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Morning briefing: The US treasury and the German yields

The Dollar Index has rebounded yet again, moving above 99.00 and dragging the Euro below 1.16. USDJPY can attempt to test 160-161 before a reversal is seen from there. For now, the view is bullish above 158. Aussie and Pound have declined back after a brief bounce seen earlier. Both currencies are headed towards 0.70 and 1.33, respectively, from where a bounce can be expected. The EURJPY can trade within the 185-184 region. EURINR may trade within 112.50-111.50, while USDCNY could fluctuate within the 6.79-6.83 region for the rest of the week and the next. USDINR has scope to rise to 97 if it sustains trade above 96.50.

The US Treasury and the German Yields have risen back very well. The Treasury yields are holding well above their support. That keeps our broader bullish view intact. The yields can rise more. The German yields can also rise further if they get a strong follow-through rise from here. The 10Yr GoI has dipped. But bias remains positive to see more rise. Supports are there to limit the downside if it dips further.

Equities broadly remain weak and slightly mixed. The Dow Jones can come down towards the lower end of its 48700-50200 range. DAX looks mixed after it failed to sustain the intraday rise yesterday. It can go either way from here. Nikkei is coming down towards 59000 in line with our expectation. Shanghai has risen above its resistance and can rise further if it sustains higher. However, a rise above 4200 is needed to turn the big picture bullish. Nifty is struggling to breach 23800 which is necessarily needed to go up. Else the danger of falling back to 23300-23000 will still be there.

Crude prices have risen back and could be headed towards $115/120 soon while precious metals have tanked and could be headed towards $4400 (Gold) and $70 (Silver). Copper has dipped too and can test $6, while there is a slight rise in the Natural Gas prices above $3 and can rise in the near term targeting $3.25.


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Author

Vikram Murarka

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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