Morning briefing: Pound appears bearish towards 1.2000

Vikram Murarka Kshitij Consultancy Services

The Trump's statement on not imposing tariffs immediately led the Dollar to weaken against major currencies. The Dollar Index has broken below 108.75 but could find deeper support around 108.00-107.75 region. Our target of 111 is kept on hold for now. The Euro has risen well but could face rejection from 1.04. EURINR continues to remain volatile within the 90-88 region. USDJPY has slipped again to support around 155, but while it holds; there could be scope to see a rise back towards 158 in the near term. AUDUSD and Pound appear bearish towards 0.61-0.60 and 1.20 respectively while below 0.630 and 1.24/26. EURJPY has an upside caped at 164 and a break below 160 if seen, can drag it lower to 157-156. USDCNY has been coming off sharply but could find support near 7.25 region. USDINR on the NDF is also trading lower and we can witness a lower opening in our markets as well. Later, as the buying pressure strikes in, the spot is likely to move higher. Our view remains intact for it to head towards 86.80 by the end of Jan’25.

The US Treasury yields have declined sharply in the early Asian session today. The yields are coming down in line with our expectation. There is room to fall more from here before the broader uptrend resumes. The German yields continue to dip gradually. The yields can fall more while they remain below their immediate resistance. The 10Yr GoI remained stable. The yield can fall from here before reversing higher again.

The Dow Jones was closed yesterday. The index maintains a bullish outlook towards 44,000, and a break above this level could extend the rally to 45,000. DAX is heading towards 21300-21500. Nifty is holding above 23,000, trading within the 23,000-23,500 range. A breakout on either side is necessary to gain directional clarity. Nikkei is attempting to rise past 39,000, with the potential to move further towards 40,000. Shanghai, unable to sustain a move above 3,250, is trading below it. However, while above the 3,200-3,150, it retains the possibility of rising towards 3,300-3,350.

Crude prices have fallen further down due to the Trump's inaugural uncertainty. The prices are expected to decline further towards 79 (Brent) and 75 (WTI) in the near term. Gold and Silver looks uncertain for now as they have to break above their immediate resistance levels to be bullish towards our earlier mentioned levels of 2800-2850 and 33-34 respectively. Copper and Natural Gas can fall towards 4.2 and 3.6 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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