Morning briefing: Euro continues to hold within the 1.1800-1.1600 range
Weaker US NFP and higher US Unemployment pulled the Dollar index lower on Friday. Still, the Dollar Index, Euro and the EURINR continue to hold within the respective ranges of 97-99, 1.18-1.16 and 103.50-102.50 for now. EURJPY and USDJPY can trade within the 174-172 region 149-147/46 region, while below 174 and 149. USDCNY can soon test the support near 7.1300-7.1250 before attempting to bounce back again. The Aussie faces immediate resistance at 0.66, below which a pull back towards 0.655-0.6400 looks likely. If the Pound fails to sustain above can fall towards 1.34-1.33. USDINR can test 88.50 in the near term before declining a bit from there.
The US Treasury yields have declined further as expected. Weak jobs data dragged the yields lower as the hopes for rate cuts increased. The US added just 22K jobs to its non-farm payroll. The Unemployment rate on the other hand increased to 4.3%. Failure to bounce back immediately can drag them further lower in the coming days. The German Yields have declined below their intermediate support. If this sustains more fall can be seen from here. That in turn will delay the rise that we have been expecting. The 10Yr GoI is coming down in line with our expectation. It can test its support and then possibly bounce back from there.
Most equity indices are likely to be ranged for the near term. The Dow, Dax, Shanghai and Nifty can trade within 46000-45000, 23000-24500, 3700-4000 and 24400-24850/25000 respectively while Nikkei has jumped sharply today on news of PM Ishibu to step down. The index can test 44000-44500 soon.
Crude prices have weakened as Brent broke support to $65.07 and looks vulnerable to $64–$62, while WTI slipped to $61.45 with scope to fall further towards $60–$58. Gold is attempting to clear resistance at $3,650, and a sustained break could lift it towards $3,700–$3,800, though failure may drag it back to $3,600–$3,500. Silver stays weak below $42 with risks of $40.50–$40.00 unless it breaks higher towards $42.50–$43.00. Copper is under pressure and may dip to $4.40 before a possible rebound towards $4.70–$4.75. Natural Gas has risen and could extend gains towards $3.15–$3.20 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.
