The dollar index rose and the euro fell following a weak business activity report from the eurozone economy. The index needs to bullishly move above 101 towards 102 in the coming sessions, while the euro can trade between 1.1070-1.12. USDJPY and EURJPY are falling against our short-term outlook for them to rise towards 145/146 and 162 respectively. It will be important to keep an eye on the speech of the Bank of Japan Governor today for further directional clarity for both currency pairs. The Australian dollar needs to rise above 0.6850 or it could fall towards 0.67/66. The Reserve Bank of Australia (RBA) meeting is scheduled for today and the central bank is likely to keep interest rates unchanged. The pound could remain in the 1.31-1.33/34 range. USDCNY rose slightly after Governor Pan Gongsheng said in a press conference that the central bank will cut the reserve requirement ratio (RRR) by 50bps. It needs to continue rising above current levels to avoid any chance of a drop to 7.0250 or below in the coming sessions. EURINR is likely to trade within the 94-92 range for a few sessions. USDINR is well above the provisional support of 83.40 and as long as this level holds, it may rise towards 83.60/80 in the coming sessions. Keep an eye on the US Case-Shiller Index and US Consumer Confidence Index due to be released today.
US Treasury yields are gradually increasing. However, upcoming resistance may cap the rise and maintain the overall downward trend. We expect yields to fall again after testing resistance. German Bund yields are declining, indicating that the downward trend may have resumed. There is room to fall further from here. Any medium-term rally will be short-lived. 10-year Bunds are gradually increasing. Yields may stabilize in a narrow range and then fall further. The overall trend is downward.
Dow is continuing to rise and while it remains above the support at 41750, it may remain bullish for further gains. DAX is recovering as it is holding firm at the support at 18600 and while it remains above that, we can expect the recovery to continue further. Nifty and Shanghai are continuing to rise and from there can target 26000-26200 and 2800 before seeing a corrective fall. Nikkei is above the resistance at 38000 and is likely to rise further from here.
Brent and WTI have fallen slightly but a rally to key resistance levels cannot be ruled out. Gold has room to rise to 2670-2700. Silver seems to be in the 30-32 range. Copper is recovering nicely and could rise to 4.5 and above. Natural gas could test 2.9-3.0 and then fall from there.
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