Morning briefing: The Yen is overall in depreciating mode

Vikram Murarka Kshitij Consultancy Services

Fresh strikes between the US and Iran once again seem to gain dominance, overall impacting the price movements. However, the Dollar Index and Euro are expected to remain in a range for the near term between 100.40-101.40 and 1.1370-1.1470 region, with some chances of the Dollar Index rising to 102 and the Euro testing 1.1350 or lower. The Yen is overall in depreciating mode, targeting 163/165 which could push EURJPY to 186 initially and further towards 187/188. USDCNY could fall towards 6.78 while below 6.81. USDINR has risen back sharply above 95.50, and while the rise sustains, it can test 95.75-96.00, which could lead the EURINR to rise further towards 110 given the Euro may remain ranged. Aussie and Pound struggle to rise above 0.70 and 1.34, and hence could remain range-bound within the 0.69-0.70 and 1.33-1.34 region for the very near term.

The US Treasury and the German Yields have risen sharply. A strong rise in the oil price has pushed the yields higher. Both the US and the German yields can rise more from here. The 10Yr GoI has risen above its intermediate resistance contrary to our expectation. It can rise further to test its next resistance and possibly can turn down from there.

Global equities remain under pressure as renewed Middle East tensions continue to weigh on market sentiment. Dow and DAX can decline further towards 52000-51800 and 24800-24500 respectively. Nifty remains weak below 24000 and is vulnerable to a fall towards 23600-23500. Nikkei also remains bearish and can decline towards 66000-65000. Shanghai continues to weaken and can fall further towards 3925-3900.

Crude prices have surged sharply on renewed Middle East tensions and rising fears of supply disruptions. Brent and WTI can rise further towards $85-$90 and $80-$85 respectively. Gold remains weak and can test the key $4000 support, while Silver remains vulnerable to a decline towards $55. Copper has turned weak amid heightened geopolitical tensions and can fall further towards $5.85-$5.75. Natural Gas is likely to continue trading within the broader $3.00-$3.50 range.

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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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