Morning briefing: The ECB meeting outcome today
The Dollar Index is trading within a narrow range of 99-100. Need to see a break on either side for further clarity. The Euro and EURINR can witness a fall back to 1.12-1.11 and 96.0-95.5 respectively before attempting to rise back. EURJPY is holding the range of 160-164 for now. USDJPY can have downside limited to 140 for now. A rise past 144 on the upside will be needed to bring upper targets into picture. AUDUSD continues to trade between 0.61-0.64 range. The USDCNY above 7.30, can attempt to test 7.35 as well. Pound is coming off from 1.33 and further decline below current levels will assume that it has peaked out and a fall to 1.30/29 can happen. USDINR remains bearish to 85.30-85.00 in the near term. Watch out for the ECB meeting, US Philifed Index & US Housing starts data releases scheduled today.
The US Treasury yields continue to move down. A further fall breaking the immediate support can drag them much lower going forward. The German yields remain lower. The bearish view is intact. The yields can fall more. The ECB meeting outcome today will be important to watch. The 10Yr GoI has declined below its key support. This is contrary to our expectation to see a bounce from this support. While this break sustains, the yield can fall more in the coming days.
Asian equities are trading higher today while the Dow ended lower, revisiting levels below 40000 keeping danger of testing 39000-38000 alive in the near term. Dax closed above 21300 yesterday but needs a strong follow through buying to rise back towards 21800-22000 else could drag down towards 19600. Nikkei and Shanghai are trading higher today and could see a slow upmove from current levels. Nifty is also likely to move up targeting 23700/23800 soon.
Crude prices can remain in the range of $68–$62 (Brent) and $64–$58 (WTI) in the near term. Gold has surged past $3,300 amid US-China trade tensions, with potential to rise toward $3,400–$3,600. Silver remains strong above $32, eyeing $34–$35. Copper needs to sustain above $4.70 for further gains; otherwise, it may fall toward $4.40–$4.20. Natural gas continues its downward trend towards $3.10–$3.00.
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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.
