Morning Briefing: Dollar Index continues to look bullish

Vikram Murarka Kshitij Consultancy Services

Dollar Index continues to look bullish while Pound, Aussie, Euro, Chinese Yuan, Indian Rupee are looking bearish against the Dollar and can test 1.02/1.00, 0.64/62, 0.96/95, 7.20 and 81.50/80 respectively. High volatility is likely to remain for a few more sessions this week. UK announced last week to implement tax cuts and investment incentives to boost growth that took Pound down to 1.0354, breaking below the Feb’85 low. A maximum fall to 1.02/1.00 can be seen before a sharp reversal sets in. USDRUB has broken below 58 and can now test 56/55 before a bounce is seen again. USDJPY is bullish in line with the bullishness seen in Dollar Index.

The US Treasury yields continue to surge at the near-end while those at the far-end remain higher but stable. The 10Yr and 30Yr has resistances coming up which if holds can trigger a corrective fall going forward. The German yields remain strong and can continue to move up in the coming days. The 10Yr and 5Yr GoI have moved up as expected. The view is bullish, and a further rise is possible from here.

Dow could come down further from the current level if it fails to make an immediate bounce just now. DAX has scope to fall further towards 11000. Nikkei has fallen sharply and is likely to test key support at 26200-26000 in the near term. Shanghai has rebounded but needs to sustain the bounce above 3100 and extend further to negate a deeper fall in the coming sessions. Nifty could test 17200 on the downside.

Commodities have witnessed a sharp decline on last Friday. Brent have fallen towards $85 while WTI have fallen below $80. Both the Crude prices look bearish to fall further in the coming sessions. Gold, Silver and Copper have broken below their lower end of 1660-1700 (Gold), 19-20 (Silver) and 3.4-3.6 (Copper) respectively as expected and have room to come down further from the current levels.

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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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