STOCKS
Overall markets are mixed globally. Dow and Dax could re-test crucial resistances in the near term while Nikkei is in a consolidation phase. Shanghai could start moving up soon and Nifty may also bounce back from near term support levels.
Dow (20937.91, +0.21%) and Dax (12659.15, +0.31%) have risen slightly. Both Dow and Dax has important resistances in the 21000-21200 region and 12800-13200 region respectively and while that holds, the indices could consolidate sideways if not fall to lower levels in the near term.
Shanghai (3042.75, -0.64%) has tested the support on the 3-day candle charts and if that holds, it may move up towards 3150-3170 in the medium term. While above 3000, trend looks bullish.
Nikkei (19707.87, +0.48%) has been trying to move up towards resistance near 20000 again but movement has been very narrow in the past few sessions. Trade within 20000-19400 region may be seen in the coming sessions without much attempt to break on either side just now.
Nifty (9386.15, -0.55%) is tested decent support at 9370 yesterday before closing at slightly higher levels. 9350-9370 is an important near term support zone and while that holds, a bounce could be expected in the near term.
COMMODITIES
Gold (1252) could not hold its ground above 1260 levels and fell towards its crucial support of 1249, which could be a level where the price action has to be checked to assess the chances of further bounce to 1260-80 regions. A failure to hold 1249 could keep the price range-bound in the 1220-1250 regions.
Similar kind of trading pattern has been seen in silver (17.01) also though the same it still above its crucial support of 16.90. The recent trading range could be 17.50-16.90 and we will remain bearish while it is trading below 17.50 levels. A close below 16.90 could open up 16.50 levels as well.
Copper (2.57) has found resistance at 2.62 levels. Only above 2.62, higher resistances of 2.68-72 can come into consideration. In the medium term 2.55 are going to be a strong support now but a close below that could open up 2.44-35 levels as well.
Both Brent (54.20) and the current NYMEX July contract of WTI (51.64) are trading within the range of 54.20 – 56.32 and 51.28 – 53 respectively. Both the contracts are highly overbought in near term time frame thus a correction will be anticipated. Besides we have U.S crude oil inventory data today at 8.00 P.M with an expectation of a decrease of 2.4 MB. If the actual figures are higher than the expected, we might be able to see further rally (less preferred view) otherwise a move below the respective supports could drag Brent and WTI towards 52 and 50 levels.
FOREX
Dollar Index (97.37) held previous day’s low of 96.80 to recover to a minor degree but the corrective bounce can reach 98.30 at best if it manages to break and sustain above the interim resistance of 97.45. Our downside target of 96.50-00 remains unchanged. Euro (1.1179) is seeing a normal correction while the larger uptrend remains intact so far. This correction can take it to 1.1100-1.1075 where fresh buying can be expected again. Repeat – if any profit booking is seen in Euro either near 1.1300-30 or near the higher long term resistance of 1.1400-50, then corresponding short covering can be expected in Dollar near 96.50 or 96.00.
Dollar Yen (111.90) is testing the upper end of the near term range of 110-112. A firm break above 112 may open up the higher levels of 112.80 or even 113.40. From a larger perspective, the price action in the coming 5-10 days may be contained in the broader range of 11.50-114.00 with no major direction.
Pound (1.2968) is still lacking the bullish momentum. The chances of a fresh high above 1.3050 can’t be ruled out but a without a break above 1.3100 soon, it may be very difficult for the currency to sustain the higher levels. Immediate support comes at 1.2950 and 1.2900.
Aussie (0.7451) hit a high of 0.7517, rising above the resistance of 0.7500 just for a brief moment before coming down. The key support at this point comes at 0.7430-20 which must hold to keep the chances of another bounce open. In case 0.7420 gives way, a sharp decline to 0.7330-00 can be seen.
Coming to Dollar Rupee (64.55). the rise above 64.67-72 has negated the immediate bearish momentum and the closing at the day high of 64.89 indicates possible testing of 65.10-25, provided the bullish momentum remains intact. The price action near 65.10-25 may determine the next course of action.
INTEREST RATES
The US yields has risen as expected. The 5Yr (1.83%), 10YR (2.28%) and the 30Yr (2.94%) are all up from 1.79%, 2.25% and 2.91% respectively. The yields could continue to move up in the near term.
The Japan-US (2.23%) has bounced from support near v2.17% and while that holds, we could expect a rise in the yield spread as well as Dollar-Yen.
The German-US 10 Yr (-1.87%) and German-US 2Yr (-2.00%) have fallen sharply pulling down Euro also to levels below 1.12. The 10Yr yield spread has come off from resistance and while that holds, some downward correction is possible in the near term.
