On Friday President Trump announced 100% tariffs on Chinese exports and export controls on critical software, in response to China’s rare earth export restrictions. The Dollar Index has inched lower but the targets of 100-101 are kept open while it trades above 98.50. Euro & EURINR have upside capped at 1.17 and 104.00-104.50 and can fall towards 1.15-1.14 & 102.50-102.00 respectively. EURJPY & USDJPY can target 178-180 and 154-155 in the near term. USDCNY continues to consolidate between 7.10-7.15 region. The Aussie and Pound faces immediate resistance at 0.66 and 1.34 respectively. USDINR can target 89.00-89.25 in the near term while it stays above 88.50.

Dollar Index (98.88) fell sharply on Friday to 98.81 after Trump announced tariffs on China. As long as it stays above 98.50, a test of 100–101 remains likely in the near term.

EURUSD (1.1623) have recovered a bit from the low of 1.1541. Still, the targets of 1.15-1.14 are kept open while the pair trades below 1.17.

EURINR (103.1038) has bounced from the support coming at 102.50 but even if the rise extends further, the upside can be limited to 104.00-104.50. A break below 102.50 will be needed to bring 102-101 into picture.

EURJPY (176.59) is attempting to rise back and the target of 180 can get achieved while the cross trades above 176.

Dollar-Yen (151.96) tested the low of 151.16 but has currently recovered well. While the rise sustains, a test to 153-154 can happen before getting peaked out.

USDCNY (7.1322) continues to consolidate between narrow range of 7.12-7.14 and a broad range of 7.10-7.15 region.

Aussie (0.6571) tested 0.6470 as anticipated. While the resistance near 0.66 holds, the pair can consolidate between 0.645-0.660 region for some time.

Pound (1.3350) faces immediate resistance at 1.34, below which the pair remains vulnerable to fall towards 1.32 or even lower.

USDINR (88.7320) had slipped sharply to the low of 88.50 on Friday before closing higher. The targets of 89.00-89.25 can get tested as long as the pair remains above 88.50.

The US Treasury yields declined sharply on Friday. The US announcing an additional 100% tariff on China dragged the yields lower. The outlook is negative. The yields have room to fall more from here. The German Yields have also come down. The yields have support which is likely to hold and trigger a bounce eventually going forward. The 10Yr GoI is inching up. The support is holding well, and the yield can rise more from here.

The US 10Yr (4.03%) and 30Yr (4.62%) Treasury yields have declined sharply on Friday. The yields are below 4.08% (10Yr) and 4.65% (30Yr). A fall to 3.9%-3.85% (10Yr) and 4.55%-4.5% (30Yr) looks possible now.

The German 10Yr (2.64%) and 30Yr (3.22%) yields have come down. Support is at 2.6% (10Yr) and 3.2% (30Yr) which is likely to hold. We expect the yields to bounce and rise back to 2.7% (10Yr) and 3.3% (30Yr) eventually.

The 10Yr GoI (6.5370%) has moved up further and can rise to 6.6%. A fall below 6.5% is needed to negate the rise and drag it down to 6.45%-6.4%.

The Dow has declined. But we may expect a rebound especially after Trump announced additional 100% tariffs on China. The Dax has fallen and can test 24000-23600 before attempting to rebound back towards 24500-25000. Nifty has risen well above 25280 but needs to sustain to test resistance at 25500 from where a rejection is possible. Shanghai also has similar resistance at 4000 and can see trade within 3800-4000 for the near term. The Nikkei, is headed towards the support region of 48000-47500 from where a bounce can be expected.

The Dow (45479.60, -0.19%) has broken our expected 45500 level mentioned last week. We may look for a rebound in the stock prices especially after the news of an additional 100% tariff on China announced by Trump. Failure to bounce from here immediately will open chances of a decline to 44000.

DAX (24241.46, -1.50%) has also declined sharply as expected. The index can test 24000-23600 again before attempting to rebound again in the medium term.

Nifty (25285.35 +0.41%) had risen last week, closing above 25280. Now the index may test resistance near 25500 which if holds can produce another decline within the 25500-24600 range. A decisive break above 25500 is needed for fresh rise in the medium term.

Nikkei (48088.88, -1.01%) has dipped back towards 48000. There can be some support near 48000-47500 region from where the index can again bounce back in the medium term. Failure to hold above 47500 will make it vulnerable to test 46000.

Shanghai (3858.14 -1%) has declined after the fresh trade tensions emerged post announcement of additional 100/% tariffs on China. If the index breaks below 3800, it could be vulnerable to decline further towards 3700 or lower.

Crude prices have extended their declines last week amid renewed US-China trade tensions, though the prices could see short-term corrective bounces towards $ 64-65 (Brent) and $ 61-62 (WTI) respectively before resuming their broader downtrend. Gold and Silver have rebounded strongly from recent lows, with Gold likely heading towards $ 4100-4200 and Silver towards $ 49.50-50.50. Copper has recovered above $ 5.00 after testing $ 4.82, suggesting limited downside with potential to rise towards $ 5.15-5.20, while Natural Gas remains weak and could dip further towards $ 3.10-3.00.

Brent ($ 63.73) plunged sharply to a low of $ 62 on Friday after stocks sold off due to renewed trade tensions with China, as President Trump threatened a “massive increase” in tariffs on Chinese goods, citing recent “hostile” export controls on rare-earth minerals. A corrective rise towards $ 64-65 can be seen in the near term before the broader bearish trend resumes towards $ 62-60.

WTI ($ 59.93) fell sharply to a low of $ 58.22 yesterday, as expected. Immediate support is seen near $ 58, and while this level holds, a bounce back towards $ 61-62 is possible before the price resumes its decline towards $ 56-54.

Gold ($ 4069.80) has rebounded from Friday’s low of $ 3961.20 and is currently trading above $ 4000. It is likely to rise further towards $ 4100-4200 in the near term.

Silver ($ 48.85) has recovered from Friday’s low of $ 46.70 and is currently trading above $ 48.50, having tested $ 49.42 so far. A further rise towards $ 49.50-50.50 looks likely in the near term.

Copper ($ 5.0710) fell sharply below $ 5.00 to test a low of $ 4.8220 but has since bounced back above $ 5.00. The downside appears limited to $ 4.80, and while above this level, a gradual rise towards $ 5.15-5.20 can be expected in the near term.

Natural Gas ($ 3.1340) has declined in line with expectations and could fall further towards $ 3.10-3.00 in the near term.

GMT 10:30 IST 16:00 IN CPI
… 2.28 …Expectations 1.70 …Previous 2.07

DATA LAST FRIDAY
===============

NO MAJOR DATA RELEASED LAST FRIDAY