The FED kept rates unchanged as expected, and the ECB is also expected to keep rates unchanged today. The Dollar Index has dipped from 102.50, while the Euro has moved up from 1.1113. But overall, the Dollar strength and Euro weakness could resume in the medium term. Dollar-Yen and EURJPY could initially dip to 157 and 176 before rising towards 158/159 and 177/178 in the longer run; while EURINR may trade between 105.70 and 106.60 with some chances of a dip to 105. The pound needs to hold above 1.33 to prevent another decline to 1.32 and instead rise towards 1.34/35. The Aussie is stable, trying to slowly inch upwards. USDCNY looks weak towards 6.65. USDINR tested 95 as expected. With downside limited to 95-94.90 just now, we may expect trade within 94.90-95.50 for a few sessions. A break higher will bring in higher targets of 95.80-96.00 into the picture.
Dollar Index (102.13) tested 102.49 before coming off from there. Overall, the view remains bullish while above 102.
EURUSD (1.1149) tested 1.1113 yesterday before moving higher from there to current levels. While above 1.11, we may expect some stability before an eventual decline towards 1.10 in the medium term.
Dollar-Yen (157.73) tested 158.35, slightly higher than our expected resistance near 158.15 before coming off. While it holds below 158, there is scope for a decline to 157. That said, the EURJPY (175.90) could see a limited decline to 175 before an eventual bounce is seen towards 176-178 in the longer run.
EURINR (106.15) has scope to test 106.60 while above 106, in the coming sessions; else, a break below 105.70, is needed to make it vulnerable to decline towards 105.
USDCNY (6.6617) has dipped sharply, keeping the bearish view intact for a test of 6.65.
Aussie (0.7056) has risen well and could face rejection near 0.7075. However, a break higher, if seen, can take it towards 0.71 or higher.
Pound (1.3332) has bounced well from 1.3274. The rise will have to hold for the price to come back towards 1.34/35 in the coming days. Else, another decline to 1.32 cannot be ruled out in the medium term.
USDINR (95.23) tested 95.01 yesterday before rising to close near 95.23. This has been in line with our expected downside to 95-94.90 and immediate upside of 95.50, which can continue to hold for this week. Thereafter, a break on either side is needed for further directional clarity. There is enough room on the upside if a break above 95.50 materialises. However, we would wait for confirmation.
The US Treasury Yields remain stable. The yields are likely to see a rise eventually. But it is still unclear whether this rise can happen from here itself or after a fall. We will have to wait and watch. The US Fed kept the rates unchanged at 3.75%-4% in line with market expectation in its meeting yesterday. German Yields are also stable. They can fall to test their support first and then resume their broader uptrend. The resistance in the 10Yr GoI continues to cap the upside. That keeps the chances high for seeing a corrective fall going forward.
The US 10Yr (5.01%) and 30Yr (5.33%) Yields remain stable. We repeat that the yields are likely to go up to 5.15%-5.2% (10Yr) and 5.4% (30Yr) and higher. However, a dip to 4.85% (10Yr) and 5.2% (30Yr) first is still a possibility before that rise.
The German 10Yr (3.37%) and 30Yr (3.68%) Yields continue to remain stable. We expect them to fall to 3.25% (10Yr) and 3.6% (30Yr) while below 3.4% (10Yr) and 3.75% (30Yr). Thereafter a fresh leg of rise can target 3.7% (10Yr) and 4%-4.1% (30Yr).
The 10Yr GoI (7.44%) continues to face resistance below 7.5%. That keeps the chances high to see a break below 7.4% and a fall to 7.3%. The 7.5%-7.6% region will continue to act as a good resistance.
Dow is holding above 52,000, which keeps the door open for a rise toward 53,000 or higher. DAX needs a clear move above its recent high to push toward 25,800–26,000; otherwise, it could slide back down toward 25,500–25,000. Nifty remains bearish below 22800, with scope to decline towards 22350-22250. Nikkei is struggling to sustain above 64000, and a sustained break below can open a decline towards 62000. Shanghai remains weak below 3700 and can fall towards 3600-3500.
Dow (52480.26, +0.19%) tested a high of 52639 before closing off its peaks. As long as support near 52000 holds, it can rise towards 53000 or higher. Conversely, a break below this support would open the path towards 51000.
DAX (25704.02, +0.44%) moved higher in line with our view, testing a high of 25716 before closing. It has faced pullbacks around these levels over the last couple of months; a sustained break above current levels would take the index higher towards 25800–26000. Otherwise, it could fall back towards 25500–25000.
Nifty (22698.85, -0.22%) has recovered well from the low of 22497 and managed to close just below 22700. Near-term resistance stays at 22800. While below this level, the outlook remains bearish with scope to decline further towards 22350-22250 in the coming weeks.
Nikkei (64144.45, +0.30%) has opened higher and tested the high of 64797 so far. It is struggling to sustain above 64000 for now. A sustained break below 64000 will open the door for a further decline towards 62000 over the coming weeks.
Shanghai (3666.16, -0.45%) is moving lower. Scope remains open for a further decline towards 3600-3500 in the coming weeks while it stays below 3700.
Crude oil prices have bounced back. Brent and WTI hold upside momentum toward $ 114–$ 116 and $ 102–$ 104 respectively. Gold has dipped and must sustain above $ 4000 support to avoid further downside toward $ 3900–$ 3800, while Silver remains on track for a decline toward $ 50 as long as $ 55–$ 56 caps gains. Copper pulled back after testing $ 6.73 and risks a drop to $ 6.6–$ 6.5 unless it breaks back above $ 6.7. Natural Gas continues to consolidate within a steady $ 2.7–$ 3.2 range.
Brent ($ 111.19) and WTI ($ 99.97) have bounced back in line with our expectations and could rise further towards 114–116 and 102–104, respectively, in the near term.
Gold ($ 4066.60) has dipped and needs to hold above 4000 to negate further downside risks towards 3900–3800 and push higher towards 4200.
Silver ($ 53.80) has dipped in line with our expectations, and as long as it trades below 55/56, our view remains intact for a decline towards 50 in the near term.
Copper ($ 6.65) tested a high of 6.73 yesterday as expected and has pulled back from there. While below 6.7, a further fall towards 6.6–6.5 can be seen. Alternatively, a break above 6.7 is needed to move higher and negate the decline.
Natural Gas ($ 3.03) is expected to trade within a range of 2.7–3.2 for some time.
9:00 14:30 EU Biz Climate
…Previous 97.4
12:30 18:00 US Personal Income
Expn. 0.5 % …Expected 0.3 % …Previous 0.2 %
12:30 18:00 US PCE Price Index M/M
Expn. 0.3 % …Expected 0.5 % …Previous 0.3 %
12:30 18:00 US Core PCE
…Kshhitij Expn. 0.2 % …Expected 0.3 % …Previous 0.2 %
12:30 18:00 US GDP
Expn. 1.7 % …Expected 3.2 % ….Previous 2.2 %
DATA YESTERDAY:-
—————-
AU CPI
Expn. 3.9 % …Expected 3.9 % …Previous 3.9 % …Actual 3.9 %
IN IIP
…Previous 7.8 % …Expected 7.2% Exxpn.5.8% …Actual 6.7%
BOC Meeting
…Expected 2.50 % …Previous 2.25 % …Acctal 2.50%
US FOMC Meeting
…Expected <4.00 % ...Previous<4.00 % ...Acctual<4.00%
