Morning briefing: The Dow Jones index has risen above 42,200 ahead of the US election results
The early polls which showed Trump taking the lead led to the strengthening of the Dollar against most of the currencies. The index continues to remain volatile within the 105-103 range. Euro and EURINR witnessed a sharp fall from the level of 1.0936 and 92 respectively. A range of 1.0900-1.0750 and 91.50-90.50 can hold for some time. USDJPY remains ranged within 150-155 and EURJPY, above 165 has a fair chance to test 167-167.50 on the upside. USDCNY, on a break past 7.1450 can target 7.1751 if sustained. Note, bearishness in the pair will only strike in if a break below 7.10 is seen. Aussie can test 0.65 if the fall extends further. Pound is nearing the lower end of its range of 1.3150-1.2900. USDINR might see a gap up opening in the on-shore markets today. There could be a scope to see a rise to 84.15/20 if it fails to break below 84.10.
The US Treasury yields have bounced back but may not sustain. Resistances are there to cap the upside. We expect the yields to fall and resume the broader downtrend going forward. The US Presidential Election results during the day and the US Fed meeting outcome tomorrow will need a close watch. The German yields continue to move up. The bullish view is intact, and the yields can go up further from here. The 10Yr GoI remains stuck in a range. The bias is bullish to break the range on the upside and see a rise eventually.
The Dow Jones index has risen above 42200 ahead of the U.S. election results, recovering from a recent dip below 41700. However, a further climb beyond 42300-42500 is needed to fully dispel downside risks to the 41000. DAX sustained above 19000 and has risen above 19200. The view remains bullish towards 19800-20000. The Nifty maintained above support near 23800 and has climbed past 24200; a break above 24600 is required to gain positive sentiments. As expected, Nikkei has risen above 39000 and is heading towards 39500-40000. Shanghai has risen above 3400 and while it sustains above 3400, a rise towards 3500 looks possible.
Crude prices have risen slightly but can fall towards 70/68 (WTI) and 72/70 (Brent) while below their respective resistance levels. Gold and Silver are holding above their support levels; we expect a rise towards 2800 and 33.0-33.5 respectively in the near term. Copper and Natural Gas could target 4.5-4.6 and 2.8-3.0 respectively on the higher side.
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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.
