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On Friday, the British Pound surged by 168 pips or 1.08% against the Japanese Yen. The GBP/JPY currency pair tested the 157.40 resistance level during Friday's trading session.

Technical indicators suggest buying signals on the 4H, daily and weekly time-frame charts. Most likely, the exchange rate could continue to trend higher during the following trading session.

However, if the resistance level at 157.37 holds, a decline towards the 155.50 area within this session.

The Australian Dollar versus the US Dollar traded with low volume on Friday. The currency pair breached the 50– hour simple moving average support level at 0.7413 during the Asian session on Monday.

Everything being equal, the exchange rate could target the support line formed by the 200– hour SMA at 0.7342 within this session.

However, technical indicators suggest that the AUD/USD currency exchange rate might edge higher during the following trading session.

Daily Pivots: (S1) 1.2334; (P) 1.2366; (R1) 1.2394; More...

Intraday bias in USD/CAD is turned neutral with current recovery, and some consolidations should be seen first. Upside of recovery should be limited below 1.2592 support turned resistance to bring another fall. As noted before, rebound from 1.2005 should be finished at 1.2947. Below 1.2335 temporary low will target 161.8% projection of 1.2947 to 1.2492 from 1.2894 at 1.2158 next.

In the bigger picture, the rejection by 38.2% retracement of 1.4667 to 1.2005 at 1.3022 argues that rebound from 1.2005 is merely a corrective rise, which is complete. More importantly, the down trend from 1.4667 (2020 high). is not over yet. Sustained break of 1.2005 will extend the down trend to next long term fibonacci level at 61.8% retracement of 0.9406 to 1.4689 at 1.1424. In any case, outlook will not turn bullish as long as 1.2947 resistance holds.

Dollar and Yen recover mildly as the week starts, paring some of last week's losses. Buying momentum in both currencies is rather weak so far, and they don't look like bottoming yet. New Zealand Dollar spiked higher earlier today after much stronger than expected consumer inflation data. But the rally in Kiwi faded quickly. Overall, the markets are in consolidative mode, and we'd look for more downside in Dollar and Yen later in the week.

Technically, however, the rather weak recovery in EUR/USD is casting some doubts on Dollar's weakness. The recovery from 1.1523 is limited comfortably below 1.1639 minor resistance so far. Larger fall from 1.2265 is still mildly in favor to resume at a later stage. Nevertheless, firm break of 1.1639 should confirm short term bottoming and bring stronger rebound. We'd keep an eye on the development as hint on overall direction in Dollar.

In Asia, Nikkei closed up 0.15%. Hong Kong HSI is down -0.45%. China Shanghai SSE is down -0.25%. Singapore Strait Times is down -0.03%. Japan 10-year JGB yield is up 0.012 at 0.092.

New Zealand CPI rose 2.2% qoq, 4.9% in Q3, highest in over a decade

New Zealand CPI rose 2.2% qoq in Q3, well above expectation of 1.4% qoq. That's the largest quarterly increase in over a decade since 2010. For the 12-month period, CPI accelerated to 4.9% yoy, up from Q2's 3.3% yoy, well above expectation of 4.1% yoy too. The annual rise is also the highest since 2011. The strong inflation reading prompted more expectations of more RBNZ rate hikes ahead, following the 25bps increase earlier this month.

China GDP growth slowed to 0.2% qoq, 4.9% yoy in Q3

China GDP grew 4.9% yoy in Q3, below expectation of 5.2% yoy. On a quarterly basis, GDP grew only 0.2% qoq, slowed from Q2's 1.2% qoq, and missed expectation of 0.5% qoq. In September, retail sales rose 4.4% yoy, above expectation of 3.3% yoy. Industrial production rose 3.1% yoy, below expectation of 4.5% yoy. Fixed asset investment rose 7.3% ytd yoy, below expectation of 7.9%.

"The overall national economy maintained the recovery momentum in the first three quarters … however, we must note that the current uncertainties in the international environment are mounting and the domestic economic recovery is still unstable and uneven," said NBS spokesman Fu Linghui.

