Morning briefing: Dollar Index has risen and can test 108

Vikram Murarka Kshitij Consultancy Services

Dollar Index has risen and can test 108 indicating a decline in Euro in the near term. Pound has scope to fall to 1.19/18 and is bearish while below 1.23. Aussie can fall to 0.6850-0.68 before a bounce is seen. EURJPY has scope to rise to 139/140 while Dollar Yen can rise to 138 on the upside in line with the bullishness seen on the Dollar Index. USDCNY is holding above immediate support at 6.74 and can rise to 6.78 while USDRUB can remain in an immediate range of 62.85-57. USDINR can range within 78.80-79.80 for now unless a break on either side is seen.

The US Treasury yields have surged after the strong jobs data release on Friday. The US Nonfarm Payroll increased by 508K as against the market expectation on 250K and our forecast of 308K. The unemployment rate dipped to 3.5%. It will have to be seen if the yields gets a strong follow-through rise from here and breach their resistances. That will be very bullish. We will have to wait and watch. The German yields have risen sharply across tenors. But resistances are ahead that can cap the upside and trigger a reversal to keep the overall downtrend intact. The 10Yr GoI had surged after the RBI’s 50-basis point rate hike on Friday. The view is bullish to see a further rise from here. The 5Yr GoI on the other hand looks mixed and need to break above its immediate resistance to become bullish.

Dow is ranged within 32400-33000 and needs a break on either side to give more directional clarity while Dax has support at 13500/400 which if holds can produce a bounce. Nikkei can test crucial resistance at 28500 while Shanghai too has resistance at 3250 which if holds can be bearish too. Nifty looks bullish while above 17400.

Brent has bounced back from 92.5 and has the scope to rise towards 97.5 , while WTI has risen back above the support at 87-85 and could rise further on the upside. Gold has fallen below1800 and could remain in a range for some time. Silver has fallen back after failing to rise above 20.5 and while that holds, a further downside seems possible. Copper has moved up but needs to break above the key resistance at 3.6 to become further bullish on the upside.

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Author

Vikram Murarka

Kshitij Consultancy Services

Vikram has been forecasting, trading and hedging currencies since 1991. Beginning his career as a currency trader in Essar Group, he was managing an FX exposure of $1.2 bln.

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