Extreme volatility hit the markets as the BOJ intervened and a mix of US data releases yesterday, with the GDP coming out lower than expected and the PCE inflation having cooled in June. USDJPY plunged to 157.95 taking down the Dollar Index to 99.85. While both have seen a good recovery from those lows, an eventual and slow rise is still on the cards for the near term. Euro trades below immediate resistance at 1.1525 and could see a slow dip from here. EURJPY can rise back towards 186 while above 184 while USDCNY has broken below 6.75 for the first time and unless it bounces back immediately, we would open chances of testing 6.70 in the medium term. Aussie and Pound have risen but look short-lived and could soon dip in the medium term. USDINR is likely to open gap down today. Support at 95.25 is crucial to watch. Need to see if the RBI intervenes in the 95.25-95.00 region today.

Dollar Index (100.187) plunged on a sharp decline in the Dollar-Yen (160.66) on possible intervention from the BOJ ahead of the policy decision today. The Yen appreciated from 163.74 to 157.95, which dragged the Dollar Index down too from 101.07 to 99.85. The Dollar Index can test 99.50 before bouncing back towards 101 while USDJPY has tested crucial support at 158 above, which it can slowly start rising back towards 161-162 in the coming days.

EURUSD (1.1510) bounced sharply contrary to our expectations and trades near 1.15 currently. If the spot does not decline immediately from here towards 1.1450-1.14, we might have to allow for a test of 1.1550-1.16 on the upside soon. Note that 1.1525 is an immediate resistance and is likely to hold to push the spot back towards 1.1450/1.14 and lower eventually.

EURINR (109.9028) tested 110.33, breaking above our mentioned 110 yesterday. 110.35 seems to be an immediate resistance on the near-term charts which can hold and push the pair down towards 109.

EURJPY (184.93) peaked out at 187.50 itself to decline sharply to 182.112 yesterday. Thereafter, the pair has bounced back well to trade higher today. We may see that the pair eventually regains its trade zone of 186+ in the coming days. 183-183.50 is an important support zone for the very near term.

USDCNY (6.7483) has broken our expected target of 6.75 for the very first time. It can fall further towards 6.70 while it sustains below 6.75.

Aussie (0.7020) and Pound (1.3456) have risen well today on Dollar weakness, but could be short-lived. A rise in the Dollar Index from 99.50 can take the Aussie and Pound down towards 0.69 and 1.33/3250 again in the coming sessions.

USDINR (95.67) quotes 95.25 on the NDF. It is likely to open with a gap down today and could test support at 95.25. Whether the RBI will intervene to buy near 95.25 or let it fall further will have to be seen. Overall, 95.25-95.00 will be crucial to watch.

The US Treasury Yields have come down from their highs. Support is there to limit the downside. The broader view remains bullish. The yields have room to rise more. The German Yields sustain higher. The bullish view is intact. The yields can rise further from here. The 10Yr GoI has risen further. While this sustains, the yield can go further higher before resuming its overall downtrend.

The US 10Yr (4.65%) and 30Yr (5.20%) yields have dipped from their highs of 4.7% and 5.24% respectively. While above 4.6%, the upside is open to see 4.8% for the 10Yr. The 30Yr on the other hand has to get a strong follow-through rise from here to see an extended rise to 5.35%-5.4%.

The German 10Yr (3.15%) and 30Yr (3.66%) Yields sustain higher. The bullish view is intact. The yields can rise to 3.25% (10Yr) and 3.75% (30Yr).

The 10Yr GoI (6.8132%) has risen above 6.8% and can test 6.85% while this sustains. That will keep the upside open to see 6.9% before the broader downtrend resumes to target 6.7% and 6.6% happens.

Dow has rebounded sharply but remains vulnerable to a decline towards 51000-50000 while below 53000. DAX continues to strengthen and can test 26000, after which a break higher or a pullback towards 25000 will be crucial to watch. Nifty remains constructive above 24000 and can extend its rally towards 24400-24500. Nikkei is testing key resistance near 66000, and a sustained break above this level could open the way towards 67000-68000. Shanghai is likely to remain range-bound within the 3750-3900 range for some time.

