FOREX
The Bank of England and European Central bank, both hiked rates by 50bps yesterday and have signaled another rate hike next month of similar magnitude a inflation still remain elevated. The Dollar Index has recovered from the sharp fall seen yesterday and may trade within 101-103 now while Euro has dipped from 1.1033 but could limit its downside to 1.08. EURJPY and USDJPY look bearish for a fall to 139-138 and 126 respectively while Pound and Aussie too have fallen and could head towards 1.20 and 0.70-0.6950 in the next few sessions. USDCNY has bounced from 6.70 and can now attempt to rise back to 6.80. A range of 6.70-6.80 may hold for now. USDRUB may rise towards the upper end of the 72-68 range. USDINR has managed to close above 82.10 yesterday which is likely to hold and produce a further rise to 82.50. EURINR has declined from 90.44 and could test 88 before pausing.
Dollar Index (101.881) has risen slightly after an initial decline yesterday to levels of 100.82. While above 101, we may expect the earlier range of 101-103 to hold for the near term.
EURUSD (1.0891) declined from 1.1033 seen yesterday, after the ECB raised rates by 50bps and signaled another 50bps rate hike next month. Overall the range of 1.08-1.10 may continue to hold for the near term.
EURJPY (140.04) has declined from 142 which holds very well as immediate resistance. The pair now looks bearish for a fall to 139-138 in the coming sessions.
Dollar-Yen (128.56) has dipped and could fall towards support at 126 before pausing or attempting to rise from there in the medium term.
Pound (1.2203) has fallen to test immediate support at 1.22 which needs to hold to produce a bounce back towards 1.24/25. Failure to hold above 1.22 will drag the Pound lower to 1.20 before the expected reversal takes place.
Aussie (0.7049) reversed from 0.7158 itself instead of reversing from expected 0.72. Now, Aussie looks bearish for at least the next 2-3 sessions with possibility to see a fall towards 0.70 or even to 0.69.
USDCNY (6.7437) has risen from initial decline to 6.7085 yesterday. We re-iterate that the view is bearish while below 6.80. An immediate range of 6.70-6.80 is possible in the near term.
USDRUB (70.0642) looks ranged within 72-68 region for the near term. A slow rise to the upper end of the range can be possible in the next few sessions.
USDINR (82.1775) has managed to rise above 82 and closed higher yesterday. While above 82, we may have to allow for a rise to 82.25/50 soon. View is bullish above 81.75-82.10.
EURINR (89.4452) has fallen sharply from 90.44 seen yesterday. The dip could be limited to 88.80-88.00 on the downside over the next few sessions.
INTEREST RATES
The US Treasury yields have dipped further and are looking vulnerable to fall more unless a strong bounce-back is seen from current levels. The German Yields have declined sharply but have strong support coming up while above which the broader bullish view will continue to remain intact. The ECB raised the interest rates by 50-bps, more inline with the market expectation. The 10Yr and 5Yr GoI have risen back sharply from their day’s low and can rise further if they get a strong follow-through from here.
The US 10Yr (3.38%) and 30Yr (3.54%) Treasury yields have dipped further. The 10Yr can fall further to 3.3%-3.2% while the break below 3.4% sustains. The 30Yr can fall to 3.4%-3.35% if it breaks below 3.5%.
The German 10Yr (2.07%) and 30Yr (2.09%) yields have declined sharply but have support at 2% while above which the bullish view will remain intact to see 2.4%-2.5% on the upside. A fall to 1.8% will come into picture if a decisive break below 2% is seen.
The 10Yr (7.2959%) and the 5Yr GOI (7.14%) have risen back from their lows of 7.2418% and 7.059% respectively. A strong follow-through rise from here can take them up to 7.4% (10Yr) and 7.25% (5Yr) again.
STOCKS
Dow has fallen back but is sustaining well above the support at 33600. DAX has surged towards the key resistance at 15600, from where a short corrective fall is expected to be seen in the coming sessions. Nikkei has moved up above 27500 and while above it there is room to target further upside. Shanghai has fallen back from the level of 3300 and is likely to remain range bound for some time. Nifty is managing to hold above the support at 17400 and while above it there is scope to move up higher in the near term.
Dow (34053.94, -0.11%) sustains well above its support at 33600 and keeps intact our bullish view of seeing 35000.
DAX (15509.19, +2.16%) has surged and come closer to 15600 inline with our expectation. A short-lived pull-back to 15200-15000 is a possibility before the upmove extends up to 16000.
Nikkei (27578.30, +0.64%) has risen above 27500. While above 27500, bias is bullish to see a rise towards 28000.
Shanghai (3243.18, -1.29%) has fallen back from the level of 3300. A sustained break above 3300 can see a rise to 3350 or higher. Else it may trade within 3300-3225 region for some time.
Nifty (17610.40, -0.03%) is stable and holding well above 17400. We reiterate that while above 17400, the bias is positive to break 17800 and rise to 18000 and higher.
COMMODITIES
Brent and WTI is coming off towards the key support at $80.50-80 and $75 respectively which is expected to hold and produce a bounce back from there. Gold has declined as the resistance at 1975 held well. Silver has come down towards the support at 23.50 as expected and may fall further below 23.50. Copper is coming off breaking below the support at 4.1 and looks bearish to target further downside.
Brent ($82.25) has come down further. Immediate support is at $80.50-80. If that holds, a bounce back to $84.50-87 can be seen.
WTI ($75.95) has come down towards the support at $75. While that holds, a rise back to $80 can be seen.
Gold ($1931.50) has fallen sharply below 1940 as the resistance at 1975 held well. Below 1940, there is scope for a fall to 1910-1900.
Copper (4.0920) is coming off below 4.10. If it sustains below 4.1, a fall to 3.9 can be seen in the coming sessions.
Silver (23.63) has fallen towards 23.50 after testing a high of 24.75 as expected. A break below 23.50, if seen, can lead to a fall to 23.00-22.80.
DATA TODAY
5:00 10:30 IN Services PMI
…Kshitij Expn 57.1 …Expected 58.1 …Previous 58.5
13:30 19:00 US NFP
…Kshitij Expn 239K …Expected 193K …Previous 223K
13:30 19:00 US Unemployment Rate
…Kshitij Expn 3.8% …Expected 3.6% …Previous 3.5%
13:30 19:00 US Avg Hrly Earnings
…Kshitij Expn 0.5 …Expected 0.3 …Previous 0.3
13:30 19:00 US Average Hourly Earnings Production & Non Supervisory Employees
…Kshitij Expn 0.38% …Expected – …Previous 0.2%
DATA YESTERDAY:-
—————-
12:00 17:30 BOE Mtg
…Kshitij Expn – …Expected 4.00% …Previous 3.50%
12:00 17:30 UK BOE Minutes
…Kshitij Expn – …Expected 7-0-2 …Previous 7-0-2
13:15 18:45 ECB Mtg
…Kshitij Expn – …Expected 3.00% …Previous 2.50%
