Morning briefing: Crude prices have risen due to the escalation of the Russia-Ukraine war

Vikram Murarka Kshitij Consultancy Services

The Dollar Index rose in line with our bullish view and while above 106 has a scope to see a rise towards 109. The Euro and EURINR are headed towards 1.04 and 88 respectively. Thereafter, we need to see whether the fall extends further, or the pairs bounce back. Aussie and Pound look bearish in the near term. USDCNY is holding well below the resistance at 7.25/26 from where a rejection can be expected. The Dollar Yen is trading within its 152-155 region but overall, the view is bullish towards 157-158 in the near term. EURJPY, contrary to our view has slipped below 162 and failure to sustain above current levels can drag it further to 160-158. USDINR tested 84.50 yesterday. For now, we anticipate the resistance at 84.50 to hold and push the pair back down towards 84.40 but whether it happens or not will have to be seen.

The US Treasury yields continue to hover near their support. A break below it can drag them lower. A strong rise above the near-term resistance is needed to negate this fall and see a rise. We will have to wait and watch for clarity. The German yields have dipped. But support can limit the downside and keep our bullish view intact. The 10Yr GoI is moving up as expected towards the upper end of the range. We retain our bullish bias to see an upside breakout of this range eventually.

Dow Jones is rising but watch could limit its upside to 44000. A fall from 44000 will keep our bearish view intact for a decline towards 42000/41000. Dax is bullish while above 19000 for a rise towards 19600 and higher. Nifty dipped yesterday to close lower at 23349.90 and could test 23000 before pausing for a corrective rise towards 23500/800 again in the medium term. Nikkei has held above our expected support and bounced higher but needs to move up further above 38500 to keep the bullish momentum intact. Shanghai needs to sustain above 3340 to move up else can fall within the broader 3400-3250 range.

Crude prices have risen due to the escalation of the Russia-Ukraine war. They can target 76-77 (Brent) and 72-74 (WTI) in the near term. Gold continues to rally higher and can rise further towards 2700-2750. Silver and Copper have dipped slightly. Silver can fall towards 30.5 while Copper remains biased to see a rise towards 4.3-4.4 while above 4.1. Natural Gas looks bullish towards 3.8-4.0 in the upcoming 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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