Morning briefing: Euro can rise to 1.09 or higher
FED raised rates by 25bps as expected but has stated to raise rates higher if needed. Sharp fall in Dollar Index thereafter has given some scope and room for other currencies to strengthen against the Dollar but it has to be seen if the movement sustains or reverses back by early next week. Euro can rise to 1.09 or higher while Aussie and Pound too cold rise towards 0.6750-0.68 and 1.24 respectively. EURJPY can dip to 142/141 before pausing. USDCNY is bearish below 6.85 while USDRUB could face rejection from 78. USDINR can test 82.25/82.00 while EURINR can test 90 and decline from there again.
Expectation in the market that the Fed rate hike cycle could be nearing an end has dragged the US Treasury yields from their highs. This could keep the yields subdued and drag them lower from here. The Fed raised the rates by 25-bps as expected and has kept the doors open for one more hike for this year. The German yields have surged and can rise further from here if they sustain higher. The 10Yr GoI remains mixed, and range bound. The 5Yr GoI can rise if it sustains above the support.
Dow falls on the dovish FED rate hike. The US central bank raise rates by 25 bps taking the target range to 4.75-5%. DAX has risen well but needs a sustained break above 15300 to strengthen its bullishness further. Nikkei, Shanghai and Nifty are likely to trade sideways for some time.
Brent and WTI have risen well but needs to surpass the immediate resistances to accelerate the rally on the upside. Gold may trade sideways for some time. Silver is lacking the strength to move up above 23.20. Copper can fall back while below the resistance at 4.13.
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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.