ECB Lagarde: Inflation is largely transitory

ECB President Christine Lagarde repeated on Saturday that "inflation is largely transitory". "Monetary policy will continue supporting the economy in order to durably stabilize inflation at our 2% inflation target over the medium term," she said. "The ECB is committed to preserving favorable financing conditions for all sectors of the economy over the pandemic period."

"Once the pandemic emergency comes to an end -- which is drawing closer -- our forward guidance on rates as well as asset purchases will ensure that monetary policy remains supportive of the timely attainment of our target," Lagarde said.

Separately, Governing Council member Klaas Knot also said the current inflation is "mostly temporary". "It is highly relevant to determine whether this is a temporary phenomenon and goes away or not, and whether this becomes a risk and has secondary effects through higher wages and costs, and that is not the case now," Knot said. "At this moment, we see it as mostly temporary as our economy is reopening after the corona shock and the supply of products is not keeping up with demand."

BoE Bailey sent another signal that "we have to act"

BoE Governor Andrew Bailey warned that rising energy prices means inflation will "last longer" and "get into the annual numbers for longer as a consequence." The development raised the "fear and concern of embedded expectations."

"Monetary policy cannot solve supply-side problems," he noted. "But it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations"

"That's why we, at the Bank of England have signaled, and this is another signal, that we will have to act", he said. "But of course that action comes in our monetary policy meetings."

More inflation data and PMIs to highlight the week

PMI data from Australia, Japan, UK, Eurozone and UK will be the major focuses this week, for insights on growth, employment as well as inflation. Additionally, UK, Canada and Japan will release inflation data. BoC business outlook survey, RBA minutes and Fed's Beige Book report will also be watched. Additionally, China will release a set of latest economic data, which could shake the Asian markets.

Here are some highlights for the week:

• Monday: New Zealand CPI; China GDP, retail sales, industrial production, fixed asset investment; Canada housing starts, foreign securities purchase, BoC business outlook survey; US industrial production, NAHB housing index.
• Tuesday: RBA minutes; Swiss trade balance; US housing starts and building permits.
• Wednesday: Japan trade balance; Germany PPI; UK CPI, PPI; Eurozone current account, CPI final; Canada CPI; Fed's Beige Book report.
• Thursday: Australia NAB business confidence; UK public sector net borrowing; Canada new housing price index; US Philly Fed survey, jobless claim, existing home sales.
• Friday: Australia PMIs; Japan PMI manufacturing, CPI core; UK retail sales PMIs; Eurozone PMIs; Canada retail sales; US PMIs.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2334; (P) 1.2366; (R1) 1.2394; More...

Intraday bias in USD/CAD is turned neutral with current recovery, and some consolidations should be seen first. Upside of recovery should be limited below 1.2592 support turned resistance to bring another fall. As noted before, rebound from 1.2005 should be finished at 1.2947. Below 1.2335 temporary low will target 161.8% projection of 1.2947 to 1.2492 from 1.2894 at 1.2158 next.

In the bigger picture, the rejection by 38.2% retracement of 1.4667 to 1.2005 at 1.3022 argues that rebound from 1.2005 is merely a corrective rise, which is complete. More importantly, the down trend from 1.4667 (2020 high). is not over yet. Sustained break of 1.2005 will extend the down trend to next long term fibonacci level at 61.8% retracement of 0.9406 to 1.4689 at 1.1424. In any case, outlook will not turn bullish as long as 1.2947 resistance holds.

Economic Indicators Update

The 50– hour simple moving average guided the EUR/JPY currency pair higher on Friday. As a result, the Eurozone single currency surged by 80 pips or 0.61% against the Japanese Yen during Friday's trading session.

Technical indicators suggest buying signals on the 4H, daily and weekly time-frame charts. The exchange rate could continue to trend higher during the following trading session.

However, if the currency exchange rate breaks the support level at 132.12, bearish traders could target the lower boundary of an ascending channel pattern at 131.50 within this session.

Asian stocks held steady in early trading even as investors continued focusing on the ongoing supply chain challenges. Many ports are seeing a significant increase in cargo volumes, leading many to start worrying about delays. Sadly, analysts expect that the situation will get worse in the near term. For example, last week, Dubai, a leading handler of cargo announced that it was pausing air cargo in its main airport. Meanwhile, there is a likelihood that Joe Biden’s measures to speed port logistics will not solve the situation soon. Therefore, the impact of these delays is higher costs for businesses and consumers and more delays.

