Morning briefing: RBI policy meeting is due today

Vikram Murarka Kshitij Consultancy Services

Near-term stability can be expected in the Dollar Index, Euro, EURJPY, USDJPY, Aussie, Pound and USDINR within 100.20-99.50, 1.1550-1.15, 182-181, 158-156, 0.71-0.70, 1.35-1.34 and 95.50-95.00, respectively, before moving in a specific direction in the medium term. EURINR is likely to sustain below resistance at 100.30. RBI policy meeting is due today.

The US Treasury Yields have come down sharply. A strong fall in oil price following the news that the Strait of Hormuz could be reopened has dragged the yields lower. Support is there near current levels. Failure to bounce back from there can trigger an extended fall. We will have to wait and watch. Our expected rise is just getting delayed but has not been negated. The German Yields are coming closer to their support. We expect them to bounce back and resume the overall uptrend from there. The 10Yr GoI has dipped further. It has to sustain above its immediate support to go back up again. Else the broader downtrend can resume straight away. The RBI monetary policy meeting outcome is due today and it will need a close watch.

Global equities have strengthened on optimism surrounding easing tensions in the Middle East. Investor sentiment has improved on expectations that the Strait of Hormuz could reopen soon, easing concerns over global energy supplies. Dow and DAX remain bullish and can rise further towards 55000-55500 and 27000-27500 respectively. Nifty continues to hold a positive bias and can advance towards 25000-25200 in the coming weeks. Nikkei has turned bullish and can extend its gains towards 67000-68000. Shanghai is likely to remain range-bound within the 3750-3900 band while below 3900.

Commodities remain mixed as easing geopolitical tensions have weighed on crude prices. Brent and WTI can decline further towards $75-$70 and $70-$65 respectively. Gold is likely to remain range-bound within the broad $4000-$4200 range, while Silver can continue to trade between $55 and $62. Copper remains bullish after breaking above $6.60 and can rise further towards $6.70-$6.80. Natural Gas has turned weaker and can decline further towards $2.65 in the near term.

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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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