Morning briefing: The US treasury yields have come down

Vikram Murarka Kshitij Consultancy Services

The Dollar Index continues to hold the 99-97/96 range for now. The Euro & EURINR looks bullish towards 1.18/19 and 105 or higher in the near term. EURJPY needs to sustain above 174 to head towards 176, else it can be vulnerable to test 173 initially. USDJPY can test 148 or slightly lower levels before attempting to rise back again. USDCNY can trade within 7.14-7.10 region for some time. Aussie and Pound have recovered well and a breach past 0.66 and 1.35 can open the doors for higher levels in the near term. USDINR can head towards 89.00-89.10, while above 88.50. US Case Schiller & US Consumer Confidence data releases are scheduled today.

The US Treasury yields have come down. Support is coming up which has to hold in order to keep alive the chances of the rise that we have been expecting. The German Yields have declined sharply. Failure to rise back immediately from here will negate the rise that we had expected. It will then drag the yields lower. The 10Yr GoI has broken its narrow range on the upside. A follow-through rise from here can take it further higher. The RBI monetary policy meeting tomorrow will need a close watch.

The Dow and Dax have immediate resistances near 46500 and 24000 which if hold can produce a decline back towards 45500 and 23500-23000 respectively. Only a break past these resistances of seen can trigger a medium term rise. Watch price action near the mentioned resistances. The Nifty dipped to foose lower yesterday but while above 24600/400, it can eventually rise to 25000 and higher. Nikkei continues to fall as expected and could test 44000-43000 unless any immediate rebound is seen. Shanghai has risen well from 3809 and may hold trade within 3800-3900 for the near term.

Crude prices have declined as expected, with Brent falling towards $66 on the back of OPEC+ production outlook and WTI slipping towards $62 while staying within their broader ranges. Precious metals remain firm, with Gold pushing above $3,850 and aiming for $3,900-3,950, and Silver on track to target $47.50-48.00. Copper has surged past $4.90, and a sustained break could open the door to $5.00-5.20, though a dip back towards $4.85-4.75 is also possible. Natural gas, contrary to expectations, broke above $3.20 and may extend its rise towards $3.35-3.40 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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