Morning briefing: The US treasury yields remain lower

Vikram Murarka Kshitij Consultancy Services

The Dollar Index needs to rise past 100 to head towards 101-101.50. We retain our view that the Euro and EURINR can witness a fall back to 1.12-1.11 and 96.0-95.5 respectively. EURJPY is trading lower within its 164-160 range. USDJPY if fails to rise past 144, can be vulnerable to initially test 140 in the near term. AUDUSD is trading near the crucial resistance around 0.635-0.640. The USDCNY is rising as anticipated and if sustained, can test 7.35 as well. Pound while above 1.30 has scope to head towards 1.35. USDINR is coming off as expected and while below 86, view remains bearish to 85.50-85.30 or even lower to 85.00. The US Retail Sales, US Industrial Production & US Capacity Utilization data releases scheduled today.

The US Treasury yields remain lower. The yields have to sustain above their upcoming support in order to keep alive the chances of rising back. If the support is broken, then more fall can be seen. The German yields have inched up. It is likely to be short-lived. The view remains bearish to see more fall from here. The ECB meeting outcome tomorrow will be important to watch. The 10Yr GoI is testing its crucial support. We expect this support to hold and the yield to see a rise in the coming days.

Dow seems to be struggling to see fresh buying and could either rise to 41500 or fall below 40000 in the near term. Asian equities have opened with a decline today with Nikkei and Shanghai down by around 0.73%. It is a Wait and watch scenario till further directional clarity is seen. Dax and Nifty look bullish but it has to be seen if the Nifty can dip slightly today in line with the negative Asian indices.

Brent and WTI remain bearish, targeting $60–$55 and $55–$50 respectively. Gold has hit resistance near $3,300; a drop to $3,200–$3,100 is possible unless it breaks higher towards $3,400–$3,500. Silver stays firm above $32 with potential to rise to $33–$34. Copper faces resistance near $4.70 and may fall to $4.40–$4.20. Natural gas continues its decline, eyeing $3.00 before a possible rebound.

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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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