Morning briefing: Pound can head towards 1.3200

Dollar Index continued to decline further amid the higher speculations among the markets for a US rate hike in September and a possible intervention by BOJ yesterday to protect the Yen. Further if the fall continues a test of 103-102 could be seen in the Dollar Index. Euro on the other hand is headed towards 1.10. Watch out for the ECB meeting scheduled today where markets expect rates to remain unchanged. USDJPY and EURJPY have recovered well above their respective supports of 157-156 and 171/170.50 but still needs to see a strong rise past current levels to rise back in the coming sessions. USDCNY above 7.25/24, can head towards 7.28 in the medium term. Aussie and Pound if sustained above current levels, can head towards 0.68/6850 and 1.32 respectively. USDINR can continue to trade between 83.35-83.65 region with bias to the upside. Slight fall can be possible today on stronger Euro and a weaker Dollar. EURINR has risen past 91 and if sustained can extend it further towards 92-93.

The US Treasury yields have dipped below their support. This keeps intact our view of seeing an extended fall in the coming days. The German yields are at their key supports. We expect the yields to bounce back from here and keep the broader uptrend intact. The ECB meeting outcome today will be important to watch. The 10Yr and 5Yr GoI continue to fall in line with our expectation. They have room to test their supports. Failure to bounce back from that support can drag them further lower.

Dow Jones has surged breaking above 40250 and has scope to target 42000. DAX continues to fall over the last 3 sessions but downside could be limited to 18400-18300. Nifty remains bullish to target 24700-25000. Nikkei and Shanghai have fallen sharply. Nikkei might fall towards 39000 while Shanghai might get support at 2900 and trade between 2900-3000 for a while.

Crude prices have recovered sharply but have resistance ahead which may hold and keep them range bound for a while. Gold and Silver can fall towards 2400 and 29.70/50. Copper is near its key support. Need to see if that holds or Copper continues to fall. Natural gas is heading down towards 2.0. We expect 2.0-1.9 to holds and produce a bounce back from there. Key focus is on the ECB meeting today.

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