US futures made some modest gains as investors focused on the ongoing earnings season. Last week, some of the key companies that released their results were Blackrock, JP Morgan, Morgan Stanley, and Citigroup. Most of these companies published strong results, with Goldman Sachs being the best performer. The season will continue this week. Some of the top companies that analysts will be focusing on this week are Netflix, Philip Morris, State Street, Johnson & Johnson, Synchrony Financial, and Procter & Gamble.

Cryptocurrency prices rallied during the weekend as investors waited for a statement by the Securities and Exchange Commission (SEC) about Bitcoin ETF. The agency must deliver a verdict today on whether it will accept an ETF proposal by ProShares. Analysts expect that the agency will allow the company to go on with its ETF. That could also apply to other companies that have expressed interest in launching their funds like Ark Invest and Invesco. These fund managers could also launch other cryptocurrency funds. Still, there are worries that cryptocurrency prices will drop as investors sell the news.

EURUSD

The EURUSD pair was little changed in early trading as the market reflected on the latest China GDP data. The pair is trading at 1.1600, the same range it has been for the past two trading days. The price is also along with the 25-day moving average while oscillators like the MACD and DeMarker are at the neutral level. Therefore, the pair will likely remain in this range today since there is no major economic data scheduled from the US and the EU.

GBPUSD

The GBPUSD pair held steady in early trading. It rose to a high of 1.3750, which was the highest level on September 20th. The pair has also moved above the upper side of the ascending channel. On the four-hour chart, it has also moved above the 25-day and 50-day moving averages while the MACD and the Relative Strength Index (RSI) have rallied. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.3900.

NZDUSD

The NZDUSD pair maintained a bullish trend on Monday. The pair rose to a multi-week high of 0.7070, substantially higher than September’s low of 0.6857. On the four-hour chart, the pair rose above the Ichimoku cloud and the short and longer moving averages. It is also above the dots of the Parabolic SAR indicator. The path of least resistance for the pair is to the upside.

Market movers today

• The week kicks off with some key data releases overnight from China. Consensus expects the data on industrial production, investments, and Q3 GDP to broadly reflect a slowdown in economic activity, while retail sales is expected to stabilise after the disappointing August print. Otherwise, it is a quiet start to the week with only manufacturing and industrial production data and the NAHB housing index due in the US.
• Markets are still watching closely for any news coming from the heated oil and gas market or from China.
• In the US, this is the last week where the Fed members can guide markets before the blackout period kicks in on Saturday 23 October. Monday's speakers, Quarles and Kashkari, are considered to be in neutral and dovish camps.
• Later in the week, we will get the final September HICP data on the euro area as well as the UK inflation print for September on Wednesday.
• On Friday, focus turns to preliminary October PMIs for the UK, the US, Japan and the euro area.

The 60 second overview

On Friday, the risk sentiment was positive across the major markets, supported by strong US retail sales and so far also decent earnings reports. This morning, the Asian session has been challenged by yet another surge in energy prices that put inflation yet again at the centre of attention. Furthermore, Chinese GDP figures disappointed market expectations by only 0.2% growth qoq (vs. 0.4% qoq expected).

German politics: In Germany, SPD, Greens and FDP formally agreed to enter talks for a 'traffic light' coalition. While talks will continue in the coming weeks (and months), open questions abound, particularly on the financing part of any big green investment package. The parties seemingly agreed that the constitutional 'debt brake' will apply again in 2023, but at the same time also ruled out tax hikes. Also important from an inflation perspective, the coalition plans to introduce a 25% increase in the minimum wage to EUR 12/h, although the timing remains uncertain.

China: Yesterday, the PBOC was out saying that the risks stemming from Evergrande can still be 'contained'. This happens amid financial stress in China still expected to get worse before it gets better, but we believe we are close to the 'peak stress' level in China. Peak stress could give a short-term lift to Chinese equities but we do not see a sustained move higher until the credit cycle turns. That is still some time away. For assets indirectly linked to China, the negative spill-over from the Chinese economic slowdown is yet to be felt, see more in Strategy - China closer to 'peak stress'.

