Morning briefing: The Euro has risen past 1.1750
The Dollar Index is nearing the lower end of its 99-96 range. While the Euro has risen past 1.1750 and if sustained, can head towards 1.18-1.20. EURINR will have to rise past 101 to turn bullish in the near term. EURJPY needs to see a break past 170 to maintain its bullishness, else a corrective to 168-166 can happen. USDJPY has slipped below 144 and failure to see a rise past 144 can drag it further to 142-140. USDCNY has declined below 7.16 and if the fall persists, a test to the support near 7.15/14 can happen before attempting to rise back. The Aussie and Pound continue to hold below the respective resistances near 0.66 and 1.38. USDINR yesterday had risen to 85.77 but while below 86, our bearish view towards 85 remains intact for now. IN Manufacturing PMI and US Manufacturing ISM data releases scheduled today.
The US Treasury yields have declined sharply. The yields are coming down in line with our expectation. The bearish view is intact and there is room to fall more. The German yields are at their resistance. We expect them to turn down from here and fall. A strong rise from here will negate our bearish view. We will have to wait and see. The 10Yr GoI remains near the upper end of the range. The range is intact for now. We retain our bullish bias to see an upside breakout of this range eventually.
Equities are mixed. Dow and Shanghai continue to rise, extending gains from their previous sessions, while Nifty, Dax and Nikkei see some profit taking from their recent highs. While Dow and Shanghai can continue to rise, targeting 41200 and 3450-3500 respectively in the near term; Nifty and Dax could limit their immediate downside to 25400 and 23500 respectively, with upside targets of 26000-26300 and 24500-25000 intact for the medium term. Nikkei could limit its dip to 39000-38500, but can eventually attempt to target 41000+ levels.
Crude prices are holding above key support levels, with rebounds expected towards $70–$72 and $68–$70 respectively. Gold and Silver have bounced back from recent lows, aiming for $3,350–$3,400 and $37.0–$37.5. Copper needs a break above $5.15 to move higher, else it may fall to $5.00–$4.80. Natural gas has dropped but could see a recovery towards $3.50–$3.60 if support at $3.40 holds.
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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.
