April 24, 2023

Weekly Commodity & Currency outlook

• PRODUCT 1

Recommendations in report

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Currency/Commodity Expiry Action Entry Target Stop Loss Time Frame
Crude oil May Sell 6400-6420 6150 6580 1 week
EURINR May Sell 90.25-90.30 89.3 90.9 1 week

• PRODUCT 2

Research Analysts
Raj Deepak Singh Saif Mukadam Rishikesh Lilawat Anup Sahu
rajdeepak.singh@icicisecurities.com saif.mukadam@icicisecurities.com rishikesh.lilawat@icicisecurities.com anup.sahu@icicisecurities.com

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Outlook and Strategy

Crude oil Strategy

Sell MCX Crude May Futures around | 6400-6420 for target of | 6150 with Stop Loss of | 6580

Rationale: Crude oil price is likely to remain under pressure as major central banks are keen to raise the rates in their next policy to
combat soaring inflation. Further, expectations of weakness in first quarter GDP numbers and new home sales numbers could also dent
the demand outlook and weaken the price.

MCX crude oil prices moved below the 200 day EMA support at 6640 and slid below the lower band of the rising trend channel
suggesting weakness in the trend. Also, the oscillator readings also support the bearish momentum to continue. Immediate downside
support for the MCX Crude can be seen near | 6150-6100.

EURNR Strategy
Sell EURNR May Futures around 90.25-90.30 for target of 89.30 with stop loss of 90.90

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Rationale: The Euro is likely to trade with a bearish bias this week amid a strong US dollar. Further, the Euro may fall on expectations that
the German Q1 GDP may drop from 0.90% to 0.30%. Additionally, German CPI is expected to decline from 0.80% to 0.60%, which may
fuel expectations that the ECB may slow the pace of interest rate hikes. EURINR is expected to break the key support level of 89.75 to
continue its downward trend towards the level of 89.30.

Strategy Follow-up
Curreny/Commodity Pair Contract Action Price Target Stoploss Comment
Copper April Buy 786-787 810 775 Stop loss Triggered
EURINR April Buy 90.00-90.05 91.00 89.40 Stop loss Triggered

Note: The given recommendation in this report is for week and should not be linked with view & recommendations given in Intraday and Daily, Monthly and Positional currency Derivatives
report, as they may have different view
Bullion: Gold prices likely to face hurdle near ₹ 61,200

• Gold prices traded on a weaker note last week as hawkish

Gold vs. Dollar Index
comments from FOMC members raised bets for a 25 bps hike in the
next FOMC meeting. The rise in treasury yields to one month high
pushed spot gold prices below the key support of $1980
• Better than expected US Service PMI and manufacturing PMI has
suggested sign of resilient economy and weakened bullion
• Further, sticky inflation numbers from eurozone and the UK have
also raised the bets for a further hike in key interest rate
Gold Outlook
Gold prices may trade on a weaker note this week amid a re-bounce in
US treasury yields across the curve. Further, expectations of sticky US
PCE inflation numbers could force the Fed to keep rates high for

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longer, which could bring correction in bullion.

Pivot Levels
MCX gold is likely to decline towards | 59250 as long as it trades
under | 60800. The negative divergence on daily charts is a sign that Com m odi t y Expi ry L TP S2 S1 P i v ot R1 R2
the yellow metal is losing its steam. A move below | 59200 would see GOLD Jun-23 59845 58985 59415 60052 60482 61119
a slide further towards 58600. SILVER May-23 74654 72558 73606 74953 76001 77348
CRUDE OIL May-23 6398 6049 6223 6497 6671 6945
NATURAL GAS May-23 199.4 182.3 190.8 201.1 209.6 219.9
Silver Outlook
COPPER May-23 757.3 728.8 743.0 770.3 784.5 811.8
MCX Silver is likely to face resistance near | 77300 and is expected to
NICKEL May-23 2104.2 1928.6 2016.4 2060.3 2148.1 2192.0
slid towards | 73700. A move below 73700 would weaken the trend ZINC May-23 243.2 233.9 238.6 247.3 251.9 260.6
and it would slide towards 72400. The reversal in RSI along with LEAD May-23 184.8 181.8 183.3 184.7 186.2 187.7
bearish engulfing on the daily charts would limit the upside in silver to ALUMINIUM May-23 213.0 205.1 209.0 213.0 217.0 221.0
go beyond | 77300.
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Source: Bloomberg, Reuters, ICICI Direct Research
Base metals: Copper likely to extend decline towards ₹ 745 levels

• MCX copper failed to hold on to its gains despite better-than-

expected Chinse economic number. The Chinese GDP numbers
Copper vs. Dollar Index
surged to 4.5% against the forecast of 4.%
• The decline in imports by China in the last quarter has raised the
concerns of economic recovery. China imported 408,174 tonnes of
copper in March, down by 19% year-on-year and the lowest monthly
intake since October 2022

Copper Outlook
Copper prices are likely to remain subdued as the lagging factory activity
numbers raised questions over demand in China. Further, expectation of
weakness in US GDP numbers could also pressurise prices. Moreover,
expected 25 bps hike in interest rate in the next FOMC policy could

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strengthen the dollar and weaken the metal price.
MCX Base Metals
MCX Copper has broken the lower band of the bullish channel and
moved below the 50 DEMA support at 768. On the weekly charts, it has
formed a bearish engulfing pattern, which could weaken the metal to
slid towards 750-745 mark. On the upside, 781 would act as major
resistance to the price.

