Morning briefing: Pound need to break below 1.3000 for further directional clarity

Vikram Murarka Kshitij Consultancy Services

The Dollar Index looks bullish towards 104 and higher while above 102.50. The Euro has slipped below 1.09 but has risen back slightly. The price can head towards 1.08 on a confirmed break below 1.09. The USDJPY and EURJPY have a fair chance of rising towards 150-152 and 164 respectively while above 146 and 162-161.50. Aussie and Pound need to either see a rise past 0.68-0.6850 and 1.31 or a break below 0.67 and 1.30 respectively for further directional clarity. EURINR, below 92.50-92, looks bearish to 91. USDINR has risen past 84 as expected and now a revised range of 84.12-84.00/83.90 can hold for some time while resistance near 84.12 holds.

The US Treasury yields are turning down. The resistance seems to be holding well for now. A further fall will confirm the same and will drag the yields lower from here itself without seeing an extended rise that was mentioned yesterday. The German yields sustain higher. The view is bullish to see more rise from here. The 10Yr GoI has been stuck in a narrow range within its broad range for a few days now. The sideways consolidation can continue for some more time before a rise happens.

Dow reached a record high of 43139 before closing above the 43000 mark. Both the DAX and Nikkei have risen above 19500 and 40000, respectively. As long as the DAX holds above the interim support of 19300-19200, and the Nikkei remains above 39500, the outlook remains positive, with targets of 19800-20000 for the DAX and 41000 for the Nikkei. The Nifty has climbed above 25100, and a break above 25250 is needed to confirm further upside potential towards 25500/700. Meanwhile, Shanghai continues to trade within a narrow range of 3200/3180 to 3300 and is likely to remain in this consolidation phase for a few more sessions before moving higher.

Crude prices stumble due to the lack of Chinese stimulus. As long as the immediate support levels hold, a broad range of 81-75 on Brent and 76-70 on WTI can hold for the near term. The outlook for gold remains to range between 2700 and 2620. Silver and Copper have fallen towards their respective support levels. While the levels hold, a bounce back to 32.5-33.0 and 4.5-4.6 respectively can be seen in the upcoming sessions. Natural Gas has fallen sharply and can target 2.40-2.35 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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