Morning Briefing: Dollar Index fell sharply below 105

Vikram Murarka Kshitij Consultancy Services

Dollar Index fell sharply below 105 yesterday before bouncing back higher while Euro tested 1.0368 before falling back. Euro can remain within 1.04-1.02 for now while the Dollar Index can trade above 105. Aussie too rose almost to test 0.72 before coming off sharply from there. Pound is bearish while below 1.23. Dollar Yen fell sharply and can be ranged within 137-132 over the next few sessions. USDCNY broke below 6.74 and now while above 6.72, can be bullish towards 6.77/78 again. USDRUB needs to break above 62 to be bullish towards 65 else can fall back to 60-58. USDINR too can fall while below 79.65/60.

The US Treasury yields have dipped at the near-end while those at the far-end sustains higher but look mixed. The price action in the next few days will need a watch to get clarity. The US inflation seems to be cooling down. The US Headline inflation increased 8.48% (YoY) in July, slower that the 9% rise seen in the previous month. This might keep the yields lower in the near-term. The German yields have dipped across tenors. The outlook remains bearish. Upside is limited from here. The 10Yr and 5Yr GoI are signalling a turn around and can fall in the coming days.

Dow has risen back sharply and is bullish towards 33800-34000 while Dax needs to break above 13800 to head higher. Nikkei can fall to 27500-27200 before bouncing back to higher levels while Shanghai needs to sustain above 3250 to move up else can fall back to 3150 soon. Nifty is bullish while above 17500.

Brent and WTI have moved up further but need a strong break above 97.5 and 92.5 to rise further on the upside. Gold and Silver have declined after witnessing a rise yesterday. But while above the near term supports, there is scope for a rise back to higher levels again. Copper has risen firmly above 3.6 and look bullish for the near term.

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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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