Morning briefing: GBP/USD appears bearish towards 1.2000

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is trading near the support of around 108.75. For now, the view remains intact to see a rise towards 111. The Euro can have an upside capped at 1.0350/04 and can fall to 1.02 or lower in the near term. EURINR continues to remain volatile within the 90-88 region. USDJPY has immediate support around 155, above which there could be scope to see a rise back towards 158 in the near term. AUDUSD and Pound appears bearish towards 0.61-0.60, 1.20 respectively while below 0.6250 and 1.24/26. EURJPY is trading at the crucial level of 160, so we need to see whether it holds or not. The upside is capped at 164. USDCNY can gradually head towards 7.35. USDINR has risen well and can head towards 86.70 soon. US Housing Starts, US Industrial Production and US Capacity Utilization data releases are scheduled today.

The US Treasury yields continue to fall. There is room to fall more before the overall uptrend resumes. The German yields remain lower. Failure to bounce back immediately from here can drag them lower. The 10Yr GoI has declined sharply, breaking below its support. This is contrary to our expectation. The yield can fall more from here.

The Dow Jones closed lower. While above 43000-42750, it could attempt to rise past 43400 and move higher towards 44000. The DAX has risen and is nearing 20,700. A sustained break above 20,700 would open doors for a further rise to 21,300-21,500. The Nifty rose slightly. A decisive break above 23,500 is crucial to exit the current range of 23,000-23,500 and avoid the risk of slipping below 23,000, which could trigger a fall toward 22,500. The Nikkei has dipped but continues to trade above the lower boundary of its sideways range of 38,000-40,000. While it holds above 38,000, a rise toward 39,000 and beyond remains likely. The Shanghai index failed to sustain above 3,250 and has retreated back into its sideways range of 3,150-3,250.

Crude prices have fallen slightly but the outlook remains bullish towards 84-86 (Brent) and 82-84 (WTI) for the near term. Gold and Silver needs to break above their immediate resistances to be bullish towards our target levels of 2800-2850 and 33-34. Copper has broken above it's immediate resistance and looks bullish towards 4.5-4.6. Natural Gas can test its immediate resistance at 4.4-4.5 in the coming sessions.

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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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