The Dollar index and Euro remains ranged while the USDJPY can rise slowly towards 159 and EURJPY can test 178. EURINR could have limited downside and could soon bounce back in the coming sessions, while USDCNY could trade sideways for sometime while above 6.69. USDINR is likely to open with a gap down today as the NDF quotes 96.14 just now. It is to be seen if it can trigger a sustained decline below 96 in the medium term. This is after the RBI came in with measures to curb dollar demand and ease pressure on the USDINR. The measures are: a. A special dollar window for Indian Oil, BPCL and HPCL, to meet daily dollar requirements b. Reduction of underlying exposure threshold of $ 100mln to $ 5mln for rupee derivative transactions c. Restriction on rebooking of cancelled rupee-linked derivative contracts and d. Bank requirement to maintain a 20% reserve against specified large forex derivative transactions and increase the cost of such positions.
Dollar Index (102.125) sustains to hold above 102 and looks bullish for the medium term while EURUSD (1.1214) is trading above 1.12. Any break below 1.12 will trigger further bearishness.
Dollar-Yen (158.18) and EURJPY (177.37) can rise towards 159 and 178 respectively in the near term while EURINR (107.8766) has crucial support near 107.50-107 above which it can slowly recover back towards the 108-109 region again. We continue to look at a broad range of 107-109 to hold for the medium term.
USDCNY (6.6924) can hold above 6.69 and consolidate above this level for a couple of weeks.
Aussie (0.6989) can rise towards 0.70/71 while Pound (1.3249) is also bullish above 1.32.
USDINR (96.14) quotes 96.14 on the NDF and is likely to open with a gap down today. This is after a few measures by the RBI as stated below to ease pressure on USDINR:
a. A special dollar window for Indian Oil, BPCL and HPCL, to meet daily dollar requirements
b. Reduction of underlying exposure threshold of $ 100mln to $ 5mln for rupee derivative transactions
c. Restriction on rebooking of cancelled rupee-linked derivative contracts and
d. Bank requirement to maintain a 20% reserve against specified large forex derivative transactions and increase the cost of such positions.
The US Treasury Yields remain lower but stable. Supports are there to limit the downside from here. The broader bullish view remains intact. The yields can rise more going forward. The German Yields can dip further from here and test their support. Thereafter the overall uptrend can resume. The 10Yr GoI continues to move up. The bullish view is intact. The 10Yr GoI has more room to rise. Any intermediate dips can be short lived.
The US 10Yr (5.24%) and 30Yr (5.60%) yields remain lower but stable. Support at 5.15%-5.1% (10Yr) and 5.55%-5.5% (30Yr) can limit the downside. The bullish view remains intact to see 5.35%-5.4% (10Yr) and 5.7%-5.75% (30Yr) on the upside.
The German 10Yr (3.48%) and 30Yr (3.85%) Yields remain stable. A dip to 3.35% (10Yr) and 3.75% (3Yr) looks likely to be seen first. Thereafter the broader uptrend can resume targeting 3.7% (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.2994%) made a high of 7.3136% on Friday. The outlook is bullish to see 7.5%. Any intermediate dips can be limited to 7.2%-7.15% for now.
Dow and DAX have moved above 51500 and 25000, with upside towards 52000-52500 and 25400 if they sustain. Nifty needs a sustained move above 22750 to turn bullish towards 23000, else the risk of 22300 remains. Nikkei remains weak below 70000 with downside towards 67500-67000. Shanghai remains weak below 3900 and can fall towards 3700.
Dow (51660.18, +0.83%) has moved higher above 51500 on Friday, contrary to our earlier view. If it sustains above this level, a rise towards 52000-52500 can be seen in the coming weeks. Only a slip below 51500 will open room for a decline towards 50000.
DAX (25087.27, +1.13%) has rebounded above 25000, contrary to our view. It needs to sustain above this level to move higher towards 25400. Otherwise it remains vulnerable to a decline towards 24600-24500 in the coming weeks.
Nifty (22520.45, +1.30%) has managed to close the weekly candle above 22500 after testing the high of 22580 on Friday. The index needs a sustained move above 22750 to turn bullish towards 23000 or higher. Else the risk of falling towards 22300 or lower remains in place.
Nikkei (69030.70, -0.02%) opened with a gap down and is moving higher for now. It needs a sustained rise above 70000 to negate our view of a decline towards 67500-67000.
Shanghai (3813.79, +0.05%) has managed to close above 3800 on Friday. The index remains weak while it stays below 3900 and carries the risk of a fall towards 3700 in the coming week.
Brent and WTI have dipped but could remain within ranges of $ 100-$ 110 and $ 85-$ 100, respectively, as long as immediate support levels hold. Gold and silver have bounced back in line with expectations and could rise towards $ 4300-$ 4400 and $ 63-$ 65, respectively. Copper could rise towards $ 6.80-$ 6.85 in the near term, while natural gas could trade within a range of $ 3.00-$ 3.50 as long as it sustains above $ 3.00.
Brent ($ 102.86) and WTI ($ 90.08) have dipped, and as long as the immediate support levels hold, ranges of $ 100-$ 110 and $ 85-$ 100, respectively, could prevail for some time.
Gold ($ 4234.50) has bounced back in line with our expectations and can rise towards $ 4300-$ 4400.
Silver ($ 61.48) has bounced back in line with our expectations and can rise towards $ 63-$ 65.
Copper ($ 6.74) has risen in line with our expectations and can rise towards the mentioned levels of $ 6.80-$ 6.85 in the near term.
Natural Gas ($ 3.1590) has bounced back, and as long as it holds above $ 3.00, a range of $ 3.00-$ 3.50 could prevail for some time.
10:30 16:00 IN CPI
Expn. 4.9% …Previous 4.8%
DATA FRIDAY;-
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12:30 18:00 CA Labour Force
…Expected 6.1 K …Previous -41.7 k …Actual-68.3K
