Morning briefing: The Dow Jones has fallen below 43,000

Vikram Murarka Kshitij Consultancy Services

Dollar Index is trading near the crucial level of 104, from where a bounce back is possible. Only a confirmed break below 104 if seen, can drag it further to 102 in the near term. Euro can rise towards 1.09 or even 1.10 if Dollar Index breaks below 104, else the EURUSD can witness a corrective fall in the near term. EURINR continues to trade near the crucial resistance zone between 94-95 region. USDJPY has slipped below 148 and is if the fall continues, can extend it further to 145. EURJPY can remain ranged within 162-156 region for now. AUDUSD has risen past 0.63 but a break past 0.64 will be needed to turn bullish. Pound if sustained above current levels, can test 1.30 on the upside. USDNCY above 7.240-7.225, can attempt to rise back towards 7.28 in the near term. USDINR above 86.80, can attempt to rise back towards 87.25 or higher in the near term. Watch out for the US NFP, US Unemployment and US Avg hrly Earnings are scheduled today.

The US Treasury yields have come down failing to sustain after the resistance break. Failure to rise back can take them lower again and the expected rise will not happen. The US NFP and the unemployment rate data release today will need a close watch. The German Yields remain higher. If the current momentum sustains, there is room to rise more from here. The ECB cut the interest rates by 25-bps as expected and it was largely a non-event for the market. The 10Yr GoI has come down below its support contrary to our expectation. Failure to rise back will negate our earlier bullish view and take it lower.

The Dow Jones has fallen below 43000, keeping our bearish view to 42000-41800 intact. DAX has surged above 23400, with resistance around 23600. Watch price action near 23500-23600 closely. Nifty has risen above 22500, and a sustained rise would take the index higher to 22800-23000. Nikkei has fallen to 37000. A break below 37000 would lead to a further fall to 36000. Shanghai has risen to 3380 and looks bullish towards 3400-3450.

Brent and WTI are trading near their immediate support levels, and while these levels hold, we expect a bounce back towards $70-$71 and $68-$69, respectively. Gold has to break above $2,950 to see a rise towards $3,000; otherwise, it remains vulnerable to a fall towards $2,900. Silver, Copper, and Natural Gas can fall back to $32.5-$32.0, $4.7-$4.6, and $4.1-$4.0, respectively, in the near term while they remain below their immediate resistance levels.

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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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