Vikram Murarka
Kshitij Consultancy Services
The Dollar Index slipped after a sharp downward annual revision was seen in the NFP data by 818k and on the release of the FOMC July meeting minutes yesterday that indicated that the FED officials are inclined towards a rate cut in Sep. Traders now price in a 38% probability of a 50bps cut, up from 33% a day earlier and a 62% chance of a 25bps reduction, according to the CME Group's FedWatch Tool. Market await US weekly jobless claims data later during the day and Powell’s Jackson Hole speech tomorrow for further confirmation on a rate cut. Dollar Index may remain weak while Euro can head towards 1.12/1.13, if it sustains above 1.11. USDJPY and EURJPY need to hold above 145 and 160 to continue corrective upmove. Pound and Aussie could face near-term resistances while USDCNY may trade above 7.12 for now. EURINR can dip from 94 while USDINR may continue to trade within 83.85/90-83.40 for the near term.
The US Treasury yields, German yields, and Indian yields look bearish for the near term. The downside view holds intact, especially after the strong downward revision of the US NFP data yesterday which has signaled the rising prospect of a deeper rate cut by the FED in its Sep-24 meeting.
Dow Jones hovers below its immediate resistance. Need to see if it breaks higher or falls back from here. DAX and Nifty remain bullish for the near term. Nikkei is attempting to break above its resistance and looks bullish to target 39000-40000 in the near term. Shanghai remains vulnerable for a fall towards 2800.
Crude prices continue to dip but have crucial support coming up, which if holds, can produce a bounce back in the medium term. Gold, Silver and Copper can fallback while they remain below 2600, 30.00 and 4.20-4.25. Natural gas to remain range bound for a while.
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The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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