Morning briefing: Euro can soon fall back below 1.1200
Dollar index rose sharply on higher CPI release but has given up all its gains to fall back sharply to 102, taking the major currencies higher like Euro which can soon fall back below 1.12.The decline came in along with the dip in the US yields and easing of oil prices. USDJPY and EURJPY have dipped but could be short lived. EURINR looks bearish towards 105 while below 107 but USDCNY could trade sideways for sometime while above 6.69. USDINR can attempt to test 94.80/50 with some chances of a sharp bounce back from there in the next few sessions back to 95.50 or higher. Aussie and Pound looks ranged and could be mildly bullish for the next couple of sessions.
The US Treasury Yields have come down sharply from their highs. The Headline CPI rose 3.72% (YoY) in September, up from 3.35% in August. This triggered a sharp rise in the Treasury Yields initially, but the impact was short-lived. The Treasury Yields can see an extended fall from here (a little lower that what we have expected earlier). But the broader uptrend is intact and is likely to resume after this extended fall. The German Yields can come down in the near-term and then resume their broader uptrend. The 10Yr GoI is moving up in line with our expectation. The bullish view is intact, and the yield can rise more from here.
Dow needs to hold the 13-day MA support near 51372 for a rebound towards 52000, else it can fall towards 51000. DAX is flat above 25000 with key support at 25200, below which it can decline towards 25000-24800. Nifty remains weak below 22700 and can fall towards 22400. Nikkei has room to extend the fall towards 64000. Shanghai needs to hold near 3700 for a gradual recovery towards 3800.
Brent needs to break above $108 to rise towards $110-$112, while WTI could remain within $90-$100. Gold needs to hold above $4100 to recover towards $4300-$4400, else it risks falling towards $4000-$3900. Silver could extend its fall towards $52-$50. Copper needs to hold above $6.55 to rebound, while a break below could drag it towards $6.40. Natural Gas could trade within $3.00-$3.50 for some time.
Visit KSHITIJ official site to download the full analysis
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.
