Morning briefing: Pound is back within its broad range of 1.2500-1.2800

Vikram Murarka Kshitij Consultancy Services

The Dollar Index has immediate support around 107, above which it can bounce back again towards 108-108.50. Euro and EURINR are rising but have limited upside to 1.0500-1.0550 and 89.00-89.50 respectively for now. Aussie has risen well and if sustained, can test our mentioned target of 0.6300-0.6350 in the coming sessions. Pound is back within its broad range of 1.25-1.28 and while above 1.25, it can rise higher with a near-term target of 1.2650. USDJPY has been coming off but the downside can be limited to 156 or 154 max. While this support holds, the pair can attempt to rise back towards 158 again in the coming sessions. Similarly, EURJPY has risen past 163 and a break past 164 can turn bullish. USDINR can see a dip towards 84.90/87 before it starts ascending towards 85.35, going into Jan-25. Watch out for US Case Schiller & US Consumer Confidence data releases scheduled today.

The US Treasury and the German yields have dipped slightly. The Treasury yield came down after the US PCE data showed a fall (MoM) in November to 0.13% from 0.23% in October. But on a YoY basis, the PCE rose to 2.54% from 2.4% over the same period. The Treasury yields have an immediate support while above which the outlook is bullish to see a rise in the coming days. The German yields are also bullish and can rise more. The 10Yr GoI is coming close to an important resistance which can cap the upside. We expect the yields to reverse lower and resume the downtrend.

The Dow Jones is holding well above support at 42100. A rise to 43300-43550 could be possible while above 42800. DAX dropped below 20,000, opening the possibility of a fall to 19,500-19,400. Nifty slipped below 24,000 but there is support at 23500 which is expected to hold and provide a base for recovery. Failure to hold above 23500 will take it down to 23300-23000 before a pause is seen for a reversal. Nikkei remains below 39,000, maintaining a bearish outlook towards 38,000. Shanghai continues to trade below 3,400, with a bias for further declines towards 3,300.

Crude prices have risen slightly and can rise further towards 74-74 (Brent) and 71-72 (WTI) respectively. The support for metal prices has held, and the prices were pushed higher on Friday. Gold, Silver and Copper can target 2700, 30.5-31.5 and 4.15-4.20 respectively on the higher side. Natural Gas looks bullish towards 4.0-4.5.

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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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