Dow (52555, +0.33%) has bounced back sharply above 52000, contrary to our expectations. However, while below 53000, the possibility of a decline towards 51000 or even 50000 over the coming weeks remains intact.

DAX (25752.88, +0.19%) is moving higher in line with our expectations and can test 26000 in the near term. Thereafter, it remains to be seen whether the index breaks above this level and rises towards 27000 or pulls back towards 25000.

Nifty (24,250.20, +1.10%) rose to test a high of 24283 yesterday. While above 24000, the index can extend its rally towards 24400-24500 in the near term.

Nikkei (64550.12, +1.23%) has tested a high of 65550 so far. A sustained break above 66000 would negate our earlier mentioned view of a decline towards 60000 and trigger a further rise towards 67000-68000.

Shanghai (3832.42, +0.73%) tested a low of 3767 yesterday, in line with our expectations. The broad range of 3750-3900 could remain intact for some time.

Crude prices have fallen on hopes of a diplomatic resolution to the US-Iran conflict. Brent and WTI are likely to remain within the broad $ 80-$ 100 and $ 75-$ 95 ranges until clearer directional cues emerge. Gold can continue to trade within the $ 4000-$ 4200 range, while Silver is expected to remain range-bound between $ 55 and $ 65. Copper has strengthened and could rise further towards $ 6.55-$ 6.60 on a sustained break above $ 6.50. Natural Gas has recovered but remains vulnerable to a decline towards $ 2.65 in the near term.

Brent ($ 85.68) and WTI ($ 82.16) have corrected sharply on hopes of a diplomatic resolution to the US-Iran conflict. A broad range of $ 80-$ 100 for Brent and $ 75-$ 95 for WTI could hold for some time until further directional clarity emerges.

Gold ($ 4134.45) has risen and is likely to remain within the broad range of $ 4000-$ 4200 for some time.

Silver ($ 58.75) can continue to trade within the broad $ 55-$ 65 range for some time.

Copper ($ 6.49) has risen in line with our expectations and is testing the $ 6.50 level. A sustained break above this could take it further up towards $ 6.55-$ 6.60.

Natural Gas ($ 2.7670) has moved higher, but our view remains intact for a decline towards $ 2.65 in the near term.

23:30 05:00 JP Unemp
…Expected 2.5 % …Previous 2.5 %

1:30 07:00 AU PPI
…Expected 0.30 …Previous 0.40

3:00 08:30BOJ Meeting
…Expected 1.00 % …Previous 1.00 %

9:00 14:30 EU CPI Flash Estimate (YoY)
…Expected 2.9 % …Previous 2.8 %

12:30 18:00 CA GDP
…Expected 0.2 % …Previous 0.5%

DATA YESTERDAY:-
—————-
EU Unemp
…Expected 6.2 % …Previous 6.2 % Expn.6.3% …Actual 6.3%

EU Biz Climate
…Expected 96.0 …Previous 95.4 …Actual 96.9 Expn.96.0

EU GDP
…Expected 0.2 % …Previous -0.2 % …Actual 0.4 %

BOE Mtg
…Expected 3.75% …Previous 3.75 % …Actual3.75%

UK BOE Minutes
…Expected 2-0-7 …Previous 2-0-7 …Actual 3-0-6

US Personal Income
…Expected 0.3 % …Previous 0.7 % …Actual 0.2 %

US PCE
Expectation 0.3% …Previous 0.9 % …Actual 0.3 % …Expected 0.4 %

US Core PCE
Expn 0.3 % …Expected 0.1 % …Previous 0.3 % …Actual 0.1%

US GDP
Expn 2.3 % …Expected 2.1 % …Previous 2.1 % …Actual 1.5%