Morning briefing: Most indices look weak

Vikram Murarka Kshitij Consultancy Services

The Dollar Index is nearing support around 106 while the upside in Euro looks capped at 1.0650-1.0700. The Aussie and Pound have been rising well and can continue to strengthen further in the near term. USDCNY is holding well below the resistance 7.25/26 from where a rejection can be expected. The Dollar Yen is trading within the 155-152 range while EURJPY has scope to extend the rise further in the coming sessions while above 162. EURINR, if sustained above current levels, can test 89.50-90.00 in the near term while USDINR is flat below 84.40 and could see a corrective dip to 84.35-84.30 in the near term. US Housing Starts data release is scheduled today.

The US Treasury yields remain stable. They have to fall below the immediate support to make our view correct of seeing a fall going. A strong rise from here breaking the resistance will negate that view. We prefer to stay out and watch the market. The German yields have inched up. Outlook is bullish and the yields can rise more in the coming days. The 10Yr GoI has dipped from near the range top. That keeps the range intact and a dip within the range is possible now. Eventually we expect the yield to break this range on the upside and rise.

Most indices look weak. The Dow is headed towards 43000 with a possible extension to 42000/41000 while Dax could be vulnerable to breaking below 19000 and fall to 18800/18500. Nifty rose yesterday but it could limit any further upside to 23800 and start falling again towards 23000. Nikkei could range within a broad 37750-39000 zone till next week. Shanghai could be vulnerable to fall towards 3250 or lower on a break below 3300.

Crude prices have recovered sharply in line with our expectations due to the rising geopolitical tension. They can rise further towards 75-76 (Brent) and 72 ( WTI) in the near term. Gold and Silver have bounced back as expected but need to surpass their near-term resistance to see a further rise, else can fall back in the upcoming sessions. Copper has risen slightly and can target 4.2-4.3 in the near term. Natural Gas looks bearish towards 2.6 while below 3.

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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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