The ECB left interest rates unchanged yesterday, indicating that recent inflation data has come down and may be slowly moving towards the 2% target, while current borrowing costs are just enough to control inflation if rates are left unchanged for a “sufficiently long” time, suggesting no further rate cuts for at least the next few months. Dollar Index needs to break above 107 to test 108 otherwise may trade within 107-106 while Euro may trade within 1.05-1.07. EURJPY can test 160 while above 158. USDJPY is trading above 150 and needs to hold to move towards 151/152. USDCNY is stable and may trade near 7.30/32. Unless a break above 7.32 is seen, the bullish view may be delayed. Pound can trade within 1.22-1.20 while Aussie can trade within 0.62-0.64. USDRUB can hold above immediate support at 92.50 and move up towards 94-96. USDINR can trade within 83.00-83.30 with decent support in 82.80-83.00 region. EURINR can trade in the 87.50-88.50 range.
US Treasury yields have dropped again. The chances of seeing a corrective fall remains alive before a fresh rise is seen. German yields remain broadly stable. The view is bullish and there is room to go higher from here. The European Central Bank (ECB) left its key interest rates unchanged yesterday. The central bank expects economic growth to slow. The 10Yr and 5Yr GoI are moving higher within their expected sideways range.
Dow Jones and Nifty have room to test their support before a possible bounce. DAX remains vulnerable. Nikkei has bounced back as support at 30500 is holding well for now, but broader bias is still bearish for a fall in the coming sessions. Shanghai has risen towards the upper end of its range. Need to see if it can break higher or not.
Brent and WTI have pulled back and failed to sustain the rally and appear range bound for the near term. Gold remains higher and has room to rally higher. The outlook for silver is bullish as it holds above 22.50. Natural gas has rallied well and has room to test immediate resistance. Copper should remain sideways for some time.
