Higher crude prices, rising inflation and concerns over the US-Israeli strikes on Iran are elevating global market risk, aiding alternative safe-haven currencies. The Dollar Index is expected to hold above 101.50 and recover toward 102+, while EURUSD may fall below 1.12. USDJPY tested 156.07 amongst global risk-off trades, but higher Japan CPI has led to a sharp rebound in USDJPY to current levels of 156.82 from 156.07 seen earlier in the morning. EURJPY can slowly rise towards 177 while above 175. EURINR is expected to rise towards 107-107.10 while above 105.70, while USDCNY remains bearish toward 6.65. The Aussie needs to break above 0.7050 to target 0.71; otherwise, it may retreat toward 0.6975–0.6950, while the Pound could rise toward 1.35. USDINR may test 95.50/60 in the coming sessions as it has rebounded well from crucial support near 94.30 yesterday.
Dollar Index (101.676) looks stable and finds it difficult to rise just now, as the rising conflicts in the Middle East and US-Israel strikes on Iran is aiding alternate safe-haven currencies. However, we may expect immediate downside to be limited to 101.50 from where eventual rise could happen in the medium term.
EURUSD (1.1209) has dipped. A break below 1.12 can take it lower towards 1.1140.
Dollar-Yen (156.82) declined sharply to 156.07 as risk aversion seemed to be driving the safe-haven demand for the Japanese Yen. But the pair saw a decent rebound after the CPI data for Sep-26 came in higher at 2.1% (Y/Y) compared to 1.9% for Aug-26. With elevated crude prices and a higher inflation scenario, there is scope for bullishness in the USDJPY. Any dips, if seen, can be limited to 156-155.50, from where buying could be seen.
EURJPY (175.97) too tested 175.205 before rebounding from there. While above 175, the cross pair can attempt to rise back towards 177/178 in the coming days.
EURINR (106.2566) is holding above last week’s low of 105.73. While above 105.70, there is scope for a rise towards 107.10 soon.
USDCNY (6.6725) continues to decline towards 6.65.
Aussie (0.7013) looks stable. A break above 0.7050 is needed for a further rise towards 0.71 or higher; otherwise, the spot can again fall back towards the 0.6975-0.6950 region.
Pound (1.3395) can target 1.35 in the coming weeks while above 1.33.
USDINR (94.80) rose well yesterday and could have scope to rise further towards 95.50/60 in the coming sessions if the rise sustains in the near term.
The US Treasury and the German Yields have come down sharply. They have dipped below their support contrary to our expectation. Failure to rise back immediately can drag them further lower. That in turn will delay the rise back move which we had expected to happen from their support. The 10Yr GoI is moving up in line with our expectation. It has room to rise more from here.
The US 10Yr (4.95%) yield has come down to its support while the 30Yr (5.28%) has declined well below 5.4%. Failure to bounce back immediately can drag them further down to 4.85% (10Yr) and 5.3% (30Yr). In that case, the expected rise back to 5.35%-5.4% (10Yr) and 5.7%-5.75% (30Yr) will be delayed.
The German 10Yr (3.33%) and 30Yr (3.67%) Yields have come down sharply and dipped below 3.35% (10Yr) and 3.7% (30Yr). Failure to rise back immediately can drag them down to 3.25% (10Yr) and 3.6% (30Yr). That can delay the rise back to 3.7% (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.4596%) has moved up further. Our view of seeing 7.5% remains intact.
Dow can extend the rise towards 53500-54000 while it holds above 52500. DAX needs to hold 25300 to move towards 25800. Nifty is holding within 22500-23000, with a rise towards 23000 possible before it resumes the move lower towards 22500. Nikkei remains weak below 64000, with further decline towards 62500-62000. Shanghai remains weak below 3700 and can fall towards 3600-3500.
Dow (52867.98, +0.02%) has tested the low of 52508 before closing flat. While the immediate support at 52500 holds, it has scope to extend the rise towards 53500-54000 over the coming week.
DAX (25371.75, -1.07%) opened lower after a sharp rise in the previous session on higher oil and tech weakness. It has tested a low of 25318 before closing. Immediate support at 25300 needs to hold to push the index higher towards 25800 in the coming sessions.
Nifty (22687.65, -0.54%) closed flat after testing the low of 22554. As projected so far, it is holding within 22500-23000 for now. It may open higher around 22750-22800 today. If it manages to hold above this zone, the rise may extend towards 23000 before the index resumes the move lower towards 22500 over the coming week.
Nikkei (62907.84, -2.65%) has slipped below 64000 and fallen sharply to the current level as we had cautioned earlier on chip selloff and Gulf tensions. Further decline towards 62500-62000 looks possible in the near term while it stays below 64000.
Shanghai (3658.03, -1.48%) has fallen sharply to test the low of 3658 so far, in line with our view on risk-off and elevated oil. While below 3700, it has enough room to fall further towards 3600-3500, which can be seen over the coming week.
Brent and WTI have risen amid escalating tensions in Saudi Arabia following Houthi attacks, raising concerns over oil supply disruptions. Brent could rise towards $ 116-$ 117, while WTI may reach $ 102-$ 105 before a potential pullback. Gold is testing support near $ 4,000, with a break below this level potentially triggering a decline towards $ 3,900-$ 3,800. Silver remains under pressure and could fall towards $ 52-$ 50. Copper could decline towards $ 6.20-$ 6.00 if it breaks below $ 6.35. Natural gas could rebound towards $ 2.85-$ 3.00 as long as support at $ 2.70 holds.
Brent ($ 114.07) closed higher on Thursday amid rising tensions in Saudi Arabia, where the Houthi militia launched additional attacks on key infrastructure, including oil facilities, ports, and airports, over the past two days. A further rise towards the strong resistance zone near $ 116-$ 117 is possible in the near term, followed by a potential pullback towards $ 110-$ 105 by next month.
WTI ($ 100.49) has risen and could move higher towards $ 102-$ 105 in the near term before a pullback sets in.
Gold ($ 4026.60) has broken below $ 4,100 and fell sharply to a low of $ 4,036 yesterday, contrary to our expectations. Today, it has touched a low of $ 4,000. It remains to be seen whether support near $ 4,000 holds and triggers a rebound, or breaks lower, leading to a further decline towards $ 3,900-$ 3,800.
Silver ($ 54.17) has fallen below $ 55, contrary to our expectations. There is room for a further decline towards $ 52-$ 50 in the near term.
Copper ($ 6.39) has broken below support and plunged to a low of $ 6.38 yesterday. A break below $ 6.35 could trigger a further decline towards $ 6.20-$ 6.00. However, as long as prices hold above $ 6.35, a recovery towards $ 6.50-$ 6.60 remains possible.
Natural Gas ($ 2.7640) is holding above $ 2.70. We had anticipated a continuation of the decline towards $ 2.60-$ 2.50, but this may not materialise given the strong support near $ 2.70. As long as this support holds, prices could rebound towards $ 2.85-$ 3.00 over the coming weeks.
23:05 04:35 UK Cons Conf
…Expected -14.0 …Previous -13.0
23:30 05:00 JP CPI
…Expected 2.10 …Previous 1.7 …Actual 2.1
DATA YESTERDAY:-
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No major data release yesterday.
