Morning briefing: The US treasury yields sustain higher

Vikram Murarka Kshitij Consultancy Services

Donald Trump has announced new tariffs on 69 countries, set to go into effect on 07-Aug. As a result, the Dollar Index has moved up further and can head towards 101 soon. The Euro and EURINR are looking bearish towards 1.13 and 99 respectively. EURJPY bounced from 169.74 itself and if sustained, can test 173-174 as well. USDJPY and USDCNY have risen past 150 and 7.20 respectively and both the pairs have the scope to extend the ongoing rise towards 152-155 and 7.2250-7.2500 respectively. The Aussie has slipped below 0.6450 and can fall further to 0.640-0.635. The Pound is coming off as expected and the lower levels of 1.30 or even 1.28 can be tested in the medium term. USDINR has cooled down a bit as anticipated. While below 87.75, a further dip to 87 is possible. IN Manufacturing PMI, US ISM Manufacturing, US NFP, US Unemployment and the US Avg hrly Earnings are some of the important data releases scheduled today.

The US Treasury yields sustain higher. The bias will remain positive to see more rise while they sustain above their immediate support. The US NFP and the unemployment data release today will need a close watch. The German yields have dipped slightly. But the view remains bullish and the yields can rise back again. The 10Yr GoI has come down from near the upper end of the range. For now, the sideways range continues to remain intact.

The Dow Jones declined sharply dragging down other major equity indices as well. While the Dow can test 44000-43800, Dax can also fall to 24000 before attempting to rebound. Nifty, Nikkei and Shanghai have dipped as well and could initially test supports near 24600-24400, 40500-40000 and 3550 respectively before a bounce is seen eventually in the medium term.

Brent and WTI have dipped unexpectedly but are still expected to rise towards $75 and $72 respectively. Gold remains bullish above $3300, targeting $3400–$3450, while Silver’s break below $37 signals a bearish move towards $36–$35. Copper continues its downward trend towards $4.20–$4.00. Natural gas, despite rising above $3, maintains a bearish outlook with a target of $2.70.

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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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