Morning briefing: The Dollar Index has risen well above its support at 106.00

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has risen well above its support at 106 and while it holds, the overall view is bullish towards 109 or higher. The immediate upside in Euro looks capped at 1.0650-1.0700. The Aussie and Pound have limited upside in the near term. USDCNY is holding well below the resistance at 7.25/26 from where a rejection can be expected. The Dollar Yen is back within its 152-155 region but overall, the view is bullish towards 157-158 in the near term. EURJPY has the scope to extend its rise further in the coming sessions while above 162. EURINR tested 89.54 before coming down but the fall is expected to be limited to 88. For USDINR, we need to see whether the rise extends towards 84.50 from the current levels or falls back below 84.40 again. NDF quotes 84.38 indicating a dip from Tuesday’s close of 84.4150/4250 on the onshore market. US Philifed and Existing Home Sales data releases are scheduled today.

The US Treasury yields are poised at their support. A fall from here can drag them lower. That will keep intact our view of seeing a reversal. A strong rise breaking above their near-term resistance is needed to negate the expected fall. The German yields have dipped. But supports can limit the downside. Outlook is bullish to see a rise going forward. The 10Yr GoI is coming down within the range. Intermediate support is available. While that holds, it can rise back towards the upper end of the range.

Dow Jones has seen a relief rally but watch to see if the rise can cap immediate upside to 44000. Below 44000, bias is to see a decline towards 42000/41000 soon. Dax could rise while above 18800. However, a rise past 19600 is needed to induce bullish momentum for a rise towards 20000. Nifty came off sharply from 23781 on Tuesday, in line with our expectation of immediate upside to be capped at 28000. While below 23800 view is bearish towards 23000. Nikkei is heading towards 37750-39000 zone as expected but we need to see if the support region holds to produce a bounce. Else, Nikkei could be vulnerable to a sharp decline on a break below 37750. Shanghai could range within 3400-3250 for now. A sustained rise past 3400 is needed for the index to pick up bullish momentum again in the near term.

Crude prices face rejection near their respective resistance levels and can fall towards 71 (Brent) and 67 (WTI) in the near term. Gold and Silver need to surpass their immediate resistance to see higher levels of 2700-2750 and 32.0-32.5 respectively else can fall towards 2600/2550 and 30.50/30.00. Copper and Natural Gas look bullish towards 4.3-4.4 and 3.5-4.0 respectively. The rise in Natural Gas is triggered by the forecast of colder temperatures in the US from 28th Nov to 2nd Dec which could increase heating demand.

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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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