Morning briefing: The US treasury yields are moving

Vikram Murarka Kshitij Consultancy Services

The Dollar Index holds strong above 101 while the Euro has dipped below 1.14, moving as per its intrinsic near-term trend. Euro can soon target 1.1350-1.13. The ECB kept rates unchanged yesterday but has high scope for a rate hike in September. USDJPY continues to rally, targeting 164.50-165 while Aussie and Pound have declined sharply as expected on Dollar strength triggered by the rally in Brent crude price to 102. EURINR looks bullish towards 110.50-111 while USDCNY can trade within 6.75-6.7850 for some time. USDINR is bullish towards 97.

The US Treasury Yields are moving up as expected but at a faster pace. Surge in oil price is pushing the yields higher. The yields can rise further from here. The German Yields are inching up. The bullish view is intact. They have room to rise further. The ECB kept the rates unchanged in its meeting yesterday as expected. A rate hike in September is widely expected now. The 10Yr GoI is moving up. It can rise further from here and then can resume its broader downtrend.

Global equities have turned weaker amid escalating tensions in the Middle East. Dow is attempting to break below 52000 and could decline towards 51500-51000 if the breakdown is sustained. DAX remains vulnerable below 24700 and can fall towards 24500-24000. Nifty has slipped below 24000 and can decline further towards 23600 while it remains below this level. Nikkei continues to weaken below 65000 and can fall towards 64000-63000. Shanghai has also turned weak and can decline towards 3800-3750 while below 3900.

Crude prices have surged amid escalating geopolitical tensions and supply concerns. Brent and WTI can rise further towards $110 and $95 respectively. Gold is likely to remain within the broad $4000-$4200 range while support at $4000 holds. Silver can continue to trade within the $55-$65 range. Copper has turned weaker after a sharp correction and could test $6.28-$6.25 before recovering. Natural Gas is expected to remain range-bound between $2.80 and $3.00 for some time.

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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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