Aluminium Outlook
MCX Aluminium prices are facing an immediate hurdle near | 215 level,
which is the near the higher side of the Bollinger Band. The mid-band
support holds near 209. We expect aluminium to stay in the consolidation
range of 209-215. Only a move above 215 would bring fresh buying
interest. On the flip side a move below 209 would weaken the trend
towards 206.
4
Source: Bloomberg, Reuters, ICICI Direct Research
Energy: Crude oil prices may slid towards | 6100 level

• Crude oil prices marked their first weekly decline by almost 6% after
Crude Oil vs. Dollar Index
rallying four consecutive weeks. The prospects of further interest rate
hikes has hurt risk sentiments and raised concerns over future energy
demand
• The rise in gasoline inventory by 1.3 million barrels vs forecast drop of
1.26 million barrels has limited its upside. Further release of 1.58
million barrels from SPR by US government has weighed over prices

Crude oil Outlook

Crude oil prices are likely to remain under pressure as major central
banks are keen to raise rates in their next policy to combat soaring
inflation. Further, expectations of weakness in first quarter GDP

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numbers and new home sales numbers could also dent the demand
outlook and weaken the price. Nymex Crude Oil Options OI
MCX crude oil prices moved below the 200 day EMA support at 6640
and slid below the lower band of the rising trend channel suggesting
weakness in the trend. Also, the oscillator readings support the bearish
momentum to continue. Immediate downside support for the MCX
Crude can be seen near | 6150-6100.

Natural gas Outlook

Natural Gas is expected to hold above the key support at 178 amid
expectations of cool weather in most states in the US. MCX May
futures has formed a strong base near 178-180. As long as it holds
above 178, prices are expected to rise towards 210-220
5
Source: Bloomberg, Reuters, ICICI Direct Research
Rupee: Likely to depreciate towards 82.50 level

Currency Futures • The rupee depreciated this week and touched 82.32 level amid a
rebound in the US dollar and risk aversion in global markets.
Meanwhile, a sharp drop in crude oil prices helped the local
currency to restrict declines

Pivot Levels • We expect the rupee to depreciate further amid a stronger US

dollar and risk aversion in global markets. US$INR rebounded
from a four week’s low and touched a one-week high level at
82.32. Technically, it is trading in a downward resistance and
supports wedges by making a lower low lower high pattern. The
pair is likely to break the level of 50 EMA at 82.24 to continue its
upward trend towards the resistance level of 82.50 in the coming

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trading sessions

Dollar Index vs. US$INR Chart US$INR Weekly options build-up (April 28, 2023)
Dollar Index

US$NR

Source: Bloomberg, Ticker, ICICI Direct Research 6

EURINR: May continue to drop till 89.30 levels

EURUS$ vs. EURINR • The Euro depreciated marginally by 0.04% last week amid disappointing
economic data from Euro Area. Further, the Euro fell after European
Central Bank chief economist Philip Lane said growth in services across
the eurozone is still accelerating but the steady improvement in business
and consumer sentiment may have stalled

• The Euro is likely to trade with a bearish bias this week amid strong US

EURUSD
EURINR

dollar. Further, the Euro may fall on expectations that the German GDP
QoQ Q1 may drop from 0.90% to 0.30%. Also, German CPI is expected to
decline from 0.80% to 0.60%, which may raise hopes the ECB may slow
the pace of interest rate hikes. EURINR is expected to break the key
support level of 89.75 to continue its downward trend towards the level of
89.30

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GBPUS$ vs. GBPINR
• The pound edged higher last week as the inflation rate in Britain remained
above the 10% mark for a seventh consecutive period and the Bank of
England's 2% target for almost two years, suggesting policymakers might
continue to raise borrowing costs. Further, the rise in UK 10 year’s bond
yields supported the sterling
GBPUSD
GBPINR

• The pound is expected to trade with a negative bias for the week amid
uptick in US dollar. GBPUSD is likely to break the level of 1.2400 to trade in
downward trend towards the level of 1.2350. GBPINR is expected to break
the level of 101.75 to continue its downward trend towards the level of
101.40

Source: Bloomberg, Ticker, ICICI Direct Research 7

Economic Calendar

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Source: Bloomberg, Reuters, ICICI Direct Research 8
Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

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ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

research@icicidirect.com

9
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I/We, Raj Deepak Singh BE, MBA (Finance), Saif Mukadam BSc, MMS (Finance), Rishikesh Lilawat BBA, MBA (Finance) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect
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