Morning briefing: The markets expect another 50bps rate cut by the end of the year

The FED cut rates by 50bps in line with market expectations taking the key interest rate down from 5.50% to 5.00%. The markets expect another 50bps rate cut by the end of the year. The risks of balancing inflation and unemployment seem to be in place as indicated by the FED statement. As the markets had already priced in a rate cut earlier, the Dollar Index moved up after briefly testing 100.215 while the Euro dipped from 1.1189 itself and could be headed towards 1.10/1.0950 soon. USDJPY and EURJPY have started a corrective rise that could extend towards 146-148 and 162-164 respectively in the near term. Aussie may face rejection from 0.6850 while Pound could remain ranged between 1.31-1.33 for a while. USDCNY may continue within the immediate range of 7.12-7.08. Bearishness would only strike in on a break below 7.08, if seen. EURINR has dipped below 93 and while that holds, could attempt to test 92.50-92.00 soon. USDINR is likely to bounce back towards 83.80-84.00 while above 83.70. BOE policy meeting is due today where markets expect the central bank to keep rates unchanged.

The US Treasury yields have risen after falling immediately after the Fed meeting outcome. Though there is room to rise further from here, resistances can cap the upside and keep the broader downtrend intact. The Fed cut the rates by 50-bps yesterday and have kept the doors open for another 50-bps rate cut for the rest of the year. The forecast for a larger rate cuts this year could keep the yields under pressure. The German yields have also risen sharply but have resistances ahead. We can expect the downtrend to resume after testing the resistance in the coming days. The 10Yr GoI has limited to rise from here. The downtrend is likely to resume after some more rise from here.

Dow Jones almost tested its crucial resistance after Fed cut interest rate by 50 bps and has fallen back from there. A break below 41400, if seen, can be further bearish for Dow Jones. DAX has scope to rise towards 19000 or higher while it sustains above 18650/18600. Nifty has declined and might fall to 25200 before a bounce back can be seen. Nikkei has broken above the upper end of the sideways range while Shanghai has bounced back well from it support of 2700. Both Indices looks bullish towards 38000 and 2750-2800.

Crude prices have dipped slightly as the resistance seems to be holding well and may come down further from here. Gold, Silver and Copper have fallen after Fed cut rate by 50bps but have support coming up which if holds, can produce a bounce back. Natural Gas continues to dip and can fall towards 2.20.

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