Morning briefing: Euro has risen well within the 1.0775-1.0850/09 range

Vikram Murarka Kshitij Consultancy Services

Team Kshitij wishes a very happy and prosperous Diwali

The Dollar Index initially rose to the high of 104.43, led by stronger US ADP Employment release but later started coming on lower-than-expected US GDP. Only a sustained rise past 104.50 can take it higher towards 105-105.50. Overall, the view remains bearish towards 103.00-102.50. Euro and EURINR have risen well within the respective ranges of 1.0775-1.0850/09 and 90.50/90-91.50, while the Pound can test 1.2900. The expected rise in USDJPY and EURJPY to 155 and 168 cannot be fully ruled out until a strong break below current levels is seen. Watch out for the BOJ policy meeting scheduled today where the interest rates are likely to remain steady at 0.25%. Aussie can fall towards 0.65-0.6470 region before attempting to bounce back higher. USDCNY is widely ranged within 7.1450-7.11 region. USDINR, if opens near 84.08 can rise towards 84.10/12. Overall, the range of 84.00-84.12 can remain intact. Watch out for the US PCE and Personal Income data release scheduled today and NFP tomorrow.

The US Treasury yields continue to move up in line with our expectations. The bullish view is intact. There is room to rise further before the broader downtrend resumes. The US PCE (2.37% (YoY) in September) data release today will be important. A low PCE number can be negative for the yields. The German yields are coming closer to their resistance. The price action in the coming days will need a close watch to see if a reversal is happening or not. The 10Yr GoI has come down into its previous narrow range again. The sideways consolidation can remain in place for some time before a rise happens. Bias remains bullish.

Global equity indices remain under pressure, closing near the recent session lower. The Dow Jones faced resistance near 42500, subsequently retreating below 42200. However, while support at 42000-41800 holds, the index retains a bullish outlook with a potential upside toward 43,500-44,000. The DAX index tested key support at 19200, briefly dipping to 19201 before partially recovering. A further test of 19000 is possible before a potential rebound towards 19800-20000. In India, the Nifty index continues to show weakness, unable to gain above 24500. While trading below 24600, the index remains vulnerable to further declines toward 24000 or lower. Japan’s Nikkei index opened lower but remains above the 39000 level, keeping the near-term outlook positive, with the potential to advance to 40,000 and beyond. Meanwhile, the Shanghai Composite trades near the lower boundary of its current range at 3250. This range could hold with movement between 3250 and 3350; however, a breakdown below 3250 may prompt a further decline toward 3200-3150.

Crude prices saw some recovery after the US weekly EIA report showed a draw in the crude stockpiles. Near term view remains intact to see a fall towards support levels of $68 on Brent and $65 on WTI. Gold tested its immediate resistance and could fall back to 2750 in the near term before continuing its uptrend. Silver has fallen but could bounce back to 35.0-35.5 while above 33.5. Cooper remains ranged between 4.43-4.30 for some time. Natural Gas looks bearish towards 2.6-2.4.

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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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