Morning briefing: Pound can trade within the 1.3600-1.3400 range

Vikram Murarka Kshitij Consultancy Services

BOJ kept the interest rates unchanged at 0.50%. The Dollar Index has resistance near 99, break past which can only take it higher. Else, it can fall back towards 97-96. Euro and EURINR have a scope to fall towards 1.1450-1.1400 and 98.50-98.00 initially before attempting to rise back. EURJPY can test 166 if the fall extends further. USDJPY and USDCNY can remain ranged within the 142-146 and 7.17-7.20 region respectively. AUDUSD and Pound can trade within the ranges of 0.6500-0.6400 and 1.36-1.34 respectively. The USDINR can rise towards 86.40/50 while the support near 85.80 holds. Watch out for the US Housing starts and the US FOMC meeting scheduled today.

The US Treasury Yields are bouncing back after a sharp fall on Tuesday. Broadly the range is intact now, and we remain bearish to see a downside break of this range. The US Fed meeting outcome tonight is going to be very important. Interest rates are likely to remain unchanged. But what is important to watch would be their economic forecast and the future policy rate path. Any significant change in their economic forecast can move the markets sharply. We will have to wait and watch. The German yields remain stable and seem to lack strong follow-through rise. Failure to break the immediate resistance can drag them down. The 10Yr GoI is holding above its support as expected. A sideways consolidation is possible for some time before the yield moves higher.

The Dow and Dax have declined after Trump demanded for "Unconditional Surrender" from the Iran leader. If the Dow breaks below 42000, it can be dragged further to 41000. A broad range of 43000-41000 can hold for a few weeks. Dax can be headed towards 23000-22500 while below 23500. Nifty has fallen as well and could continue to trade within 24400-25200 region with a possibility to test the lower of the range. Nikkei could face rejection from anywhere between current levels and 39000 while Shanghai could trade within 3400-3350 region.

Crude oil prices have rebounded sharply amid escalating Middle East tensions, with further gains expected. Gold remains strong above $3,400, targeting $3,500–$3,600, while Silver has broken out and may rise to $38–$39. Copper is gradually heading towards $4.90–$5.00, and Natural gas has also surged past its range, eyeing $4.00–$4.20 in the coming weeks.

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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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