Morning briefing: Pound is nearing the support around 1.3300-1.3270
The Dollar Index needs to breach 99.50 to head towards 100-101 levels. Else, the pullback towards 98-97 looks likely. Euro is currently holding well the support near 1.1570-1.1550 region. Whether the pair will trade within 1.1550-1.1700 region or will it extend the fall to 1.15/14 region will have to be seen. On a break below 101.50 EURINR can get dragged towards 101-100. EURJPY & USDJPY can target 178-180 & 153-154 in the near term. USDCNY continues to consolidate between 7.12-7.14. The Aussie continues to stay within 0.655-0.645 range for now. The Pound is nearing the support around 1.3300-1.3270. Need to see whether the pair bounces back from the support or extends the fall further. USDINR is trading near 87.70 on the NDF and if the spot opens below 87.75 in the onshore then USDINR can get dragged towards 87.50 or even 87.00 in the coming weeks.
The US Treasury yields have bounced well. Some more rise is possible before the yields resume the fall. The German yields remain lower and stable. They have room to fall more to test their support. The 10Yr GoI has risen well but well within its range. A range breakout is needed to get clarity on the next direction of move.
The Dow, Dax and other Asia-Pac indices have risen after a long awaited announcement of a meeting between Trump and Xi Jinping next Thursday in Asia. The Dow is headed towards 47000 while the Dax can rise towards 24500-25000. Nifty is inching higher towards 26000. Thereafter whether the index would face rejection or break higher will have to be seen. Nikkei can test 50000. Thereafter a break past 50000, if seen can open up doors for 52000. Shanghai is headed towards 4000, a break past which if seen can take it towards 4200 eventually.
Crude prices surged after new US-EU sanctions on Russian energy, with Brent rising to $66.36 and WTI to $62.20, both eyeing further gains towards $68 and $64 respectively. Gold and Silver rebounded strongly, targeting $4200-4250 and $49-50 as long as supports at $4000 and $46.50 hold. Copper touched $5.1185, facing resistance near $5.15, with potential for a breakout towards $5.25-5.30. Natural Gas fell to $3.29 after a higher storage build, with chances of extending the decline to $3.20-3.00.
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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.
