STOCKS
Important level of 24000 has not broken yet on the Dow (24174.82, -0.54%). Although 3-day chart show further room on the downside, while 24000 holds, the index could trade sideways in the 24000-24800 region for some time.
Dax (12349.14, +0.91%) bounced back taking support from the weekly candles and the trend support visible on the line charts. While the support holds, the index could move up towards 12600-12700 in the next few sessions.
Nikkei (21654.32, -0.60%) was stable below 21800 and looks bearish for the coming sessions. As mentioned yesterday, the downside target for Nikkei could be 21400-21200 just now. Need to see if the 3-day candle support holds there and produces a bounce.
Shanghai (2781.04, -0.21%) is in a pause mode below 2800. Failure to bounce back to levels above 2800 could take it lower towards 2750-2700 in the medium term. Near to medium term looks bearish.
Clarity on movement in Nifty (10699.90, +0.40%) persists while the index trades in the 10600-10800 region. Another 4-5 sessions could be spent in the mentioned region before a break out on either side is seen.
COMMODITIES
Brent (78.13) and Nymex WTI (74.65) could be stable for a couple of sessions and spend some time in a sideways trade. 73-71 in WTI and 77-79 on Brent could be the range for the next few sessions.
Gold (1259.10) moved up sharply as expected coming back to 1260. While the upmove continues, Gold could re-test 1270/80 in the near term.
Copper (2.9375) is stable just now. Need to watch price action near 2.90. A bounce from here could take it back towards 3.0-3.05
FOREX
Euro (1.1671): EU Retail Sales in June turned out to be below market expectations. However, German political tensions seem to have eased a bit, thereby providing a boost to the Euro yesterday, which rose towards 1.167. It is trading at resistance on daily candles near 1.167 now (also corresponds with the 34 days MA). A break of this resistance could take Euro to 1.172 in this week, where it could find resistance. A rise above 1.172-1.173 could make it bullish till 1.185 but would happen only on an appropriate trigger. The US FED Meeting Minutes release on Thursday could be one trigger which might impact the Euro through its impact on Dollar strength.
Dollar Index (94.59): Against expectation, the Dollar Index again dropped towards support on daily candles near 94.6 yesterday. The Independence Day holiday in USA today could lead to muted movement in the Index today. However, with the US Fed meeting minutes slated to release on Thursday, the Dollar Index might finally find some direction in its near term movement. We prefer a downmove towards 94.3 in the next 1-2 sessions. A break below that could make it bearish towards 93.
Dollar Yen (110.33): Dollar Yen has come off from levels near 111. Inspite of resistances on daily and 3 day candles having been breached, higher resistance on longer term charts near 111.5 is a crucial and strong resistance, which is holding and could lead to Yen strength in the weeks ahead. In the next couple of sessions, a further downmove towards 110.1-110.0 could happen. A break of 110 would make Dollar Yen bearish.
Euro Yen (128.86): Euro Yen could stay ranged between 128-129 below resistance near 129.5 on daily candles. A test of 1.172 by Euro and Dollar Yen staying above 110 in this week would prevent it from falling below 128. Horizontal support on weekly line chart near 127 is a crucial level to look out for. A week close below 127 (possible in the next 1-2 weeks) could make Euro Yen bearish in the medium term.
Pound (1.3206): Pound has breached the immediate resistance near 1.3175 on daily candles and is now moving up towards resistance near 1.33 on daily candles. While below 1.33, it could again test levels near 1.30 in the next week. We believe 1.30 is a crucial level for the Pound – if it breaks lower, then medium term could be bearish; if it stays above it, it could breach 1.33 and thereby turn bullish.
Dollar Rupee (68.58):May be ranged between 68.40-80 for some days.
INTEREST RATES
US bonds market would be closed today for the Independence Day holiday. The US Fed meeting minutes release on Thursday would be an important event which could move the bond markets globally. Although the meeting’s outcome was hawkish, further detailing in the minutes might just reveal some dovish sentiment which could have further bearish effect on yields.
US 10 year yield (2.83%), 30 Year (2.96%), 5 Year (2.72%), 2 Year (2.524%): The US 10-2 Yield Spread (0.306%) dipped below 0.29% for the first time in 10-11 years yesterday. A further fall in the spread towards 0.2% in the weeks ahead seems very likely. With the prevailing risk averseness sentiment, US longer term yields might have already seen a top this year (10 Year yield’s top being near 3.125% in May). For July, a downmove for the US 10 Year towards 2.75% seems likely.
As expected, German 10 year yield (0.294%) is now breaking below support near 0.3% on medium term chart. It’s next downside target would be levels near 0.18% which could be tested by July end.
