Morning briefing: The US treasury yields have declined sharply

Kshitij Consultancy Services Team Kshitij Consultancy Services

The Dollar Index and Euro can continue to trade within 106.50-105/104.50 and 1.0650-1.0750/08 respectively while Dollar-Yen tested 161.95 on the upside before cooling a bit. EURJPY has exceeded our target of 174. Aussie & Pound have risen well but continue to remain sideways within the range of 0.6580-0.6720 and 1.26-1.28 respectively. USDCNY is nearing our target of 7.28 from where an initial dip looks possible. EURINR had risen above 90 but is coming off now. Overall, the pair can trade within 90.30-89.80/50 region for some time. USDINR can continue to trade within its range of 83.30-83.67 in the near term with an immediate range of 83.45-83.60 for today.

The US Treasury yields have declined sharply. Failure to rise back immediately can drag the yields further lower. That in turn will negate the rise that we have been expecting. The German yields have dipped but are likely to rise back again. The broader bullish view is intact. The 10Yr and 5Yr GoI have declined. Key supports are there to limit the downside. We expect the yields to bounce back again from their support.

Dow Jones remains stuck in a narrow range but has scope to see a breakout on the upside. DAX looks mixed. A clear break on either side of the range is needed to get more clarity on future direction. Nifty has risen above the resistance at 24200-24250 and now looks bullish to target new highs from here. Nikkei is heading up towards its key resistance which can halt the current rally. Shanghai has dipped further, but downside might be limited to 2960-2950.

Crude prices have recovered and have scope to test their key resistance in the near term before a corrective dip can be seen. Gold, Silver and Copper have risen sharply, breaking above their resistances after lower than expected US ADP Non-Farm Employment and US ISM Services PMI data, which is a dovish factor for Fed monetary policy. The Metals can rise further from here. Natural Gas remains bearish for the near term.

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Kshitij Consultancy Services Team

Kshitij Consultancy Services

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