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.

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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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