STOCKS
US-North Korea tensions, nearing of the French elections and the news of the UK SNAP elections on June 8th are adding on to the news list keeping the global indices low. European stocks have seen a sharp fall yesterday and may not rise back immediately. Dax (12000.44, -0.90%) may test initial support at 11930 which if fails to produce a bounce could take it to lower levels of 11800 in the near term.
Dow (20523.28, -0.55%) is holding above support of 20410 and while that holds, we could see some movement in the 20780-20410 region in the coming sessions. Only on a break below 20410 (if seen in the near term) can shift our focus to further downside levels.
Shanghai (3161.85, -1.09%) fell sharply breaking below the 3175 support mentioned yesterday. Either the index could bounce back from current levels or test lower supports near 3100.
Nikkei (18417.54, -0.01%) may trade within 18650-18230 zone for the next couple of sessions and if a break below 18230 is seen we may see a test of 18000 before a sharp recovery on the upside.
Nifty (9105.15, -0.37%) fell sharply from an intra-day high of 9217 yesterday. Note important support zone of 9000-8900 on the downside on a break below 9100. We could allow for a possible fall towards 8900 as an extension to the current corrective fall.
COMMODITIES
Notinh new to add. Gold (1288) has closed at slightly higher from its yedtreday’s close and hovering around its crucial resistance of 1305. We continue to look for a bounce beyond 1305 levels in the near term. But before that gold may spend a few sessions within the 1265-1305 regions to overcome its near term overbought condition.
Silver (18.23) closed below its support at 18.30. We might see 17.70 within few days of time and we will remain bearish while it is trading below 18.30 levels.
Copper (2.55), as per our expectations, has moved lower near 2.51 yesterday,inspite of Dollar weakness and as long it stays below 2.62, the chances of another dip to 2.48 or even 2.42 within next week can’t be ruled out.
Brent (54.76) and WTI (52.30) have fallen from their resistance levels of 55.20 and 53 and trading within the range of 53.60-55.20 for Brent and 51.70-53 for WTI respectively. The trend is still bullish in the near to medium term time frame and any corrective fall may face buying pressure at the lower levels. We have EIA Crude oil weekly inventory data today at 8.00 p.m with an expectation of a decrese of -1.0M barrels. Only a surprise rise / lower than expected decrese in U.S. drilling activity could keep a lid on the bullish momentum and could open up 52.50 levels for brent and 50 levels for WTI as well.
FOREX
A shock election call by the UK PM has not only strengthened Pound but boosted almost all the majors against Dollar.
Inability to rise above 100.70-85 pushed down Dollar Index (99.62) below the support of 99.80 and now it may test the next major support near 99.20-10 from where a recovery to 100.20-50 levels can be expected.
Euro (1.0720) has broken the near term range of 1.0550-1.0700 to the higher side and now may rise further to 1.0780-1.0830 if the rise sustains after the release of the Euro CPI data today.
Dollar Yen (108.49) is stuck between the support of 108.25-00 and the resistance of 109.25-40 discussed yesterday. The chances of a bounce back can’t be ruled out as long as the pair remains above 107.85. in case 107.85 fails to hold, much deeper downside may open but that is not the preferred view.
The larger timeframe bullishness in Pound (1.2565) discussed for the last two days has taken hold now and our initial target of 1.28 is achieved in a single session. If it manages to sustain above 1.29 in the next few sessions, then much higher target of 1.33 may open up but that may take time.
Aussie (0.7529) is testing the support of 0.7525 which must hold to keep the upside chances for 0.7640-75 open. A failure of 0.7525 may extend the decline to lower support near 0.7470-50 but for now, the upside chances still survive.
Dollar-Rupee (64.63) is trading flat in the NDF despite the major moves in the global markets. For an extension of the rise to 65.00-20, a break above 64.70 is required as a confirmation. Otherwise, it may keep oscillating in the range of 64.20-70.
INTEREST RATES
The US yields are falling. The 5yr (1.71%), 10yr (2.18%) and the 30Yr (2.85%) are down from 1.20%, 1.76% and 2.23% respectively but are testing decent support near current levels. We will have to see the price action here to see if there is scope of a bounce in the coming sessions.
The German yields are falling and headed towards near term support levels from where a bounce is expected in the near term.
The German-US 2Yr (-2.04%) and the 10Yr (-2.01%) are trading just below immediate resistances and could come off in the next couple of sessions. The Euro CPI data release today is to be watched. Upside for Euro seems limited for the near term.
The UK yields have bounced slightly but look bearish for the coming sessions. The 5Yr (0.489%), 10yr (1.004%) and the 20Yr (1.553%) are up from 0.477%, 1.003% and 1.5490% respectively.
The UK 10-5 Yr (0.5150%) is headed towards 0.40% in the medium term.
