Morning briefing: The US treasury and the German yields

Vikram Murarka Kshitij Consultancy Services

Lower-than-expected ADP Employment and US Jobless claims data have kept the Dollar Index lower. The market now awaits the NFP data today. A weaker-than-expected level, if seen, can drag down the Dollar Index lower from current levels, delaying a break above 100 by a week or so. That keeps Euro within the 1.15-1.16 region for the near term while the USDJPY can trade within the broad 159-157 region. EURJPY can slowly rise towards 184 while above 181. Aussie and Pound can trade within 0.71-0.70 and 1.35-1.34 region while USDCNY can target 6.70 while below 6.75. USDINR needs to decisively break above 95.50 to trigger a rally. Till then a range of 94.90/95.00-95.25/50 could hold.

The US Treasury and the German Yields have risen back well from their support as expected. The bullish outlook remains intact for both the German and US Yields. They can rise more from here. The US Unemployment and NFP data release today evening will be important to watch. The 10Yr GoI has dipped further. A break below the intermediate support can drag it further lower from here. Outlook remains bearish.

Dow has turned weaker and can decline further towards 53000. DAX is pulling back but remains constructive above 26000, with scope for a rebound towards 27000 unless it breaks lower. Nifty continues to hold above the key 24500 support and can rise towards 24800-25000. Nikkei remains under pressure but can bounce back towards 67000-68000 while above 64000. Shanghai has strengthened after breaking above 3900 and can advance further towards 4000-4050 in the near term.

Commodities remain volatile as renewed Middle East tensions have lifted crude prices. Brent and WTI likely to stay range-bound within $80-$100 and $75-$90 respectively. Gold remains bullish above $4200 and can rise further towards $4500, while Silver can extend its gains towards $65-$70. Copper remains constructive but needs a sustained break above $6.85 to move towards $6.90-$7.00. Natural Gas has weakened further after breaking below expected levels and can decline towards $2.55-$2.50 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.

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