STOCKS
Worries of trade tariff between US and its major trading partners seems to be taking the stocks lower. Imposition of 20% tariffs on EU vehicles as stated by Trump took down the automobile stocks on the Dax this week, while the EU posed retailitory tariffs of about 25% on $3.3bln of US goods in response to the US tariffs on EU steel and aluminium imports.
Dax (12177.23, -1.39%) looks bearish in the near term towards 11800.
Dow (24216.05, +0.41%) bounced a bit from levels just above 24000. While the daily trend support holds, there could be some upmove in Dow towards 24750. Else failure to remains above 24000 may take it lower to 23600 next week.
22000 is an important levels for Nikkei (22194.21, -0.34%). In case it breaks lower, it could be vulnerable to fall towards 21500 over the next couple of weeks. Watch price action near 22000.
Shanghai (2813.61, +0.96%) is likely to break below 2800 and head towards 2750 next week. The index looks bullish with some possibility of a bounce towards 2850.
Nifty (10589.10, -0.77%) finally broke below our expected 10650 levels and while the index trades lower, it could target 10400 in the near term. The index is bearish for the coming week.
COMMODITIES
Brent (77.39) may head towards 80 while above support near 76. Near term looks bullish. On the other hand, WTI (73.25) has resistance at 74 which if holds could bring in a small dip towards 72. 74-76 is a resistance zone for WTI which could prevent an immediate rise above current levels.
Gold (1249.70) is fast headed towards 1240 and may pause there. A short bounce from 1240 is possible before the price attempts to fall further. Overall Gold looks bearish for a few more sessions.
Copper (2.9730) could hold above immediate support near 2.95 and while that holds, the price could trade sideways in the 2.95-3.05 region.
FOREX
Euro (1.1570): Euro has seen a high near 1.1601-1.1617 over yesterday and today. There is resistance near 1.162 and higher up near 1.165 which it could test in today’s session and then move down towards 1.15 again in the coming week.
Dollar Index (95.29): Dollar Index could probably see a dip to 95.00-94.75 levels in today’s session. Next week, it could rise from support on daily candles (near 94.75) back towards 95.5 and beyond.
Dollar Yen (110.48): Dollar Yen’s ranging continues and is now being restricted to a very narrow range between 110.7-110.0 on daily and 3 day candles. Next week could possibly see a break of this range on the downside (preferred). Long term crucial resistance near 110.5-111.0 is likely to hold.
Euro Yen (127.85): Euro Yen again rose above support on daily candles (127.75) as the Euro tested highs near 1.1617 and the Dollar Yen remained ranged. The horizontal support on weekly line chart near 127 is crucial and a break of the same would be required to confirm medium term bearishness towards 124.
Pound (1.3074): Pound tested support on daily and weekly candles near its low of 1.3050 yesterday. This support could hold for at least sometime in the next week, taking Pound towards 1.32 again. A break of this support (could happen eventually) would be very bearish.
Dollar Rupee (68.7925): Weakness in the Emerging Market currencies (specially, Chinese Yuan) are indicative of further weakness in Rupee. Immediate target on the upside could be 69.20, while above 68.60.
INTEREST RATES
US GDP data (released yesterday) for the 1st quarter fell short of previous estimates by 0.2%. This could moderate some of the enthusiasm in global markets regarding the US economy’s growth and inflation prospects. It could also be a supporting factor for a further dip in US yields, which have already been falling due to the trade war worries.
US 10 year (2.84%), 30 Year (2.97%), 5 Year (2.72%), 2 Year (2.51%) :
Repeating yesterday’s comments:
The US 10 Year yield’s gradual downtrend could target support near 2.70%-2.65% on medium term chart.
Similarly, the 30 Year yield also looks like it could move towards 2.90%.
The German-US 10 Year spread (-2.52%) has risen slightly and is at resistance on medium term chart.. If it goes above this resistance, it could well target -2.48%. This might imply a further fall for US yields.
