Morning briefing: Euro towards the crucial resistance at 1.1000

Vikram Murarka Kshitij Consultancy Services

The lower-than-expected US PPI release at 0.10% (M/M%) yesterday took the Dollar Index below 103 and Euro towards the crucial resistance at 1.10. The USDJPY and EURJPY while below 148/148.50 and 162/163 respectively, can resume their downtrend in the medium term. Pound and Aussie have risen past 1.28 and 0.66 respectively and now if sustained, can extend their rise further to 1.29/30 and 0.6650/67 respectively. USDCNY fell sharply yesterday and any break below 7.14 if seen, can make the pair vulnerable to test 7.12/10 on the downside. EURINR has surged past 92 and if sustained can test 93 before topping out. USDINR on the Offshore is trading lower on a strong Euro and a weak Dollar and we are retaining our view of the pair seeing a dip to 83.85/80 initially before attempting to rise back towards 84 or higher again in the medium term. Watch out for the US CPI release scheduled today.

The US Treasury and German yields have dipped and have some more room to continue decline in the near term keeping our bearish view intact. The US CPI data release today will be important to watch. The 10Yr GoI is still stuck inside the narrow range of 6.85-6.90/92% but the bias remains bearish while below resistance at 6.92%. The 5Yr yield too can fall from immediate resistance at 6.92%.

Dow Jones has gained positive momentum after a softer US PPI data. DAX continues to inch up. Both Indexes could target 39800-40000 and 18000-18200 before turning lower from there. Nifty has fallen sharply within the 24500-24000 range and might break on the downside and fall towards 23500 while it remains below 24500. Shanghai remains bearish for a fall towards 2825-2800.

Crude prices have fallen back and might come down further from here. Gold, Silver and Copper lack a strong follow through rise but overall view remains bullish for the near term. Natural Gas has scope to rise towards 2.4-2.5 while above 2.1-2.0.

Visit KSHITIJ official site to download the full analysis

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.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold eyes worst week in a month amid hawkish Fed outlook

Gold is extending Thursday’s late rebound from the weekly low of $4,244 into Asia on Friday, but remains below $4,300. The bullion is headed for its worst week in four weeks amid a hawkish US Federal Reserve outlook and deepening global bond rout.

Ripple, Cardano, Solana: ETF inflows and whale demand signal further rally

Ripple (XRP), Cardano (ADA), and Solana (SOL) continue to experience a steady recovery with double-digit gains so far this month. Ripple and Solana experience firm institutional demand, while the percentage of ADA supply in profit rises, underpinned by interest from large-wallet investors, commonly referred to as whales.

Treasury yields at 2007 highs

The combination of energy prices rising back above $100 a barrel, US PMI’s topping multi-year indexes and FOMC members taking tough tones when discussing future rate paths have all led Treasuries at both ends of the curve with higher yields. Treasury Notes account for close to 52% of all marketable Treasuries, so movements in yields are especially painful for the US fiscal outlook.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.