Morning briefing: Euro has fallen from 1.17550

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has recovered slightly while, the Euro has fallen from 1.17550. With the markets awaiting cues of possible rate hikes ahead for the year from the central bank meetings this week ahead (FOMC tomorrow and ECB day after) the currencies could remain stable. The Dollar Index and Euro can trade within 97.50-99 and 1.1650- 1.18 respectively, while the EURINR is likely to remain within 110-112. EURJPY and USDJPY can trade within 186-187.50 and 158-160.50 region while USDCNY has scope to test 6.855 while above 6.81. Pound and Aussie are likely to trade within 1.3430-1.36 and 0.7250-0.71 region with the USDINR trading just below crucial resistance near 94.30/50.

The US Treasury Yields have risen sharply on the back of sharp rise in crude prices and ahead of the central bank policy meetings this week. With the FOMC tomorrow and the ECB on Thursday, we may expect the yields to rise this week followed by a possible decline later. The US 10Yr and 30Yr yield are trading at crucial resistance levels which need to hold for a decline; else sharp upside breakout looks possible. The German yields have moved up well and are up for some more rise in the next few sessions. Markets expect ECB and BOE meetings this week to open up avenue for rate hikes later -% may hold for the near term.

Dow can decline towards 49000-48500 while below 50000, and DAX may test 24000 while below 24500. Nifty has turned positive after sustaining above 24000 and can rise towards 24400-24600. Nikkei remains strong above 60000 with upside towards 61000-62000. Shanghai has recovered slightly but while below 4115, downside towards 4000 remains likely.

Crude prices remain firm with Brent likely to rise towards $115 and WTI towards $100 in the near term. Precious metals remain under pressure for now, with Gold vulnerable towards $4600 and Silver towards $70 before a possible bounce back. Copper is moving sideways and may stay range bound between $6.00-$5.80. Natural Gas is also likely to remain within the $2.80-$2.55 range 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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