Morning briefing: Pound can continue to hold the 1.3400-1.3600 range in the near term

Trump said he would be willing to extend the July 8 deadline for completing trade talks with countries before higher tariffs are imposed. The Dollar Index, Euro and the EURINR can meet our targets of 98-96, 1.16 and 99-100 respectively in the near term. EURJPY turned lower from 166.42 and failure to see a rise past 167 can drag it towards 164-163. USDJPY is coming off as anticipated and while below 146, there is a scope for it to extend the fall towards 142-140 in the near term. AUDUSD and Pound can continue to hold their respective ranges of 0.6500-0.6400/635 and 1.34-1.36 in the near term. The USDCNY below 7.20 can extend the fall towards 7.17/15 in the near term. The USDINR, if it fails to sustain above 85.50, can witness an initial fall to 85.25-85.00 before eventually rising towards 86 thereafter. IN CPI and US PPI data releases are scheduled today.

The US Treasury Yields have declined sharply. That negates the chances of seeing a rise. The yields can fall more from here. A slight rise in the inflation numbers failed to support the Treasury yields. The US Headline CPI increased by 2.38% (YoY) in May from 2.33% seen a month ago. The German yields remain stable. They have room to fall further before seeing a reversal. The 10Yr GoI is inching up in line with our expectation. The yield can rise more in the coming days.

The Dow and Dax trade slightly lower after the US and China reach a trade framework after their intense talks in London. Dow has support at 42500 above which it can be bullish towards 43000 in the near term. A break above 43000 later can be further bullish for the Dow in the medium term. Dax on the other hand can have scope to fall to 23500 while below 24000. Nifty needs to break above 25200 and sustain to rise to 25400 and higher eventually else, a corrective dip from 25200 if seen can delay the expected rise and instead keep the index ranged within 25200-24800 region for some more time. Nikkei and Shanghai have dipped today but could re-attempt to rise back while above 38000 and 3380; else can be vulnerable to sharp decline in the near term.

Crude prices surged past resistance levels, driven by geopolitical tensions, with potential to rise further in the near term. Gold remains range-bound below $3,400, while Silver shows a bullish bias above $36. Copper is trading within a tight range, awaiting a breakout. Natural gas is at a key level near $3.50, with potential to either fall towards $3.30 or bounce back to $3.80-4.00.

Visit KSHITIJ official site to download the full analysis