Sharp decline in the Dollar Index after the FOMC meeting where the FED left interest rates unchanged but hinted at the end of the hiking cycle and three rate cuts in 2024. The Dollar Index has fallen to levels below 103, with support levels of 102.50-102-101.50 coming back into play.
Euro is heading towards 1.0950-1.0975 where a rejection may be possible. EURJPY and USDJPY have fallen along with the Dollar Index, while the Aussie, Chinese Yuan and Pound have strengthened against the Dollar. However, we need to see if this movement will last for long. USDRUB looks bearish. EURINR has rallied well from 89.50 itself and could be heading towards 91.50 while USDINR could fall in the range of 83.40-83.25 as RBI may not allow much appreciation of the Rupee beyond 83.25/20. The volatility in the forex markets may continue as we have the BOE and ECB policy meetings today.
US Treasury yields have fallen sharply following the outcome of the US Fed meeting last night. The Fed left interest rates unchanged at 5.25%-5.5% and hinted at three rate cuts next year. Treasury yields fell and broke below their key supports. While this break is holding, further declines are on the cards. German yields have broken their supports as expected and are falling in line with our expectations. They have room to fall further. The 10Yr and 5Yr GoI are coming down within their sideways range. The range remains intact for now and we will have to wait for a breakout on either side.
Dow Jones has rallied well, breaking above its resistance and looks bullish for more highs. DAX has dipped slightly but has support at 16600-16500. Nifty may open with a wide gap up taking cues from global markets. Shanghai can trade in 3000-2925 range for a while. Nikkei looks mixed.
Commodities have recovered. Crude oil prices have rallied on the weekly EIA report showing that crude oil inventories fell more than expected. Gold and copper have rallied sharply back above 2040 and 3.80, while silver has bounced sharply from its support at 22.80 after the Fed left rates unchanged at 5.5% and hinted at a possible 75bps rate cut next year. Natural gas has rebounded and may continue to rise on the USPIDE.
