Forex Market:
Dollar Index Surges: The Dollar Index has climbed above 102.50 following the release of the US manufacturing index for December 2023. A potential test of 103-104 is anticipated before a pause. Conversely, the Euro is expected to head towards 1.09, with a potential reversal towards 1.10. Failure to maintain levels above 1.09 could turn the outlook bearish for the medium term.
Yen Pairs Bullish: Contrary to expectations, EURJPY and USDJPY have experienced sharp increases, suggesting a bullish trend for the next few sessions.
USDCNY and Other Currencies: USDCNY has tested 7.15/16 as predicted and could move towards 7.20/22 upon surpassing 7.16. The Australian Dollar, holding above 0.67, faces potential bearishness towards 0.66 if the bounce does not sustain. The Pound, maintaining levels above 1.26, awaits a decisive break on either side of the 1.26-1.28 range for further clarity. USDRUB has surpassed the anticipated resistance at 92 and might head towards the next resistance at 92.60.
Indian Rupee Outlook: USDINR is expected to trade within the range of 83.35-83.20, while EURINR, after testing 91.35 on the upside, is projected to test 90.50/90.00 on the downside.
Bond Markets:
US Treasury Yields: US Treasury yields rose to test their resistances but subsequently retreated. Further price action will be closely monitored to determine whether yields break resistances or resume their downtrend.
German and Indian Yields: German yields have dipped slightly but have room for potential upward movement before a fresh decline. The 10Yr GoI is moving upward in line with expectations, likely to test its resistance before a subsequent fall. The 5Yr GoI remains mixed, exhibiting a range-bound pattern within its overall downtrend.
Equity Markets:
Global Equities: Most equities declined after the FOMC minutes revealed no imminent rate cuts. Dow Jones and Nifty have experienced declines, with the potential for further extension. DAX, while falling sharply, managed to close above its 16500 support. A decisive break below 16500 could turn the outlook bearish. Shanghai continues its descent and might fall further if it breaks below 2925.
Commodities:
Crude Oil Surge: Crude prices bounced back sharply due to global supply disruptions, including Libya shutting down its Sharara oil field. This field produces approximately 300,000 barrels per day.
Precious Metals Movement: Gold and Silver declined following FOMC minutes, indicating no imminent rate cuts. Copper, despite a slight rebound, remains vulnerable below the resistance at 3.88-3.90.
Natural Gas Momentum: Natural Gas has risen and has the potential for further upward movement in the near term.
As geopolitical factors, economic indicators, and central bank signals continue to shape market dynamics, investors should closely monitor these key developments for informed decision-making in the coming days.
