Morning briefing: The US treasury yields have risen sharply

Vikram Murarka Kshitij Consultancy Services

Donald Trump announced 25% tariffs on Japan and South Korea, effective from 01-Aug-25. The Dollar Index needs a break past 99 to make the outlook bullish. Till then the range of 96-98/99 can hold. The Euro had slipped to 1.1686 but later rose above 1.17 again. The target of 1.19-1.20 is kept open for now. EURINR needs to give a break on either side of its 100-101 range. EURJPY has risen past 170 and if sustained, can head towards 175 in the near term. USDJPY and USDCNY can broadly trade within the 142-147/48 and 7.14-7.18 region respectively in the near term. The Aussie and Pound have immediate support around 0.645 and 1.35 level respectively and while it holds. The pairs can continue to trade within 0.645-0.660 and 1.35-1.38 range. USDINR tested 86.0275 before cooling down. Need to see whether the rise extends past 86 or the range of 86.00-85.50 holds for some time.

The US Treasury yields have risen sharply. A further rise from here can turn the view positive and take the yields higher. That will negate our earlier bearish view of the yields reversing lower. The German yields have risen sharply. That keeps alive our bullish view. The yields can rise more from here. The 10Yr GoI remains stable within its sideways range.

The Dow Jones declined after Trump sent put letters of trade tariffs to about 12-14 countries and on news of a fresh political party by Elon Musk. The dow can dip to 43500-43000 before eventually rising towards 44000. On the other hand, Dax, Nikkei and Shanghai have risen and could be headed towards 25000, 41000 and 3500 respectively. Nifty was stable yesterday but could have scope to rise towards 25600 or higher in the medium term.

Crude prices rose as expected, with Brent nearing $70 and WTI above $68, supported by Saudi price hikes and Middle East tensions. Gold remains range-bound between $3,250–$3,400, while Silver holds a bullish outlook towards $38. Copper may dip to $4.90 before rebounding towards $5.40. Natural gas bounced from $3.2750 and is likely to rise further towards $3.50.

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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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