Morning briefing: The US Treasury yields have come down further

Vikram Murarka Kshitij Consultancy Services

Major currencies were highly volatile in the last couple of sessions as expected. The Dollar Index, AUDUSD, Pound, EURINR remained volatile within respective ranges of 103.00-105.50/60, 0.67-0.65, 1.3150-1.2900 and 92-90. The ranges are likely to hold in the near term until further directional clarity. Euro needs to see a sustained rise past 1.08, else while below it, the pair can be vulnerable to test 1.06. USDJPY may trade within 155-152/150, while EURJPY has slipped below 165 and if the fall continues, can test 162 soon. USDCNY remains uncertain for now. The immediate target on the upside is coming around 7.22, while the support is around 7.14. USDINR had risen well and while above 84.30, there is enough room for the pair to test 84.50.

The US Treasury yields have come down further. The resistances have held well as expected. Outlook is bearish. The yields have room to fall further. The US CPI data release on Wednesday will be an important event to watch this week. The German yields have come down sharply. But supports are there to limit the downside and keep the bullish view intact. The yields can reverse higher and go up in the coming days. The 10Yr GoI has come down towards the lower end of its range. We expect it to rise back from here and up towards the upper end of the range. The bias is positive to see a bullish breakout of this range eventually.

The Dow Jones briefly rose above the 44000, reaching a high of 44157.29 before closing just below the 44000 mark. Upside potential remains capped near the resistance of 44500. Meanwhile, the DAX lacks momentum to surpass 19500 and has retreated to 19200. A sustained hold above 19000 is essential to keep the outlook for a potential rise toward 19800-20000 intact. The Nifty closed lower, showing limited upside strength above 24600. A drop below 24000-23700 would shift focus to downside targets to 23500-23000. The Nikkei remains stable, trading between 39000 and 39500, with a potential pullback to test the 39000 support level before attempting a move towards 40000. In China, the Shanghai Composite is approaching the 3400 mark, as recent stimulus measures fell short of market expectations.

Crude prices stumble on weaker China energy demand. Brent and WTI could fall towards $67 and $71 respectively in the near term, while below their immediate resistance levels. Metal prices have traded lower on Friday. Gold and Silver can fall towards 2650-2600 and 30.5-30.0 respectively in the near term, while Copper can rise towards 4.4-4.5 above support at 4.3. Natural Gas has dipped but while above 2.6 it could rise towards 2.9-3.0 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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