Equities: Buy the dip was the name of the game last week. Investors picked up more than half of the September drop, with MSCI World a meagre -2% off its all-time highs. Friday was no exception, as equity markets were higher across the board. In the US, S&P 500 closed up 0.8%, Nasdaq 0.5%, Dow 1.1% but Russell 2000 -0.4%. Risk-on visible in sector performance as well. Cyclicals the clear outperformers, with industrials, consumer discretionary and banks at the top. This appears to be lingering into this week as well with US futures pointing sharply higher. Opposite moves in Asia though, partly driven by a negative GDP surprise from China.

FI: On Friday, volatility was more muted than previous days, with EGB yields ending slightly higher on the day supported by solid US retail sales. The bearish steepener on the back of the positive risk sentiment came after a significant repricing the previous days. 10s30 EUR swap steepened 2bp after flattening 17bp since Tuesday.

FX: Price action in FX markets have over the last week been heavily characterised by strong performance of commodity-sensitive currencies e.g. AUD, MXN, NZD and ZAR and where central banks have room to hike (irrespective of the central bank's communication). Also in the Scandies both SEK and NOK have faired strongly with EUR/NOK and EUR/SEK breaking below important support levels. EUR/USD still seems to struggle to break through 1.16.

Credit: Cash bonds performed well on Friday while CDS indices took a slight breather. Xover closed unchanged in 256bp while Main tightened 0.4bp to 50.4bp. HY bonds tightened 2.5bp and IG 0.5bp.

General trend

• Equity markets have generally pared gains amid rise in government bond yields, higher oil prices.
• Nikkei has traded modestly lower after the higher open.
• Shanghai traded modestly lower during the morning session after opening flat; Property index drops amid higher yields and tax concerns.
• China data weaker than expected, but affirms economic targets for the year.
• Hang Seng reversed the opening gain.
• Evergrande bond payments and grace periods still in focus.
• S&P ASX 200 has outperformed [Resources and Financial indices rise].
• BHP to issue Q1 production update on Tues.
• China Thermal Coal FUTs rise over 10%; Largest Chinese coal province reported rise in COVID cases.
• US Natural Gas FUTs drop.
• NZ Dollar and Bond yields rise after higher than expected CPI data, some now see higher probability of 50bps rate hike in Nov; NZD later pared gain.
• UST yields extend rise, curve flattens.
• RBA Oct Meeting Minutes due on Tues (Oct 19th).
• Companies due to report during the NY morning include State Street.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened 0.0%.
• ALL.AU Comments on funding for acquisition of Playtech: launches A$1.3B capital raise.
• HUB.AU To acquire Class Ltd (CL1.AU); Class shareholders will receive 1 ordinary HUB24 share for every 11 ordinary Class shares held, plus $0.10 per ordinary Class share.
• (NZ) NEW ZEALAND Q3 CPI Q/Q: 2.2% V 1.5%E; Y/Y 4.9% V 4.2%E (2nd consecutive reading above target, fastest in 10 years).
• (NZ) Bank of New Zealand: Probability of RBNZ 50bps rate hike at Nov meeting is ~ 50:50.
• (NZ) New Zealand Q3 RBNZ Sectoral Factor Model inflation Index Y/Y: 2.7% v 2.2% prior.

Japan

• Nikkei 225 opened +0.1%.
• (JP) Japan PM Kishida: Will urge oil producing countries to increase production.
• (JP) Japan PM Kishida: No plans to change consumption tax, can deliver cash handouts in a quick manner.

Korea

• Kospi opened +0.1%.
• (KR) South Korea Fin Min Hong: Will actively respond to US info sharing request on chipmakers supply chains – Yonhap.
• (KR) According to a recently Bank of Korea (BOK) poll, South Korea banks are expected to keep loans to households subdued in Q4 - Yonhap.

