STOCKS
Overall stocks are stable and could either remain ranged or move up in the near term
Dow (21235.67, -0.17%) is slowly inching up towards 21600 and could possibly test 21400 on the upside this week. Support remains at 21000 and while the index is trading above 21000, the trend remains bullish.
Dax (12690.44, -0.98%) fell sharply yesterday instead of breaking above 12850. We could possibly see some trade within the 12650-12850 region in the near term before testing 13000.
Shanghai (3138.67, -0.04%) has enough scope on the upside towards 3160-3170 for the next couple of sessions.
Nikkei (19885.72, -0.11%) is holding above 19825 and could move up towards 20000 in the coming sessions. Near term looks bullish.
Nifty (9616.40, -0.54%) has been fluctuating within the 9700-96500 region and could possibly continue to do so for some more sessions. Immediate support is seen near 9600 which could extend to 9550 on the downside. Overall the index could be ranged sideways before rallying to higher levels.
COMMODITIES
Muted price action had been seen in Gold (1264) as it remains in a slow corrective move which may take it to the support of 1242 but if the support holds, a quick bounce towards 1307can’t be ruled out. Silver (16.88) also moved lower in line with our expectation. A close below 16.80 could open up 16.50 as well. We might see less volatility in the market ahead of FOMC meeting (on 14th June 2017), which may add some directional clarity.
Copper (2.62) is trading within the narrow range of 2.56-2.68. Only above 2.68, higher resistances of 2.84 can come into consideration. We will remain bullish on copper while it is trading above 2.55 regions.
Nothing new to add as market is waiting for tomorrow’s U.S FOMC as well as weekly crude inventory data. Brent (48.47) and WTI (46.30) is trading above their respective supports of 47.40 and 44.20 to keep the upside possibility of 50.22 (Brent) and 47.50 (WTI) open. If Brent and WTI manage to close above 50.30 and 47.50 in the next couple of sessions, another attempt for 52 and 49.55 can be seen. Bearish possibilities will come in consideration in case 47.40 for Brent and 44.20 for WTI break down.
Gold/WTI ratio (27.59) found resistance at 28 levels and might come down towards 26.50-27 levels.At the same time Brent-WTI 3day spread (2.22) had bounced from its support near 2.00 levels and could move up towards 3.00-3.25 regions within a few days of time.
FOREX
All eyes remain glued on the three central bank meetings this week – FOMC on 14th, BOE on 15th and BOJ on 16th, among which BOE and BOJ are expected to keep the rates unchanged but the Fed is expected to hike.
Dollar Index (97.22) is taking a comfortable pause after the sharp rally from 96.50 to 97.30 last week and may resume the rally for 97.70-80 after the FOMC conclusion tomorrow. A sustained break above 97.80 may open the door for further upside towards 100.00.
Euro (1.1191) remains weak and may test the immediate support area in 1.1140-00 in the next couple of sessions. If 1.1100 fails to hold in the near term, the downside risk for Euro may increase considerably.
A bit of risk aversion is driving money into Yen and pushing Dollar-Yen (109.98) lower. If the FOMC policy decision looks favorable to the market tomorrow, then Dollar may strengthen and pull Dollar Yen up but it needs a break above 110.60 as the initial signal for an upside reversal.
Contrary to expectations, Pound (1.2646) is in a free fall towards 1.2600 and may test the long term support of 1.2560-40 by the end of the week if the current bearish momentum persists. Some amount of short covering can be expected near 1.2560-40 if Pound declines that far. The trend remains firmly down below 1.2800.
Aussie (0.7558) is stalling near the previous week’s high of 0.7567 and may rise to 0.7590-0.7610 yet but it may be the time for caution as a short term correction can be expected from anywhere in the area of 0.7570-0.7610.
Dollar-Rupee (64.44) closed above 64.40 yesterday moving in line with our expectation. The rise may extend towards 64.50/60 in the coming sessions from where a pulll back to current levels is possible.
INTEREST RATES
The US yields continue to rise and look bullish in the near term. The 10Yr (2.21%) could head towards 2.28% while the 30YR (2.87%) could move up to 2.90% but there could be a small dip before moving up.
The Japan-US 10YR (2.15%) has bounced from immediate support and could test 2.2% in the near term taking up Dollar Yen a bit. Overall the yield spread looks bullish for the near term.
The German-US 10Yr (-1.96%) has broken below the immediate support near -1.95% mentioned yesterday and while the yield spread continues to move lower, Euro could come off sharply. The German-US 2Yr (-2.11%) had given an initial indication of a fall in the yield spreads and the Euro. The 2YR yield spread could possibly pause before moving to lower levels in the next couple of sessions.
The UK-US 10YR (-1.24%) has come off sharply in the last few sessions and is testing support near current levels. If the yield spread bounces back from support, it could move back towards -1.18%. In that case the Pound could remain stable for at least 1-2 sessions.
