Morning briefing: Pound may head towards 1.3300 – 1.3350

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is holding well above the support at 100.50, which if holds can take it higher towards 101.50 in the near term. A better directional clarity could be expected post the FOMC meeting scheduled today. Euro has resistance between 1.1150-1.12 which suggests a limited upside for the pair. USDJPY and EURJPY needs a strong break past 142 and 158 respectively to become bullish further, else both look bearish towards 139-138.40 and 154-152 respectively. Aussie and Pound if sustained above current levels, may head towards 0.68/6850 and 1.33-1.3350 respectively. USDCNY for now can hold the immediate range of 7.12-7.08. Bearishness would only strike in on a break below 7.08 if seen. EURINR has risen past 93 but needs to sustain to rise towards 93.50/94 else can fall back towards 92.40-92.00. USDINR has broken below 83.80 but we expect the pair to rise back towards 83.90 in the coming sessions.

The US Treasury yields remain stable ahead of the US Fed meeting outcome tonight. The trend is down and there is room to fall more from here. A 25-bps rate cut is already factored in the market. A higher rate cut today or if the dot plot shows a revised forecast for more rate cuts for the rest of the year/next year will be more bearish for the yields. The German yields have bounced but are unlikely to sustain. The downtrend is likely to resume, and the yields can fall more. The 10Yr GoI witnessed a corrective bounce as expected. The resistance ahead can cap the upside and keep the broader downtrend intact.

Dow Jones continues to rise but has crucial resistance overhead, which if holds, can lead to fall from there. Key focus is on the FOMC meeting today where the central bank is expected to cut interest rate by 25bps or 50bps. DAX has broken above its resistance and while this break sustains, a further rise can be seen. Nifty is stuck in a very narrow range but is positive to see a break on the upside of the range. Nikkei appears range bound. Shanghai hovers above it support, which if holds, can produces a bounce back..

Brent and WTI have entered into the key resistance zone. Need to see if Crude prices able to break above the resistance or not. Gold has fallen back as the mentioned resistance held well. Silver, Copper and Natural Gas have too declined. Gold, Silver and Copper may come down to test 2550, 30 and 4.2/4.1 before a bounce back might take place. Natural Gas can fall towards 2.20. Today's FOMC meeting would be crucial to watch as it could bring volatility in the market and set the tone for future direction.

Visit KSHITIJ official site to download the full analysis

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.

GBP/USD back to 1.3250, down modestly for the day

GBP/USD now comes under fresh downside pressure and recedes toward the mid-1.3200s on Tuesday, partially reversing the optimism seen at the beginning of the week. Meanwhile, Cable’s bearish tone follows the resumption of the upside traction in the Greenback, always amid the sharp rally in USD/JPY.

EUR/USD looks inconclusive in the low 1.1400s

EUR/USD alternates gains with losses in the 1.1420 region in the latter part of the NA session on turnaround Tuesday. The pair’s vacillating price action comes amid the lack of clear direction in the US Dollar. Meanwhile, market participants are expected to gear up for the upcoming key releases on the US docket and developments from the ECB Forum in Sintra.

Gold clings to daily gains beyond $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Coinbase, BlackRock, Visa and Stripe support Open Standard’s OUSD stablecoin

Open Standard on Tuesday unveiled Open USD (OUSD), a dollar-pegged stablecoin designed for global payments, backed by more than 140 companies. The founding coalition spans payment networks, banks, fintech firms, technology platforms and crypto infrastructure providers, including Shopify, Google, Ripple, Solana, Coinbase, Visa, Mastercard, Stripe, BlackRock and BNY.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.