above 2.6% (10Yr) and 2.8% (30Yr). A strong follow-through rise from here can take them up to 2.8% (10Yr) and 3% (30Yr). We will have to wait and see.

The 10Yr GoI (6.85%) has surged above 6.8%. That negated the fall to 6.7%-6.65% that we have been expecting. The yield can now rise to 6.9% while it sustains above 6.8%.

The Dow Jones has fallen below 42000 and is expected to test the support of 41800. Failure to hold the support would drag the index lower to 41500-41300, and if the support holds, we might see a rise towards 42300-42500. DAX lacks the strength to move higher and could come down to 19800. Nifty has remained below 23500 and could come down to 23000-22500. Nikkei is closed today. Shanghai has fallen below 3200 and is holding the support of 3150 as of now. While the support holds, it could rise towards 3250.

The Dow (41938.45, -1.63%) tumbled on Friday and has come into the 42000-41800 region much faster than expected. Failure to sustain above 41800 can drag it down to 41500-41300. While above 41800 holds, a corrective rise to 42300-42500 is a possibility.

DAX (20214.79, -0.50%) seems to be struggling to get a strong follow-through rise. It can fall to 20000-19800 again. As such the expected rise to 20700 may get delayed.

Nifty (23431.50, -0.40%) has declined below 23500 as expected. The outlook is weak now to see 23000. From a long-term picture, 23000-22500 is a strong support from where the Nifty can see a reversal.

Nikkei (39190.18.90, -1.05%) is close today. Within its broader range of 38000-40000, a break below 39000 could lead to a drop toward 38000.

Shanghai (3167.1272, -0.4%) is holding the support of 3150. Going ahead, as long as this support holds, it could witness a rise towards 3250.

Crude prices remain bullish towards 82-84 (Brent) and 80-82 (WTI). Gold and Silver have fallen and while the respective support levels hold a range of 2650-2730 and 30-32 is expected to hold for sometime. Copper can rally higher towards 4.4. Natural Gas has plunged back to its immediate support and while the support holds, a rise towards 4.2-4.4 looks likely for the near term.

Brent ($ 80.78) and WTI ($ 78.67) have moved further up towards 81.68 and 79.27 respectively. While above 80 and 78 the view remains intact to see a rise towards 82-84 and 80-82 in the near term.

Gold ($ 2686.10) has taken a reversal from its immediate resistance as anticipated. A further fall towards its immediate support at 2650 looks likely for the near term. Thereafter, while the support holds a range of 2650-2730 can hold for a while.

Silver (30.33) fell to 30.21 in line with our expectations. It tested the 21-Day moving average support near 30 and while it holds a range of 30-32 can hold for some time.

Copper (4.3530) has risen as anticipated. A further rise towards 4.4 can be seen in the upcoming sessions.

Natural Gas (3.9520) has reversed back sharply from a high of 4.37 to close at 3.93 yesterday contrary to our expectations. Immediate support is near 3.8-3.6 above which, it can bounce back towards 4.2-4.4 in the coming sessions.

6:30 12:00 IN WPI
… Exp 2.46% … Expected 2.30% … Previous 1.89%

13:30 19:00 US PPI
… Exp 0.1% … Expected 0.4% … Previous 0.4%

13:30 19:00 US Core PPI
… Exp 0.3 … Expected 0.2 … Previous 0.2

DATA YESTERDAY:
————-
12:00 17:30 IN CPI
… Exp 5.40 … Expected 5.30 … Previous 5.48 … Actual 5.22