Morning briefing: The Dollar Index trades stable ahead of the US CPI and PPI data releases

Vikram Murarka Kshitij Consultancy Services

The Dollar Index trades stable ahead of the US CPI and PPI data releases and could be seen to trade within 100.40-102 region keeping Euro above 1.1370 for now with a possible gradual decline to 1.13 later. EURINR may rise on expected rise in the USDINR towards 96 while the USDJPY could reflect the movement in the dollar index after the inflation data release today. However, USDJPY may hold above support at 161.50 targeting 163/165 eventually. EURJPY may remain confined within 183-186 zone unless a decisive breakout occurs. USDCNY could retest 6.7850/6.80 if it sustains the rise from current levels due to fresh dollar strength. Aussie and Pound are likely to remain range-bound within 0.68-0.70 and 1.33-1.35 region respectively, while USDINR looks bullish targeting 96.

The US Treasury Yields continue to move up and are just above their intermediate resistance. A strong follow-through rise from here can take them further higher. The US CPI data release will need a close watch. The German Yields have risen back as expected. The bullish view is intact, and the yields can rise more. The 10Yr GoI is holding above its support. That keeps alive the chances of a rise first before the next leg of fall happens.

Global equities remain under pressure as geopolitical uncertainty continues to weigh on market sentiment. Dow can decline further towards 52000-51800, while DAX is attempting to break below 25000 and could fall towards 24800-24500. Nifty is holding steady and may continue to trade within the 23800-24400 range. Nikkei has turned weaker after breaking key support and can decline towards 66000-65000. Shanghai is also testing crucial support near 3900, with a break lower opening the way towards 3850-3825.

Commodities remain mixed as escalating Middle East tensions continue to support crude prices. Brent and WTI can rise further towards $90 and $85 respectively, with Brent turning more bullish above $90. Gold is testing the crucial $4000 support, which needs to hold to prevent a deeper decline towards $3800-$3600. Silver is likely to remain within the $55-$65 range, while Copper continues to face resistance near $6.30. Natural Gas remains weak and can decline further towards $2.85-$2.80.

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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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