STOCKS
Dow (21206.29, +0.29%) has closed just above the interim horizontal resistance near 21200. Only if the rise sustains can we expect a further rise towards 21500 else a fall back from current levels could take it back to 20800. Our preference is for a rally upwards.
Dax (12822.94, +1.25%) could move up towards 13000-13200 levels in the coming sessions. Near term looks bullish.
Shanghai (3097.11, -0.27%) is likely to trade below 3120 for at least the next few sessions. Downside could extend to 3050.
Nikkei (20205.65, +0.14%) is testing immediate resistance on the daily charts and if that holds, could come off just now towards 19900. But on the longer term charts, these is still scope for a rise towards 20500-21000 levels.
Nifty (9653.50, +0.39%) rose in line with our expectation on Friday and closed just above 9650. Trade within 9630-9670 is possible for the next 2-sessions and the index may remain stable just now. Overall rise towards 9700-9800 is on the cards in the medium term.
COMMODITIES
Gold (1281) closed at the high of the day and may test the resistance zone of 1292-1300 this week if the bullish momentum remains intact, though the chances of downside can’t be negated due to the overbought condition. In case a break below 1270 takes place in the coming sessions, we may have to consider lower levels of 1247 and 1230 respectively. But till the sub 1270 fall really materializes, we prefer to stay cautious.
On the other hand, Silver (17.52) is sustaining the higher levels comfortably irrespective of the overbought condition. Thus we recommend caution at the higher levels for Silver longs.
Copper (2.56) is hovering around its pivot at 2.55 of the trading range of 2.44-2.66. Only above 2.66, higher resistances of 2.72-80 can come into consideration. In the medium term 2.44 are going to be a strong support now but a close below that could open up 2.40-35 levels as well, which could be an ideal level for accumulating.
Brent (50.05) is recovering after making a low at 49, very close to our target of 49.50, dated 30th May, 2017 and now may rise to 51.90-53.30 due to near term oversold condition. 49-50 remains the immediate support zone. WTI (47.78) is also oversold in near term time frame and now it may recover to 49.50-51.20 levels if Brent recuperates to 51.90-53.30. Thus caution must be exercised at the lower levels of both Brent and WTI which may attract buyers near supports. Till now, the bears remain in the driving seat firmly but the possibility of a turnaround (very short term) in the coming days must be kept in mind. In the medium term time frame, we would be bearish on the energy pack while Brent and WTI are trading below 54.60 and 51.50 respectively.
FOREX
Just as expected, Dollar Index (96.77) has been hurt by the US NFP data missing expectations as the labour market shows signs of losing momentum despite the unemployment rate at a 16-year low. It remains to be seen if the major support of 96.50-25 is able to arrest the decline or else 95 or even lower levels may come into consideration.
Euro (1.1272) keeps rising in line with our expectations and our target of 1.1300 is close. It must be noted that Euro is now entering a huge resistance cluster in the band of 1.1300-1.1450 and a sudden selling from anywhere within this band is a distinct possibility. Caution warranted.
The resistance of 112.00 for Dollar Yen (110.57) held and pushed it down as expected and now the support of 110.00 shows initial signs of standing firm. In that case, we may expect the pair to trade sideways without any directional clues for a few sessions more.
Pound (1.2863) remains absolutely indifferent to the terror attack in London yesterday as it waits for the election to be held on Thursday, 8th June. The range of 1.2750-1.3000 is expected to remain intact till the election. If the result threatens the current ruling party, then a decline towards 1.2650-00 can be expected but we prefer to wait for the actual result to take a firm stance.
Aussie (0.7447), contrary to expectations, firmed up above 0.7400 on the back of a weak Dollar and a rebound in Iron ore. It may oscillate in the range of 0.7360-0.7500 for a few days before triggering a trending move if the RBA rate decision due tomorrow fails to introduce any fresh volatility.
Dollar Rupee (64.44) may remain stable between 64.30-70. We will have to assess the chances of a intra-week dip towards 64.20 after the RBI decision Wednesday, 7th June.
INTEREST RATES
The US yields have come down further from levels seen last week. But we could now expect a bounce back from current levels in the near term. the 10YR (2.17%) could move up towards 2.20% and higher while the 30Yr (2.81%) may start bouncing towards 2.90%.
The US 10-5Yr differential (0.44%) has come down as expected and could possibly bounce back in the next couple of sessions. This could indicate that the 10Yr could move higher compared to the 5Yr yield.
The German-US 10YR (-1.89%) has bounced back from immediate support as expected taking the Euro higher with itself. -1.85% is an important resistance for the yield spread and if that holds, the yields spread could come off towards -1.95%. In that case Euro could test 1.130-1.135 in the near term before coming off.
The UK-US (-1.13%) could test immediate channel resistance near -1.08% from where a small dip is possible in the coming sessions.
Japanese yields are moving up and are eventually inching up to higher levels. The 10YR and 30YR are trading at 0.06% and 0.81% respectively as compared to 0.039% and 0.08% seen a week ago. The Japan-US 10Yr yield spread (2.11%) has broken below the near term support and while it moves lower, Dollar-Yen could also come down.
