STOCKS
Dow (21184.04, -0.10%) is almost on the verge of breaking the horizontal resistance near 21200. In case the resistance holds, we could see a fall back towards 21000 else a rise towards 21400 is possible in the near term.
Dax (12822.94, +1.25%) rose with a gap up and managed to close at higher levels, making a new high of 12878 yesterday. The index could be headed towards 13000 in the coming sessions.
Shanghai (3090.68, -0.03%) is also trading below the immediate resistance on the daily charts and could test 3050 before again bouncing back towards 3070 or higher.
Nikkei (20026.45, -0.72%) came off on fresh fall in Dollar Yen to levels below 110. Also the trendline resistance on the daily charts has held well. While the resistance holds, some more dip in the near term is possible. Else, we need a break above the current resistance to turn more bullish for the near term.
Nifty (9675.10, +0.22%) is slowly inching higher towards 9700-9800 and looks bullish for the near term. We could possibly see attest of 9700 this week if the index continues to rise at this pace.
COMMODITIES
We are doubtful about the sustainability of Gold (1284) at these levels. Maximum upside we are looking at is 1300 but if Gold could not hold its ground above 1275 then it could fall towards its crucial support of 1245-49, which could be a level where the price action has to be checked to assess the future trend. A failure to hold 1245-49 could keep the price range-bound in the 1220-1250 regions; otherwise we may see a fresh upward rally from 1245-50 levels, which could take the price beyond 1350 regions.
Similar kind of trading pattern has been seen in Silver (17.58) also. The recent trading range could be 16.90-17.60, and the chances of a minor correction can’t be fully ruled out due to the overbought condition.
Copper (2.55) is trading within the range of 2.35-2.65. The present bias is on a weaker side thus a close below 2.55 levels could open up 2.40-35 levels, which might be the maximum downside of this particular move. Only above 2.65, higher resistances of 2.80 can come into consideration.
Brent (49.15) and WTI (47.10) have been consolidating in the range of 48.50-50.20 and 45.80-47.42 respectively. As discussed previously, it remains bearish below the medium term channel resistance near 54.50 (Brent) and 51.50 (WTI) and the chances of a decline to 47 (Brent) and 44 (WTI) remains open but it could be prudent to be prepared for a sudden turnaround to the upside in the very short term time frame due to their oversold condition.
FOREX
Dollar Index (96.60) continues its decline towards the major support area of 96.50-25 ahead of the ex-FBI chief Comey’s testimony due Thursday, 8th June. As discussed yesterday, 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) has resumed its rally after a pause day as it gets closer not only our target of 1.1300 but also to the huge resistance cluster in the band of 1.1300-1.1450 while its condition is highly overbought. Caution warranted.
Contrary to expectations, the support of 110.00 for Dollar Yen (109.83) has given way and now the lower levels of 109.20 and 108.00 may be tested. The downtrend remains strong till the resistance of 112.00 is overcome.
Pound (1.2917) has strengthened a bit but remains firmly inside the range of 1.2750-1.3000 ahead of the UK election on Thursday, 8th June. Repeat – 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 before taking a firm stance.
Aussie (0.7466) has been rejected by the resistance of 0.7500 as expected and now the impact of the RBA decision coming in a few minutes may decide the near term path.
Dollar Rupee (64.36) ended the day slightly lower but the lack of volatility kept the intraday range very narrow. We expect the range of 64.30-70 to continue till the RBI meet conclusion tomorrow.
INTEREST RATES
The US yields have bounced back as expected. The 5YR (1.73%), 10Yr (2.17%) and the 30Yr (2.83%) are all stable. The US 10-5Yr differential (0.44%) has come down as expected and could test support just below current levels before bouncing back towards 0.45%.
The UK-US (-1.13%) is trading below immediate channel resistance and could come off in the near term, limiting the upside for Pound just now.
The Japan-US 10Yr yield spread (2.12%) could bounce back in the near term towards 2.15-2.20%.
