Morning briefing: The Dollar index has bounced today

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has bounced today but can have scope for a dip while below 98.50. The EURUSD can trade within the 1.1650-1.1780/1.18 region for the next few sessions. EURJPY has risen today but could still have scope for a fall while below 184.50. USDJPY on the other hand needs to see a sustained break above 157.30 to rise further towards 158+ else can fall back to 156.50-156. USDCNY could test 6.80, thereafter whether it would bounce back or decline lower is to be seen. Pound has dipped below 1.36. A rise back above 1.36 can be eventually bullish for the currency. Aussie can test 0.73 or higher in the near term while above 0.72. USDINR declined to 94.05 exactly in line with our expectations but faster on intervention from the RBI. But now, we need to see if 94 holds as immediate support or allows for a further dip to lower support at 93.50 (more likely).

The US Treasury and the German Yields have risen back very well. Support is holding well for both of them in line with our expectation. That keeps intact our broader bullish view. We can expect both the German and US Treasury yields to go higher in the coming weeks. The US unemployment data release today will need a close watch. The 10Yr GoI has bounced slightly but may not sustain. It remains weak to dip more in the near-term before a fresh rise happens.

Dow needs a sustained break above 50000 to rise towards 51000-51500, otherwise the broader 50000-49000 range may continue. DAX has corrected sharply but remains supported above 24250 with chances of a rebound towards 25250-25500. Nifty has pulled back after testing 24500 and may continue to trade within the broad 24500-23500 range. Nikkei remains firm above 60000 with upside towards 63500-64000. Shanghai also continues to hold a positive bias towards 4200 in the near term.

Brent needs a sustained break below $100 to fall towards $95-$90, while WTI must hold below $95 to decline further towards $90-$85. Gold is likely to rise towards $4800-$4900 while above $4500, and Silver extending gains towards $85-$90 while above $70. Copper remains positive above $6 and can rise towards $6.25-$6.30. Natural Gas is likely to stay range bound within the $2.80-$2.55 zone for now.

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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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