China/Hong Kong

• Hang Seng opened +0.4%; Shanghai Composite opened 0.0%.
• (CN) CHINA Q3 GDP Q/Q: 0.2% V 0.4%E; Y/Y: 4.9% V 5.0%E; GDP YTD Y/Y: 9.8% v 10.1%e.
• (CN) CHINA SEPT RETAIL SALES Y/Y: 4.4% V 3.5%E.
• (CN) CHINA SEPT INDUSTRIAL PRODUCTION Y/Y: 3.1% V 3.8%e.
• (CN) China National Bureau of Stats (NBS): Seek to ensure achieving annual economic targets, domestic recovery is unsolid and unbalanced , see major economic data in reasonable range for Q1 to Q3.
• (CN) China Sept Surveyed Jobless Rate: 4.9% v 5.1%e.
• (CN) CHINA SEPT PROPERTY INVESTMENT YTD Y/Y: 8.8% V 9.5%E.
• (CN) China PBOC Gov Yi Gang: China's economy is "doing well", but faces challenges such as default risks for certain firms due to "mismanagement"; authorities are keeping a close eye "so they do not become systematic risks"; sees 2021 GDP at 8% - online meeting of the Group of 30 International Banking Seminar Sunday.
• (CN) China Industry (MIIT) Min Xiao: Reiterates China to deepen its drive into antimonopoly in internet sector.
• (CN) China Premier Li: China is committed to expanding opening up and facilitating free trade.
• (CN) China to sell $4.0B in 3,5,10,30 year tenors (smallest offering of USD bonds since 2018) in Hong Kong.
• 3333.HK Will officially be in default on Oct 23rd, the end of grace period on first non-payment.
• (CN) China PBOC sets Yuan reference rate: 6.4300 v 6.4386 prior.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B prior; Net drain CNY10B v Net CNY0B prior.

Other

• (SG) SINGAPORE SEPT NON-OIL DOMESTIC EXPORTS M/M: 1.2% V 0.0%E; Y/Y: 12.3% V 8.5%E; Electronic Exports Y/Y: 14.4% v 16.7% prior.

North America

• BIIB Tofersen Phase 3 Study did not meet primary endpoint of change from baseline to week 28 in Revised Amyotrophic Lateral Sclerosis Functional Rating Scale (ALSFRS-R); Open-Label Extension in SOD1-ALS reinforced these findings and showed that early tofersen initiation led to less decline across multiple measures.

Europe

• (NL) ECB's Knot (Netherlands): Sees interest rates edge up once central banks begin unwinding their stimulus programs during H1 2022 - TV interview.
• OPEC+ Sept compliance with cuts seen at 115%, see 2021 global oil demand to make up 65% of loss in 2020 - press.
• PTEC.UK Aristocrat makes offer to acquire at 680p/shr cash, £2.1B; board recommends.
• (UK) BOE Gov Bailey: have already signaled that we will have to act to fight inflation; Action to come in our monetary policy meetings.
• (EU) ECB chief Lagarde: Reiterates stance ECB will continue supporting the economy in order to durably stabilise inflation at our 2% inflation target over the medium term.

Levels as of 01:15ET

• Hang Seng -0.6%; Shanghai Composite -0.3%; Kospi -0.2%; Nikkei225 -0.2%; ASX 200 +0.1%.
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.3%, Dax -0.1%; FTSE100 -0.2%.
• EUR 1.1605-1.1578; JPY 114.45-114.01; AUD 0.7437-0.7400; NZD 0.7105-0.7064.
• Commodity Futures: Gold 0.0% at $1,768/oz; Crude Oil +1.4% at $82.88/brl; Copper +1.1% at $4.77/lb.

Key Highlights

• EUR/USD is attempting a recovery wave from the 1.1525 zone.
• It broke a key bearish trend line with resistance near 1.1550 on the 4-hours chart.
• GBP/USD is eyeing an upside break above the 1.3750 resistance.
• USD/JPY extended its rally above the 114.00 resistance.

EUR/USD Technical Analysis

The Euro extended its decline below 1.1600 against the US Dollar. EUR/USD traded as low as 1.1525 before starting an upside correction.

Looking at the 4-hours chart, the pair was able to recover above the 1.1550 resistance. There was a break above a key bearish trend line with resistance near 1.1550.

The pair tested the 23.6% Fib retracement level of the downward move from the 1.1908 swing high to 1.1525 low. It seems like the pair faced resistance near 1.1625 and the 100 simple moving average (red, 4-hours).

The next key resistance is near the 1.1650 level. Any more gains could lift the pair towards the 1.1720 level and the 200 simple moving average (green, 4-hours).

