Vikram Murarka
Kshitij Consultancy Services
Weaker than expected US PPI ramped up the expectations that rate cuts by FED can happen soon. The Dollar Index tested 97.60 before rising a bit from there. A further rise past 99 will confirm that the downtrend has ended and a fresh rally can begin. On the other hand, Euro tested the resistance near 1.16 before coming down. The ongoing fall can get extended to 1.14 or lower. The EURINR can soon test the target of 100 before eventually turning lower as well. EURJPY can get dragged towards 164-163 if it fails to see a rise past 167. USDJPY is coming off as anticipated and while below 146, there is a scope for it to extend the fall towards 142-140 in the near term. AUDUSD and Pound can continue to hold their respective ranges of 0.6500-0.6400/635 and 1.36-1.34in the near term. The USDCNY below 7.20 can test 7.17/16 before halting. The USDINR, has upside capped at 85.75. The targets of 85.25-85.00 are kept open for now.
The US Treasury Yields are coming down as expected. They have room to fall further. The view remains bearish. The German yields have declined sharply and are coming close to their key support. The price action after testing the support will need a close watch to see if a bounce is happening or not. The 10Yr GoI has dipped. But support is there to limit the downside. The view of seeing a rise continues to remain intact.
Increasing tensions in the Middle East and final tariff deals of US with other countries are concerns along with incoming economic data are keeping the equity indices volatile. The Dow rose towards 43000 as expected but needs to see a sustained break higher, to continue moving up, while the Dax continues to decline towards 23500, from where a bounce is possible. Nifty could defend 24800 and rise back to 25000-25200 to avoid further downside extension to 24500. Nikkei and Shanghai are down and can test 37500 and 3350 respectively before a possible rebound.
Crude prices surged sharply after reports of Israel striking Iran, raising fears of supply disruptions. Brent rose above $74 and may head towards $78–$80, while WTI climbed past $70, eyeing $76–$78. Gold broke above $3,400 and could target $3,500–$3,600, while Silver may range between $36.5–$37 before moving towards $38–$40. Copper is expected to stay within the $4.80–$5.00 range. Natural gas has rebounded from $3.50, likely to hold within $3.50–$3.80 for now.
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The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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