Morning briefing: US NFP and unemployment data to be released today
The Dollar Index surged yesterday to 102.09 possibly as safe haven amidst the escalating tensions in the Middle East. The index needs to sustain above 102 to continue moving up, else can fall back towards 101-100.50 again. Euro is headed towards 1.10 which needs to sustain to prevent a further dip to 1.0950/1.09. USDJPY and EURJPY could remain below 150 and 164 respectively. Aussie can be ranged from 0.6850-0.68. Watch price action at 0.68 for a bounce or break below from there. The pound saw a significant fall yesterday led by the dovish comments from the BoE Governor. EURINR may trade within 94-92.50/92. USDINR can test 84-84.10 in the near term before facing rejection. Watch US NFP and Unemployment data to be released today.
The US Treasury yields have and come close to their resistances. While the broader trend is down, a break above the immediate resistances can trigger an extended rise before the downtrend resumes. The US Unemployment data release today will be important to watch. If the Unemployment rate (4.2%) goes up from here, it can be negative for the yields. The German yields have bounced. But resistances are there to cap the upside and keep the downtrend intact. The yields have room to fall more. The 10Yr GoI is moving up in line with our expectation. The yield can rise further from here.
Dow Jones is headed towards support near 41700/600 which if holds can produce a bounce back towards 42800/43000 in the medium term. Dax is falling as expected. If it bounces from 18900/800, it can resume upmove towards 19000/20000. Nifty has plunged below 25500 contrary to our expectations. It can test 25000 before pausing there. Nikkei is rising well and could target 39000/40000 while above 37500/38000. Thereafter, a dip can be seen from 40000 in the medium term. Shanghai is closed till 7th October.
Crude prices rose significantly amidst the escalation in conflict in the Middle East, with concerns that Iran and Israel may be on the cusp of a full-blown war. Brent can rise further towards 78-80 while WTI can target 76-77 on the upside. Gold, Silver and Copper looks ranged for the near term between 2700-2640, 32.5-30.50 and 4.5-4.8 respectively. Natural Gas looks bearish towards 2.7-2.6 while below resistance at 3. A break above 3, if seen can extend it to 3.2 before the expected decline is seen.
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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.