The 50% Fib retracement level of the downward move from the 1.1908 swing high to 1.1525 low is also near the 1.1720 level. If there is no upside break, the pair could start a downside correction. An immediate support is near the 1.1550 level.

The next major support is near 1.1525. Any more losses below the 1.1525 region could open the doors for a larger decline.

Looking at GBP/USD, the pair gained pace above the 1.3650 resistance, and it is now aiming a fresh increase above the 1.1750 resistance.

Economic Releases

• US Industrial Production for Sep 2021 (MoM) – Forecast 0.2%, versus 0.4% previous.
• US Capacity Utilization for Sep 2021 – Forecast 76.5%, versus 76.4% previous.

STOCKS

Most indices have rallied well and indicate near term bullishness from current levels. Dow and Dax can test 36000 and 15900-16000 respectively while Nikkei and shanghai can rise towards 29750-31000 and 3600. Nifty and Sensex can test 18400/600 and 62000 before falling from there.

Dow (35294.76, +382.20, +1.09%) has surprised by rising above 35000 contrary to our expectation of a fall to 34000-33750 before bouncing from there. While above 35000, we may look for a rise to 36000 on the upside. View is bullish above 35000.

DAX (15587.36, +124.64, +0.81%) has risen in line with our expectation of a rise towards 15400/500. Breaking above 15500, the index could soon be headed towards 15900-16000 in the near term before pausing there.

Nikkei (28987.66, -80.97, -0.28%) is trading in the red today but t relatively higher levels than seen last week. Immediate resistance is seen near 29500-29750 with upper resistance seen at 31000. View is bullish for the medium term.

Shanghai (3564.98, -7.85, -0.22%) has dipped a bit but could trade within 3500-3575/3600 region both being immediate support and resistance levels. A break below 3500, if seen can drag the index down to 3450/3425 before rebounding from there as 3600 looks like a strong resistance just now.

Nifty (18338.55, +176.80, +0.97%) has rallied well last week, breaking above 18250 and rising towards our expected 18400/600 region. The resistance at 18400 and 18600 are still intact and can send the index down towards 18000/17800 in the coming weeks before we see an eventual rise above 18400 again. Any break above 18600 if seen in the near term is strongly bullish for Nifty for this week.

Sensex (61305.95, +568.90, +0.94%) has risen sharply beyond our mentioned 61000.The index now has resistance at 62000 which can hold and we can see a corrective fall towards 60,000 soon.

COMMODITIES

Crude prices continue to rally as demand picks up and there is a possible energy crunch globally. But on the charts we would caution going longs at current levels as upside could be limited. Brent is trading just below 86 and could face rejection else would rise to 86.48-87.36 before falling from there. WTI on the other hand can test 84-85 before falling off. Gold has fallen sharply but watch support at 1760/50 today. Silver has scope to rise to 24-24.50 while Copper has rallied well in a bullish break out and has scope to test 4.90 before reversing from there.

Brent (85.61) rose on Friday, breaking above $85 as news stated supply deficit forecasts for the next few months. As the economy is now recovering back from the pandemic, crude demand is likely to pick up. Adding to this, the falling US stockpiles may continue to keep global supply tight. According to the IEA (International Energy Agency) the current situation may boost oil demand by 500,000 barrels per day that would lead to a possible supply gap of around 700,000 bpd.
Brent has come into the 85-86 resistance zone and any break above 86 can take it higher towards 86.48-87.36 on the upside (resistances on the log charts) before a reversal is seen from there. We would be cautious at going longs and instead expect limited upside from here.

WTI (82.72) has broken above 81-82 contrary to our expectation of seeing a decline from 81-82 resistance zone. This opens up chances of testing 84-85 on the upside before a fall from there is expected. Immediate view is bullish towards 85 but we would be cautious to see a reversal anytime soon.

Gold (1771.10) has again dipped back from 1800 surprisingly, entering the 1740-1780 region. Watch immediate support near 1760/50 today.

Silver (23.44) has risen well and a rise to 24-24.50 cannot be negated before a dip is seen.

Copper (4.7460) has risen sharply indicating a bullish break out and has scope to test 4.90 on the upside before reversing from there. Immediate view is bullish.

