Morning briefing: Pound has immediate support around the 1.3550 region
The Dollar Index is trading higher within its 96-98/99 range. The Euro below 1.17 has a scope to extend the ongoing fall to 1.16 as well. EURINR is trading near the 100 level. Failure to bounce back can drag it further to 99 or even 98 before halting. EURJPY needs to see a rise past 172 to head towards 175. Failure to do so can drag it to 169 initially before the cross attempts to rise back again. USDJPY and USDCNY are holding the respective ranges of 148-145 and 7.18-7.14 for now. The Aussie has crucial resistance at 0.66, need to see whether it holds or not. The Pound has immediate support around the 1.3550 region from where it can bounce back towards 1.37-1.38 levels in the near term. USDINR needs to see either a break past 86.00 or a fall below 85.50 to get further directional clarity.
The US Treasury yields have inched up. But a strong rise above their immediate resistance is needed to go up and avoid falling back. We will have to wait and see. The German yields continue to move up. The bullish view is intact, and more rise is on the cards. The 10Yr GoI remains higher within the range. Need to see if the expected bullish breakout is happening in the coming days or not.
The Dow Jones can test 45000 before facing any rejection there while Dax could head towards 25000 while above 24000. Nifty has fallen below our expected near term support of 25400 and could have scope for a fall to 25250-25000 soon. Nikkei has moved up within the range of 40000-39500 which can hold for the near term. Shanghai has sustained to rally above 3500 and looks strong just now. It can soon head towards 3600 in the coming weeks.
Brent and WTI remain supported above $68 and $66 respectively, with potential to rise towards $72–$74 and $70–$72. Gold is gradually moving higher and may reach $3,400–$3,450 soon. Silver has bounced back and could test $38, with a break above this level opening room for $40–$42. Copper stays bullish above $5.50, targeting $5.80–$6.00. Natural gas rebounded unexpectedly due to lower inventory build and may rise towards $3.40–$3.50 while above $3.20.
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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.
