STOCKS
Dow (25320.73, -0.0062%) and Dax (12842.30, -0.0048%) are almost stable with a slight dip from yesterday’s levels. Upside for Dow remains open towards 25750 while Dax could remain stable for a few sessions. As mentioned earlier, watch crucial resistance near 12900 and 13100 on Dax.
Nikkei (22934.58, +0.25%) is up from levels seen yesterday and could move up towards 23000-23500 levels in the medium term while above 22800. Near to medium term looks bullish. A rise in Nikkei could pull up Dollar Yen towards 111 or higher in the longer run.
Shanghai (3065.75, -0.44%) is almost stable above 3050 support level. Some sessions of range trade is possible before breaking on the downside towards 3000. For now we keep the downside preference open unless we see a sharp bounce above 3100.
Nifty (10842.85, +0.52%) closed higher but just below the crucial resistance near 10850. A break above 10850 is needed to take the index higher in the medium term. Watch price action near current levels.
COMMODITIES
Copper (3.2284) is trading lower as expected. The price could dip to 3.20 before pausing the current fall from 3.30. Thereafter, a rise from 3.20 is possible in the medium term.
Brent (75.67) and WTI (65.99) have both dipped a bit and are trading lower just now. Brent could get some support near 75 which if breaks on the downside could make it vulnerable to a fall towards 74.0-73.5 before a bounce back to higher levels near 79-80. WTI on the other hand is trying to move above 66.50-67.00 levels and if succeeds, could turn bullish for the coming sessions.
Gold (1295.06) is stable but is finding difficulty to rise above 1300 just now. While below 1300, there could some scope of a gradual fall towards 1290-1285 levels in the near term.
FOREX
Dollar index (93.87) has continued to trade around the 93.4-93.8 zone in the last 3 sessions and out predicted downmove to 93.0-92.8 is yet to surface. US CPI met expectations and hence didnt have any bearish impact on the Dollar. The Fed meet today (rate hike expected) will be very important. Any sign of dovishness could push Dollar Index down to our forecasted 92.8-93.0 levels.
Euro (1.1747): Euro hasn’t yet moved towards our predicted levels of 1.1875-1.1900 yet and has only been able to see a high near 1.181 yesterday. While the Fed meet today could impact the Euro, the ECB meeting day after would be even more important. We are expecting ECB’s hawkishness to take Euro higher towards 1.19.
Dollar Yen (110.60): Dollar Yen looks bullish towards levels near 111.0-111.5 in the next few sessions. Expectation of the US Fed’s rate hike and the Bank of Japan’s maintenance of status quo in this week might be taking Dollar Yen upwards. In the medium term, Dollar Yen could turn bearish after testing 111.0-111.5.
Euro Yen (129.93): Euro Yen as per expectation has continued trading around 129.5-130.0. The possibility of Euro moving past 1.18 and Dollar Yen touching 111 implies that Euro Yen could test higher resistance on daily candles near 131 in this week.
Pound (1.3363): Pound looks bearish in this week towards levels near 1.33-1.32. On the downside, 1.31 is a crucial level, whose break could lead to bearishness in the medium term.
Dollar Rupee (67.485) : We are preferring a break below the 67.3-67.2 zone sometime in this week, given our preference for bullishness in the Nifty and Euro.
INTEREST RATES
Current yields: US 10 Year (2.97%), 30 Year (3.10%), 5 Year (2.81%), 2 Year (2.54%)
US yields rose slightly after US CPI met expectations for the month of May. Yields have been seeing minimal movement over the past 7-8 sessions as the global bond markets await the Fed meeting today.
A host of key data releases and major events are lined up, which could have a significant impact on global yields :
- The week started with trade tensions already aggravated due to the controversial G7 meet.
- The US-North Korea summit in Singapore has proven to be a breather for geopolitical volatility but it hasn’t had any significant impact on yields ( as expected).
- US CPI data yesterday: Both core and headline CPI increased by 0.2% m-o-m, thereby meeting consensus forecasts. This led to a slight rise in yields. However, it hasn’t provided any significant direction to yields yet.
- FOMC meet today: A 25 bps rate hike seems already factored in by the markets. A higher rate hike will be extremely hawkish and should take the 10 year yield beyond 3%. The language of the Fed will also be very important and any sign of dovishness in that would be bearish for yields.
- US Retail Sales data release on 14th June
- ECB meeting on 14th June as well : expected to be hawkish, thereby taking global yields higher