FOREX

Dollar Index has immediate support near 93.75/60 which while holds could keep near term bullishness intact. Euro has resistance near 1.1625 and while below it, there is scope for a fall to 1.16. EURJPY can dip to 131.50 before rising again as Dollar Yen continues to rally towards 115n which if breaks can head towards 117 in the medium term. Aussie and Pound are stable and could be ranged for sometime below 0.7450 and 1.38 respectively. USDCNY can slowly fall towards 6.41. USDINR needs to fall and sustain below 75.10 to head lower and indicate that a near term top is in place.

Dollar Index (94.07) can test immediate support near 93.75/60 before rising back from there. Uptrend is intact while above 93.60.

Euro (1.1583) dipped back below 1.16-1.1625 and while the fall sustains, a further decline towards 1.1550 or lower is possible.

EURJPY (132.38) tested 132.77 from where a dip is seen. A corrective fall to 132-131.50 looks possible before again rising higher.

Aussie (0.7403) is holding below 0.7450 and while Aussie trades lower, it is bearish for the near term.

Pound (1.3730) rose above 1.37 on Friday and now holds below 1.38. A fall to 1.37-1.3690 looks possible before another bounce is seen in the medium term.

Dollar-Yen (114.26) has been rallying, within a bullish break out after a long sideways correction. Above 114, a rise towards 117-118 looks possible. Before that watch interim resistance at 115 which if holds can produce a small corrective dip.

USDCNY (6.4383) looks stable today. A possible downside to 6.41 in the near-term and even towards 6.3750 cannot be negated unless a decisive break above 6.44/45 is seen.

USDINR (75.03 on offshore) trades below 75.10 on the offshore despite rise in Crude prices. We need to see if the onshore rates too open below 75.10 that would open up chances of a fall towards 75-74.80/60 in the near term. While above 75, we may keep possible bounce back to 75.30/40 alive in the near term. Watch price action near current levels.

INTEREST RATES

The US Treasury Yields have risen back well especially at the near end (2Yr and 5Yr) on Friday possibly on the back of the rising crude oil prices. A retest of the crucial resistances on the 10Yr (1.65%) and 30Yr (2.2%) looks likely but it will have to be seen if the yields can reverse lower from these resistances again. Watch if Brent crude is reversing lower from its 85-86 resistance region or not. The German yields remain lower below their crucial resistances. We expect the yields to see a fresh fall in the coming days and keep the long-term downtrend intact. The 10Yr GoI has bounced-back but has strong resistance which can cap the upside and trigger a fresh fall going forward. The 5Yr GoI retains its range and can move up within it. But the broader bias is bearish to see a downside breakout of its range eventually.

The US 2Yr (0.41%), 5Yr (1.14%) and the 10Yr (1.58%) had risen-back well on Friday while the 30Yr (2.05%) %) is stable. A revisit of the crucial resistances at 1.65% (10Yr) and 2.2% (30Yr) is likely now. We reiterate that a strong fall below 1.5% (10Yr) and 2% (30Yr) is necessarily needed to turn the outlook bearish and drag the yields lower. Else the chances of a rise to past 1.65% (10Yr) and 2.2% (30Yr) will remain alive.

The German 2Yr (-0.70), 5Yr (-0.52%), 10Yr (-0.17%) and 30Yr (0.28%) yields remain lower below their crucial resistance levels of -0.1%/-0.05% (10Yr) and 0.35%/0.45% (30Yr). We expect these resistances to hold and retain our view of seeing a fresh fall to -0.2% (10Yr) and 0.2% (30Yr) initially and then further deeper eventually over the medium-term.

The Indian 10Yr GoI (6.3280%) has bounced-back on Thursday last week and could retest the 6.35%-6.36% resistance region. However, we expect 6.36% to be a cap on the upside and the yield is likely to see a fresh fall towards 6.26%-6.25% initially and then to 6.2% and lower eventually over the medium-term. A break below 6.3% can trigger this fall.

The 5Yr GoI (5.6732%) sustains above 5.66% and retains the 5.66%-5.76% range. While above 5.66%, a rise within the range cannot be ruled out. However, the bias is bearish to see a downside break out of this range below 5.66% and a fall to 5.62%-5.6% eventually.