GOOD MORNING!
FOREX
Continuation on extension of ceasefire between UD and Iran and continued blockage of the Strait of Hormuz could keep the currency pairs ranged for the near term with the Dollar again moving up. The Dollar Index has risen well above 98 heading towards 98.50-99 while Euro needs to break below 1.17 to head towards 1.16. USDJPY can trade within 157-160 region for the near term. EURJPY has risen well and while above 186, it can test 188. EURINR may test 110-112 while above 108. Pound needs to sustain well above 1.35 to move higher towards 1.37 else can dip back to 1.34/33 (more likely ). Aussie can test 0.72 but then if it falls from there, it can retest 0.71/70 in the near term. USDCNY may trade within the 6.80-6.85 region. But any break lower would open downside chances of 6.78/75.USDINR has risen sharply contrary to our expectations of seeing a dip. a rise to 94-94.30 looks possible before a correction is seen in the medium term.
Dollar Index (98.356) has risen above 98. A break above the interim resistance at 98.50, if seen can take it further up towards 99.
EURUSD (1.1745) is stable above interim support at 1.17 and while that holds, can rise towards 1.18-1.1850. A fall below 1.17 will again open downside chances of 1.16.
EURINR (109.9180) is headed towards our expected 110-112 in the near term.
EURJPY (187.04) has bounced today holding above 186 as expected. A ris towards 188 is on the cards for the near term.
Dollar-Yen (158.25) can rise back to 160 while above 158 in the near term.
USDCNY (6.8219) has risen above 6.82. This rise will have to sustain for the Yuan to weaken towards 6.85. However, there are fair chances of seeing a break below 6.80 in the medium term leading to a further decline in the USDCNY.
Aussie (0.7160) is likely to face rejection at 0.72 which can take it lower towards 0.71/70 again in the coming days.
Pound (1.3515) is trading above 1.35. The price will have to bounce back from 1.35 to rise towards 1.36/37 but chances are higher of a break below 1.35 for a fall towards 1.34/33. Watch price action near 1.35.
USDINR (93.5050) moved up sharply to test 93.6250 before closing at 93.5050. Having moved up sharply over the last couple of sessions, the Rupee can further depreciate towards 94-94.30 before a correction is seen.
INTEREST RATES
The US Treasury Yields have bounced back again. It looks like the yields are stuck inside a range now. While the range can continue for some time, we remain positive to see a bullish breakout eventually. The German Yields have also bounced. If they fail to sustain this bounce, a fall can happen again. We will have to wait and see. The 10Yr GoI is coming down gradually within its range.
The US 10Yr (4.29%) and 30Yr (4.90%) Treasury yields have bounced again. 4.2%-4.35% (10Yr) and 4.85%-4.95% (30Yr) seems to be the range now. Our bias is positive to see a bullish breakout and a rise to 4.5%-4.6% (10Yr) and 5.05%-5.1% (30Yr) eventually.
The German 10Yr (3%) and 30Yr (3.56%) yields have bounced. Failure to sustain this bounce will still keep them vulnerable to see 2.9% (10Yr) and 3.5%-3.45% (30Yr) on the downside first. That will delay the expected rise to 3.2% (10Yr) and 3.65% (30Yr).
The 10Yr GoI (6.8864%) has dipped further. It is coming down gradually within its 6.85%-6.95% range.
STOCKS
Dow has pulled back after testing 50000 and needs a sustained break above it to rise towards 50500-51000. DAX remains supported above 24000 and can bounce towards 24500-25000. Nifty is holding strong and needs a break above 24600 to extend gains towards 24800-25000. Nikkei has rebounded and can test 60000, with further upside towards 61000-62000 on a breakout. Shanghai continues to move higher towards 4100-4150.
Dow (49576, +0.48%) tested 50043 and has fallen back from there, as expected. A sustained break above 50000 is needed to rise further towards 50500-51000.
DAX (24396, -0.20%) fell sharply to a low of 24179 yesterday after news of a pause in US-Iran peace talks. While above 24000, it can bounce back towards 24500-25000.
Nifty (24,576.60, +0.87%) tested a high of 24601 before closing slightly lower yesterday. A sustained break above 24600 is needed for a further rise towards 24800-25000 over the coming weeks.
Nikkei (59735, +2.08%) fell to 58370 yesterday due to uncertainty around US-Iran peace talks, but has bounced back after the ceasefire extension. It can test 60000 in the near term, and a break above 60000 is needed to move higher towards 61000-62000.
Shanghai (4087.29, +0.06%) is moving up and looks set to rise towards 4100-4150 in the coming sessions.
COMMODITIES
Crude prices remain volatile but biased lower after the ceasefire extension eased tensions. Brent can fall towards $90-$85, while WTI may decline towards $80-$75 in the near term. Precious metals remain supported with Gold likely to rise towards $4900-$5000 while above $4600, and Silver towards $82-$85. Copper can recover towards $6.15-$6.25. Natural Gas is gradually rising and may move towards $2.80-$2.90 while holding above $2.55.
Brent ($98.21) surged to a high of $101.35 yesterday as Iran did not confirm its participation in further talks with the US before the ceasefire expiry. Today it is falling after Trump extended the ceasefire and can decline further towards $90-$85 in the near term.
WTI ($89.31) had bounced back as US-Iran peace talks were put on hold, but is falling again after the ceasefire extension and can decline towards $80-$75 in the near term.
Gold ($4771.60) fell to $4685 yesterday, but while above $4600, our view remains intact for a rise towards $4900-$5000.
Silver ($77.64) fell to a low of $75.38, but the view remains intact for a rise towards $82-$85 in the near term.
Copper ($6.03) has dipped but can rise towards $6.15-$6.25.
Natural Gas ($2.6820) is inching up gradually and can rise towards $2.80-$2.90 while above $2.55.
DATA TODAY
GMT 23:01 IST 04:31 UK Cons Conf
...Market -25 ...Previous -21
GMT 23:30 IST 05:00 JP CPI
...Market 1.7 ...Previous 1.26
GMT 9:00 IST 14:30 GER IFO Business Climate
...Market 84.8 ...Previous 86.4
GMT 9:00 IST 14:30 GER IFO Business Situations
...Market 85.5 ...Previous 86.7
GMT 9:00 IST 14:30 GER IFO Business Expectations
...Market 83.9 ...Previous 86.0
DATA YESTERDAY
==============
GMT 6:00 IST 11:30 UK CPI Y/Y
...Market 3.30 ...Previous 3.01
DISCLAIMER
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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