STOCKS
Overall the global stock indices are mixed. While Nikkei and Shanghai may move down after facing stiff resistance levels, Dow looks bullish on a successful attempt to break above current levels. Dax and Nifty may remain stable in the near term.
Dow (25241.41, +0.38%) saw an intra-day high of 25326, breaking above the 25250 levels. This rise if sustains could turn bullish for the index towards 25750-26000 levels for the near term.
Dax (12811.05, -0.15%) is stable near current levels and does not look very bullish just now. As mentioned yesterday, there is some room on the upside towards 13000-13100 but while that holds, bearish possibilities of the index exist towards 12600-12500 or even lower.
Nikkei (22787.42, -0.16%) moved up to test daily trend resistance near 22800. If the resistance holds, we could see a rejection at current levels, pushing the index back towards 22000 levels. In case the index manages to break above 22800-23000 levels, it could turn bullish for the medium term thereby pulling up Dollar Yen also to higher levels.
Shanghai (3077.65, -1.02%) has started to dip from levels near 3150 and is again heading towards 3050. Near term is likely to be stable in the 3050-3150 region.
Nifty (10768.35, +0.78%) could remain in the broad trade range of 10850-10600 (both being immediate resistance and support levels) for the coming sessions. A break on either side would confirm the next course of movement. Till then we may expect some sideways consolidation to take place.
COMMODITIES
Commodities are all mixed. While precious metals remain stable, Copper is trading lower as part of the corrective dip after the recent sharp rally.Crude prices have moved up but need to break above immediate resistances to turn bullish for the longer run.
Copper (3.2588) is trading below 3.30 just now after moving up to 3.3130 on the upside. A corrective fall towards 3.20 looks likely before an attempt to move up further. Near term looks bearish.
WTI (66.07) has moved up a bit and could test 67 on the upside. Near term downside could be capped at 64 just now. Some movement in the broad 67-64 region is possible before a break on either direction. Brent (77.28) has also moved up sharply as expected. Downside could be limited to 76 in the next few sessions. WTI and Brent will have to break above 67 and 78 to turn bullish for the medium term and start moving up again; else there could be more dips in the coming sessions.
Gold (1296.55) continues to remain stable with no major movement. A small dip towards 1285 may be seen in the next couple of sessions.
FOREX
Dollar index (93.47) tested a low near 93.21 yesterday and is currently trading at higher levels. It could see an upmove till levels around 93.6-93.7 today and again move lower after that. As mentioned yesterday, 92.8 is a crucial level. A break below 92.8 would be the first indication of bearishness for Dollar Index in the medium term.
Euro (1.18): After seeing a high of 1.184 yesterday, the Euro has dipped. It could dip further to levels near 1.177-1.178 today, after which a rise back beyond 1.18 should take place. The 8 weeks MA near 1.19 is a crucial level and a breach of 1.19, if it happens, would be the first indication of a bullish Euro in the medium term.
Dollar Yen (109.77) again saw a high near 110.2 yesterday and has dipped from there. If it respects the upward channel on daily candles, then there could be a dip to 109.4 today followed by a rise towards 110-111 next week. There is crucial long term resistance on weekly line chart near 111 which should produce a dip.
Euro Yen (129.54): Euro Yen has dipped after seeing a high near 130.28 yesterday. Our expected upmove till 131.0-131.5 hasn’t come about yet. Given that we expect Euro and Dollar Yen to move towards 1.19 and 111 next week, Euro Yen could stay above 129 for most of the coming week.
Pound (1.3419): As per expectation, Pound has dipped after testing resistance on daily candles (near 1.347) yesterday. It should now move lower towards 1.33 in the coming sesions.
Dollar Rupee (67.125) : Near-term Resistances at 67.15-35 still holding on Dollar-Rupee. Whether the market closes above/ below 67.10 today may set the trend for next week.
INTEREST RATES
Current yields: US 10 Year (2.94%), 30 Year (3.08%), 5 Year (2.78%), 2 Year (2.50%)
The US 10 Year yield dropped from 2.97% to 2.92% yesterday on back of trade worries. It had earlier risen in the previous couple of days due to some hawkish comments by the ECB chief economist.
As we have been mentioning, the markets seem to be waiting for a trigger next week for the next significant move in US bond yields. The CPI data release on 12th June and the FOMC meet on 13th June could be the deciding factor for whether the 10 Year yield again rises past 3% or whether it drops to medium term support near 2.55%. A test of 2.55% by the 10 Year would open up the following levels for the other yields:
2.9% (30 Year) and 2.2% (5 Year)
