Money off the table

Markets are coming out of a long weekend. Europe and UK equity markets would still be closed at the beginning of this week. The US and the Indian equity markets are hitting Lifetime highs. Chinese markets continue to remain in extreme risk off mode. The Nikkei and the Kospi are expected to trade thinly.

Treasury yields hold

The US 2-Year and the 10-Year were range bound last week. This week they are expected to hold 4.2% and 3.7% respectively. Increasing military action in the Middle East can cause yields to flare up again.

Precious metals extend gains

Both Gold and Silver have opened positively this week. Rate cut expectations and “no recession” sentiment augurs well for precious metals. Profit booking is expected and therefore $2040 is a level to watch out for Gold. $24 is the level to watch for Silver this week.

Dollar in downtrend

The Dollar index (DXY) plummeted below 102 and closed last week at 101.71 with a decline of 0.80%. Fed’s potential interest rate cuts looming, investor sentiment is at risk-on mode. Dollar opened this week mildly negative against the Euro, the Pound, the Yen and flat to positive against the INR. 100 is the level likely to be breached for DXY.

EUR/USD continues uptrend

The ongoing bullish sentiment in EUR/USD continues this week with flat to positive gain at the start of this week. Dollar is declining against global majors so EUR/USD is expected to hold 1.1.

USD/JPY stable

Dollar’s appeal is one the wane due to inflation dip fueled expectations of Fed rate cuts in 2024. Yen is steady on hopes of Bank of Japan’s potential exit from ultra-loose policy. Stable jobless rate and service inflation bodes well for the yen. 140 could be breached this week for USD/JPY.

USD/GBP flat

USD/GBP will continue to be range bound this week. Mixed PMI reports and higher-than-targeted inflation in the UK raises uncertainty about rate adjustments by the Bank of England (BoE). Sterling’s recent strength against the dollar is based on expectations of three rate cuts by the Fed in 2024.

Crude bulls hopeful

Crude oil prices saw some strength last week. WTI crude oil futures opened flat to positive this week around $73.5. Attacks by the Houthi group on vessels in the Red Sea are expected to disrupt shipping routes in the region. Crude oil bulls will rejoice potential delays in oil deliveries through the Suez Canal.

Cryptos trade up

Above $41,000, the next level to watch for Bitcoin was $44,800 to $45,000. However upward momentum seems to be stalling below $44,500. $45,000 is a key psychological level and failure to push past this level could be a bearish signal. Similarly $2400 is key level for Ethereum. Prices of other popular tokens such as Dogecoin, Solana, Shiba Inu had surged for weeks and continued after the Fed’s reversal of its stance on rate hikes. Cryptos are expected to see profit booking amid volatility this week.

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