Morning briefing: Euro may trade within 1.05-1.07

Vikram Murarka Kshitij Consultancy Services

Good Morning!

The ECB kept rates unchanged yesterday indicating that the latest inflation data has come down and could be slowly headed towards the 2% target while the current borrowing costs are just enough to control inflation if the rates are unchanged for "sufficiently long" time, suggesting no more rate cuts for the next few months at least. Dollar Index needs to break past 107 to test 108 else can be ranged within 107-106 while Euro may trade within 1.05-1.07. EURJPY may test 160 while above 158. USDJPY trades above 150 and needs to sustain to head towards 151/152. USDCNY is stable and could hover near 7.30/32 region. Unless a break above 7.32 is seen, the bullish view may get delayed. Pound can trade within 1.22-1.20 while Aussie can trade within 0.62-0.64. USDRUB can hold above immediate support at 92.50 and rise towards 94-96. USDINR may trade within 83.00-83.30 with decent support in the 82.80-83.00 region. EURINR can trade within 87.50-88.50

The US Treasury yields have come down again. The chances are seeing a corrective fall remains alive before a fresh rise is seen. The German yields broadly remain stable. The view is bullish and there is room to rise more from here. The European Central Bank (ECB) left their policy rates unchanged yesterday. The central bank expects the economic growth to slow down. The 10Yr and 5Yr GoI are moving up within their expected sideways range.

Dow Jones and Nifty have scope to test their support before a possible bounce back can happen. DAX remain vulnerable. Nikkei has bounced back as the support at 30500 is holding well for now but broader bias is still bearish for a fall in the coming sessions. Shanghai has risen towards its upper end of the range. Need to see if it able to break higher or not.

Brent and WTI have fallen back failing to sustain the rise and appears range bound for the near term. Gold remains higher and has scope to rally on the upside. Silver outlook is bullish while it stays above 22.50. Natural gas has risen well and has scope to test its immediate resistance. Copper is to remain sideways for some time.

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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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