Morning briefing: The FOMC is scheduled today

The FOMC is scheduled today. While the 25-bps rate cut is priced in by the markets, attention will turn to Chair Powell’s remarks for signals on future easing.The Dollar Index can test the support near 96 before halting. The Euro and EURINR can rise towards 1.19-1.20 and 105 or higher in the near term. EURJPY and USDJPY can hold the immediate ranges of 172-174 and 149-146 respectively in the near term. USDCNY can test 7.10 soon. The Aussie and Pound need to see a sustained rise above 0.67 and 1.3650 to extend the rise towards 0.68 and 1.38 respectively. USDINR is trading below 88 on the NDF. Still, while above 87.75, we retain our view of the pair rebounding towards 88 and higher levels in the coming weeks.

The US Treasury yields remain lower and stable. Looks like the market is waiting to see the Fed meeting outcome tonight. A 25-basis point rate cut is largely factored in the market already. It will be important to see the economic projections which will give an idea on the future policy path. For now, we prefer the yields to fall either from here itself or after a short-lived bounce. The German yields are also stable. They have room to fall more from here before resuming their broader uptrend. The 10Yr GoI remains mixed and unclear within its sideways range.

The Dow has pulled back ahead of the FOMC policy meeting today. But while above 45500-45000, the view is likely to be bullish towards 47000. The DAX has some scope to test 23000 before bouncing back within the range of 23000-24500. Nifty looks bullish towards 25500 while Nikkei is positive towards 45000-45500. Shanghai, on the other hand, is trading weak and can test 3830-3800 before rebounding towards 3900-4000 eventually.

Crude prices have moved higher with Brent rising above $68 on supply concerns from Russian export disruptions and WTI breaking above $64, both now looking poised for further gains towards $69–70 and $65–66 respectively. Gold stays bullish with scope to rise towards $3,750–$3,800, while Silver needs to hold above $43 to extend its uptrend, else risks slipping towards $42–41. Copper remains weak and could fall further towards $4.60–$4.55. Natural Gas faces resistance near $3.20, keeping it vulnerable to a decline towards $3.00–$2.80.

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