Morning briefing: US Dollar weakness continues to drive currency movements

Vikram Murarka Kshitij Consultancy Services

Dollar weakness continues to drive currency movements today. Dollar Index remains bearish toward 98.50–98.00, supporting upside in EURUSD, Aussie and Pound, while Dollar-Yen may stay capped below 160. EURINR and EURJPY look bullish toward higher targets while USDCNY remains weak heading towards 6.70. USDINR is likely to stay range-bound below 95.75 as higher crude prices offset rupee gains supported by a weak Dollar.

The US Treasury Yields have risen back sharply. That keeps intact our overall bullish view. The 10Yr Treasury yield is range bound now. We expect it to make a bullish breakout and rise going forward. The German Yields continue to sustain higher but are stable. They have room to move further up from here. The 10Yr GoI has risen sharply. It can rise further from here before resuming its broader downtrend.

Dow is under pressure from rising Treasury yields and weak Walmart earnings, and a break below 52800 could open the way towards 52000. DAX remains weak below 26000 and can decline towards 25750-25500. Nifty continues to strengthen above 24200 and can rise towards 24300-24350. Nikkei remains vulnerable to a decline towards 64500-64000, while Shanghai is hovering near 3900 and could fall towards 3850-3800 on a sustained break below this level.

Brent and WTI are likely to remain range-bound within $80-$95 and $75-$90 respectively until a breakout provides further direction. Gold remains bullish above $4200 and can rise towards $4600-$4650, while Silver can advance towards $70-$75. Copper continues to strengthen in line with expectations and can rise towards $6.65-$6.75. Natural Gas remains positive and can move towards $2.80 and higher in the coming sessions.

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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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