The FOMC is scheduled today. While the 25-bps rate cut is priced in by the markets, attention will turn to Chair Powell’s remarks for signals on future easing.The Dollar Index can test the support near 96 before halting. The Euro and EURINR can rise towards 1.19-1.20 and 105 or higher in the near term. EURJPY and USDJPY can hold the immediate ranges of 172-174 and 149-146 respectively in the near term. USDCNY can test 7.10 soon. The Aussie and Pound need to see a sustained rise above 0.67 and 1.3650 to extend the rise towards 0.68 and 1.38 respectively. USDINR is trading below 88 on the NDF. Still, while above 87.75, we retain our view of the pair rebounding towards 88 and higher levels in the coming weeks.

Dollar Index (96.71) fell sharply to 96.58 ahead of the widely expected 25-bps Fed rate cut; support at 96 may be tested soon, with a rebound towards 98 likely unless a decisive break below 96 occurs.

EURUSD (1.1854) has surged well above 1.18 and if sustained, can test 1.19-1.20 in the near term before halting.

EURINR (104.2038) rose past 104 to the high of 104.50 so far. While above 103, the ongoing rise can test 105 or higher levels in the coming sessions.

EURJPY (173.72) is trading near the upper end of its 172-174 range. A confirmed break past 174 can open the doors for 176-178 in the medium term. Failure to do so can keep the range intact.

Dollar-Yen (146.53) tested the low of 146.21 on Dollar weakness. Still, while the support at 146 holds, the range of 146-149 can remain intact for a while.

USDCNY (7.1081) is headed towards the support coming at 7.10 which can be tested in the near term before rebounding later.

Aussie (0.6676) is nearing the immediate resistance coming at 0.67 which can cap the immediate upside. Only a sustained break above 0.67 would open the path toward 0.68 and higher levels, otherwise a pullback to the 0.660–0.655 zone is likely.

Pound (1.3643) tested the high of 1.3671 before cooling down. Note, the pair will have to hold above 1.3650 to head towards 1.37-1.38, else the fall to 1.35/34 looks possible. Watch price action closely.

USDINR (87.8530) Closed above 88 but the NDF is near 87.85; a lower onshore open is possible, yet as long as above 87.85, a rebound towards 88 and higher remains likely in the coming weeks.

The US Treasury yields remain lower and stable. Looks like the market is waiting to see the Fed meeting outcome tonight. A 25-basis point rate cut is largely factored in the market already. It will be important to see the economic projections which will give an idea on the future policy path. For now, we prefer the yields to fall either from here itself or after a short-lived bounce. The German yields are also stable. They have room to fall more from here before resuming their broader uptrend. The 10Yr GoI remains mixed and unclear within its sideways range.

The US 10Yr (4.03%) and 30Yr (4.65%) Treasury yields remain lower and stable. Market could be waiting for the Fed meeting outcome tonight. For now we retain our view of the 10Yr falling to 3.9% (10Yr) either from here itself or after a short-lived rise to 4.1% or 4.2%. The 30Yr can fall to 4.5% on a break below 4.65%.

The German 10Yr (2.69%) and 30Yr (3.27%) yields remain stable. They can fall to 2.55% (10Yr) and 3.2% (30Yr) first and then resume their broader uptrend. Resistance is now at 2.75% (10Yr) and 3.35% (30Yr).

The 10Yr GoI (6.4925%) remains stable and higher within the 6.45%-6.55% (narrow) range. The immediate outlook is unclear. 6.4%-6.6% can be the broader trading range.

The Dow has pulled back ahead of the FOMC policy meeting today. But while above 45500-45000, the view is likely to be bullish towards 47000. The DAX has some scope to test 23000 before bouncing back within the range of 23000-24500. Nifty looks bullish towards 25500 while Nikkei is positive towards 45000-45500. Shanghai, on the other hand, is trading weak and can test 3830-3800 before rebounding towards 3900-4000 eventually.

The Dow (45757.90, -0.27%) has pulled back ahead of the FOMC policy meeting due today. Strong US retail sales data was seen yesterday. The overall view is bullish towards 47000 while above 45500-45000.

DAX (23329.24, -1.77%) remains stable within the 23000-24500 range, keeping alive the chances of a dip to 23000.

Nifty (25239.10, +0.68%) has risen in line with our expectations and is headed towards 25500.

Nikkei (44977.66, +0.17%) continues to rise towards 45000-45500 in line with our bullish expectations.  

Shanghai (3858.98, -0.075%) has dipped a bit today also and could have scope to test 3830-3800 before a bounce back to 3900-4000 is seen eventually.

Crude prices have moved higher with Brent rising above $ 68 on supply concerns from Russian export disruptions and WTI breaking above $ 64, both now looking poised for further gains towards $ 69–70 and $ 65–66 respectively. Gold stays bullish with scope to rise towards $ 3,750–$ 3,800, while Silver needs to hold above $ 43 to extend its uptrend, else risks slipping towards $ 42–41. Copper remains weak and could fall further towards $ 4.60–$ 4.55. Natural Gas faces resistance near $ 3.20, keeping it vulnerable to a decline towards $ 3.00–$ 2.80.

Brent ($ 68.41) has risen above $ 68, contrary to our expectations, due to concerns over a decline in Russian oil exports as Ukraine intensifies drone attacks on Russian refineries. A further rise towards $ 69–70 can be seen in the near term.

WTI ($ 64.46) has broken above $ 64, contrary to our expectations, and can now rise further towards $ 65–66 in the near term.

Gold ($ 3,718.20) remains bullish and is expected to rise towards $ 3,750–$ 3,800 in the coming weeks.

Silver ($ 42.42) has fallen back, contrary to our expectations. It needs to rise back above $ 43 to maintain its bullish momentum; otherwise, it can decline towards $ 42–41 on the downside.

Copper ($ 4.6565) has fallen in line with our expectations and could decline further towards $ 4.60–$ 4.55 in the near term.

Natural Gas ($ 3.1130) has risen slightly, but while resistance near $ 3.20 holds, the price can decline towards $ 3.00–$ 2.80 in the near term.

GMT 6:00 IST 11:30 UK CPI Y/Y
3.8 …Expectations 3.8 …Previous 3.9

GMT 9:00 IST 14:30 EU CPI (YoY)
2.5 …Expectations 2.1 …Previous 2.1

GMT 12:30 IST 18:00 US Housing Starts
1304 …Expectations 1360 …Previous 1428

GMT 14:00 IST 19:30 BOC Meeting
…Expectations 2.50 …Previous 2.75

GMT 18:00 IST 23:30 US FOMC Meeting
…Expectations <4.25 ...Previous <4.50 DATA YESTERDAY
===============

GMT 6:00 IST 11:30 UK Unemp
4.7 …Expectations 4.7 …Previous 4.7 …Actual 4.7

GMT 9:00 IST 14:30 EU Ind Prodn (MoM)
0.1 …Expectations 0.3 …Previous -0.6 …Actual 0.3

GMT 12:30 IST 18:00 US Retail Sales (MoM)
-0.1 …Expectations 0.2 …Previous 0.7 …Actual 0.6

GMT 12:30 IST 18:00 CA Inflation Y/Y
…Previous 1.7 …Actual 2.5

GMT 13:15 IST 18:45 US Industrial Production
0.0 …Expectations -0.1 …Previous -0.1 …Actual 0.1

GMT 13:15 IST 18:45 US Capacity Utilization
77.5 …Expectations 77.4 …Previous 77.5 …Actual 77.4