Morning briefing: Sharp fall in Dollar Index suggests possible strength in the Euro

Vikram Murarka Kshitij Consultancy Services

Good Morning!

Sharp fall in Dollar Index and USDCNY has showed some relief, suggesting possible strength in the Euro and USDINR towards 1.08 and 82.25 respectively. The fall in the Dollar Index is seen after a FED official indicated a possible hold back in rate hike in the June meeting. But it has to be seen if the FED would actually skip rate hikes this month as that could be a crucial market driver for the next course of movement. Other currencies like the Pound, Aussie, RUB and the Yen have also strengthened against the Dollar and show hopes for continued rise for at least the next 4-5 sessions from here targeting 1.26, 0.67, 80.50/80.00 and 138/137 respectively.

The US Treasury yields have come down to their key supports as expected. Failure to bounce back from here can trigger a deeper fall next week. The German yields have room to test their support. The price action thereafter will need a watch to see if they are bouncing back or not. The 10Yr and 5Yr GoI have dipped further. View remains bearish and more fall is on the cards.

Dow Jones has bounced back as it is getting some support at 32700. DAX too has bounced back and can move forward while it remains above 15800. Nikkei is on its way to target 32000 as expected. Nifty fell further yesterday but can recover well following the rise in global equities. Shanghai has risen towards its upper end of the 3230-3175 range.

Crude prices have risen ahead of the OPEC+ meeting and release of key US economic data. Gold and Silver remains higher and may continue to test new highs. Copper has surpassed 3.70 and now appears to be moving higher to test the next significant resistance. The release of US NFP data could set the tone of the commodity market today.

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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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