Morning briefing: Crude prices continue to fall

Vikram Murarka Kshitij Consultancy Services

The Dollar Index, despite seeing a fall yesterday has sustained well above 106.50 and could be soon headed towards 109-110. EURUSD and EURINR have limited upside to 1.055-1.060 and 89.00-89.50 respectively and appear bearish in the medium term. Aussie and Pound can remain bearish for a while below 0.655 and 1.27. USDCNY looks stable above 7.25 and if sustained can head towards 7.27-7.30 in the coming sessions. The Dollar Yen is trading lower within its 155-152 region but overall, the view is bullish towards 157-158 in the near term. EURJPY is coming off in line with our view and can soon test 158-156 in the coming sessions while below 164/162. USDINR has bounced well as anticipated and is likely to remain ranged within 84.20-84.40/50 in the near term. Watch out for the US PCE, US Personal Income, US Durable Goods and US GDP data releases scheduled today.

The US Treasury yields have inched up but are unlikely to sustain. We retain our view of the yields coming down further to test their support in the coming days. The price action after this fall will need a watch to see if a bounce is happening or not. The US PCE data release today will need a watch. A rise in the PCE can take the yields higher. The US PCE (YoY) is currently at 2.2% (October). The German yields continue to fall and are keeping intact our bearish view. There is room to fall further. The 10Yr GoI is oscillating in a narrow range. Bias is bullish to see a rise.

The Dow Jones has almost reached the crucial 45000 level from where a rejection to 43000-42000/41000 can be possible eventually. Only a sustained break above 45000 will prove our view wrong. DAX closed lower but continues to hold within the range of 19000-19600. The near-term view continues to be bullish towards 19600 and eventually higher. Nifty initially saw a decent rise yesterday but lost its intraday gains and closed lower. Further, it needs to break above 24400 again to exhibit a rise towards 24500-24700 else can fall towards 23800. Nikkei continues to trade lower, holding above 38000. It is expected to hold the sideways range of 39500-38000. Below 38000, it can test support at 37700. Shanghai fell below 3250. Interim resistance is seen around 3300 below which there is some scope for a fall to 3150.

Crude prices continue to fall and may target their near-term support levels before a bounce back is seen. Gold and Silver are holding above their support levels and can rise towards 2650-2700 and 31.5-32.0 respectively. Copper remains ranged between 4.20-4.05 for some time. Natural Gas can rise towards 3.6 in the near term.

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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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