Morning briefing: Pound has a scope to extend the fall to 1.3450/1.3400
Lower US Unemployment claims at 231k (241k expected) & greater Philifed Index at 23.2 (1.7 expected) supported the strength in Dollar. The Dollar Index has risen but is facing immediate resistance; a clear break above this level could target 98–99 next. The Euro below 1.19 can target 1.17 or even 1.16 in the near term, while EURINR can continue to consolidate between 104.50-103.00 region. EURJPY has risen past 174 and if sustained, can ascend towards 176-178 in the medium term. USDJPY needs to breach 148 level to rise towards 150-152. USDCNY is slowly inching higher and the pair can target 7.125 and higher levels, while above 7.10. The Aussie has immediate support at 0.66, need to se whether it holds or not. Pound has a scope to extend the fall to 1.345/34 before halting. USDINR has risen past 88 and a break above 88.25 could bring 88.50 into picture. Watch out for the BOJ meeting scheduled today.
The US Treasury yields continue to move up. There is room to rise further to test their resistance. Failure to breach the resistance can drag the yields down again. The German Yields have risen sharply. But resistance is ahead which has to be broken to avoid the fall that we have been expecting. The 10Yr GoI is moving up within the range. For now the sideways range is intact.
Most indices have risen well but could face immediate resistances above current levels. The Dow has risen well but needs to break above 46500 to turn further bullish for the near term. The DAX has also risen well and can test 24000-24500 before facing any rejection. Nifty too is headed towars resistance at 25500 which needs to be breached to establish a bullish momentum for the coming weeks. Nikkei is positive towards 46000 while Shanghai looks stuck within the 3800-3950 region for now.
Brent and WTI remain mixed with Brent needing a break above $68 to rise towards $70–72 or else risk $66–64, while WTI must clear $64 to aim for $66–68 else fall to $62–60. Gold holds above support for a bounce to $3,750–3,800 while Silver has rebounded from $41.50 with potential for a rise towards $42.50–43.00. Copper stays weak towards $4.55. Natural Gas can dip further to $2.90–2.80.
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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.
