The US treasury yield curve steepened further with 10-2Y spread now widening to 78bps (from a low of 50bps at the start of 2018). This shows increasing belief in the US interest rates moving and sustaining higher plus it indicates market confidence that the US growth will allow the FED to shrink its balance sheet which in turn is affecting the longer end of the curve. If the market increasingly believes in sustained balance sheet reduction then this would lead to a sell off in risk assets which means that an increasing spread of 10-2Y US treasuries for now, will lead to negative equities and USD strength against EM currencies. The US CPI print (due this Wednesday) can significantly affect this spread and therefore global asset prices.
USD Index 90.15: Short term trend has changed to up. Weekly close at 90.4 opens the door for 91 as the US 10-2 year treasury spreads widen.
EURUSD 1.2280: Short term trend is lower although the larger uptrend is still in place. Buy at 1.2155 for the larger up move. Intraday sell 1.2295/1.2320 stop 1.22346 and tp at 1.2230.
GBPUSD 1.387: Larger up trend is still in place. But in the near term Brexit related comments can take the pair lower. Intraday range 1.39/1.3752
ÚSDJPY 108.7: Daily close below 108.50 will open the door for 106.50. 109.20/108.25 intraday range. Sell at 109 with stop at 109.36 and tp at 108.30.
AUDUSD 0.7830: The pair bounced from 200 DMA at 0.7756. Sell at 0.7855, stop at 0.7886 tp at 7790.
USDINR 64.30: USDINR 1m NDF is trading flat while EM currencies have appreciated mildly since Friday. Equity markets trade in green during the Asian session. A break of 64.48 and 64.09 to provide direction to the pair. Range for the day 64.23-64.41.
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