Morning briefing: Euro is trading higher within the range of 1.1100-1.1200

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is trading within the immediate range of 100.25-101.50/75 which can hold for a while. Watch US PCE and Personal income data release scheduled today. Euro is trading higher within the range of 1.11-1.12, but can extend the fall towards 1.1050-1.10 in the medium term. USDJPY and EURJPY need to see a rise past 146 and 163-164 respectively to make the outlook bullish in the near term. Else, both the pairs are likely to limit the ongoing rise to the mentioned levels and can start coming off. Aussie and Pound are likely to trade within 0.68-0.69 and 1.3440-1.33 respectively for the next few sessions. USDCNY tested 7 before bouncing back from there. Need to see whether it sustains above 7 and rises higher or breaks below it. EURINR could trade within 92-94 region for a few sessions. USDINR can see a dip towards the lower end of its range of 83.70/80-83.40/50.

The US Treasury yields sustain higher. However, there is not much room left on the upside as resistances are ahead. We expect the resistance to hold and drag the yields lower again and keep the downtrend intact. The US PCE (2.5% YoY in August) data release today will be important to watch. A fall in PCE from here can be negative for the yields. The German yields are inching up. There is room to rise further to test their resistances before the broader downtrend resumes. The 10Yr GoI has tested its key support and can bounce back from here going forward.

Dow Jones is stuck in a narrow range of 41800-42300 but bias is bullish to see a break on the upside of the range while it remains above 41750-41700. DAX has broken above the upper end of the range and looks bullish to target further upside. Nifty has indeed risen to 26200 but needs a strong follow-through rise from here to become further bullish and to negate the danger of seeing a corrective fall from here. Nikkei continues to rise and can target 39500-40000. Shanghai has crucial resistance ahead which if holds can lead to a corrective fall.

Crude prices and Natural Gas remains bearish for the near term. Gold and Silver needs to rise past 2700 and 33 to strengthen the bullish momentum or else could fallback. Copper has risen sharply breaking above the resistance at 4.6 and if the break sustains a further rise towards 4.7-4.8 could be seen.

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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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