Morning briefing: The US Treasury and the German yields

Vikram Murarka Kshitij Consultancy Services

Good Morning!

The lower US ADP Employment release at 99k led the Dollar Index to extend its fall below 101 before slightly recovering from there. US NFP and Unemployment release today would be important to watch as to see whether the Index sustains above 101 or not. Euro on the other hand has risen past 1.11 and if sustained can further rise towards 1.1150-1.12 in the near term. USDJPY and EURJPY look further bearish in the near term while below 145 and 160 respectively. Aussie and Pound have risen well but a break past 0.6750 and 1.32 will be needed to maintain the ongoing bullishness. USDCNY is nearing the lower end of the 7.12/14-7.08 range. EURINR has risen past 93 and needs to hold well above the current levels to head towards 93.50-94. USDINR can continue to trade between 83.80 and 84.00.

The US Treasury and the German yields are coming down in line with our expectation. The bearish view is intact, Both the German and US Treasury yields can fall more from here. The US Unemployment data release today will be important to watch. The 10Yr GoI sustains lower and is likely to resume the broader downtrend going forward.

Dow Jones and Nifty have come down failing to sustain the recovery but chances of seeing a rise towards 41800-42000 and 25500-25600 cannot be ruled out as long as the support at 40500 and 25000-24900 holds. DAX remains lower and might fall towards 18400-18300. Nikkei could remain range for a while. Shanghai can rise towards 2850 while above 2775.

Brent and WTI have to rise past $74 and $71 respectively to turn bullish. Else they could fall towards $70 (Brent) and $66-65 (WTI). Gold and Copper have risen well and might extend the rise further on a break above 2550 and 4.2. Silver has risen above its resistance at 29 and while this break sustains, a further rise towards 30-31 might be seen. Natural gas looks bullish to see a break on the upper end of the range 2.0-2.3 and target further upside.

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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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