Morning briefing: Euro defends the 1.1300 support

Vikram Murarka Kshitij Consultancy Services

The Dollar index could trade above 101 but needs to see whether it can breakout above 102 while Euro has corresponding support at 1.13. USDJPY can slowly rise back towards 159 while above 156 while EURJPY can trade within 181-178 region for the near term. USDINR has mild scope of testing 95.50 while below 96 but looks eventually bullish for a rise towards 96.25/50. Aussie can test 0.69 before reboundung while Pound is bullish above 1.32.

The US Treasury Yields are moving up in line with our expectation. They are coming close to our expected levels. Need to see if a corrective fall is happening thereafter or the upmove is extending. The US PCE rose 3.42% (YoY) in August, up from 3.36% in July. Higher PCE strengthens the case for another rate hike from the Fed. This can continue to support the Treasury Yields. The German Yields have dipped further. Failure to rise back immediately can take them further lower. Thereafter the broader upmove can resume. The 10Yr GoI has risen back well from its low yesterday. The outlook remains bullish. The yield can rise further.

Dow has fallen as expected and can decline further towards 51000. DAX remains under pressure below 25500 and can fall towards 25000. Nifty can gradually rise towards 23000 while holding above 22500. Nikkei has turned stronger above 67000 and can rise towards 69000-70000. Shanghai remains positive and can rise towards 3875-3900.

Brent and WTI have found support after Russia extended its diesel export ban through October. Gold needs to hold support for a rise towards $4300-$4400. Silver needs to hold $60 for a recovery towards $63-$65. Copper remains weak and can decline towards $6.60-$6.50. Natural Gas risks further downside towards $2.80-$2.60 below $3.00.

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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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