STOCKS
Dow (25064.36, +0.18%) and Dax (12561.02, +0.16%) both continue to trade higher. Dow seems to be neared to the upside resistance at 25250 on the daily candles whereas Dax is stable in the 12500-12700 region unable to move up sharply just now.
Nikkei (22724.46, +0.56%) could face rejection near 22800 from where it may come off towards 22400-22200 again in the medium term. Only a break above 22800, if seen would be bullish for Nikkei in the longer run. Watch price action near 22800.
Shanghai (2787.01, -0.96%) has not been able to break above 2850 and instead has come off from there. It could re-test 2750-2700 in the next few sessions while below 2850. Some chances of a possible sideways movement in the 2700-2850 region exists in the longer run.
Nifty (10936.85, -0.74%) came off sharply yesterday but could get support in the 10900-10850 region which could again take the index higher towards 11100-11200 levels in the medium term.
COMMODITIES
Nymex WTI (68.09, +0.04%) fell sharply and could head towards support near 66-65 as seen on the daily candles before bouncing back from there. Surprisingly, Brent (72.25, +0.57%) has been pulled down breaking below support at 73 and could now target 70 on the downside. The sharp fall in Crude prices came in after comments from US Treasury Secretary Steven Mnuchin stated that the administration will consider the use of waivers for countries to continue buying Iranian Supplies.
Gold (1240.80, +0.09%) is stuck near 1240 for quite a few sessions now and is unable to decide on which direction to take. Considering the fall in other major commodities, there could be some scope of gold falling below 1240 and targeting 1230-1225 levels in the medium term. But we would have to wait and see if the price bounces from 1240 and test 1270/80 before falling to current levels.
Copper (2.7870, +0.81%) is trading above immediate support at 2.70 and while that holds, Copper could eventually target higher levels of 2.85 in the coming sessions.
FOREX
Euro (1.1707): As per our expectation of an upmove towards 1.175 in the first half of this week, Euro moved up yesterday, seeing a high near 1.1725. It is trading slightly lower currently, but could test 1.175 in today’s session. Resistance on daily candles is slightly higher up near 1.176-1.177, which could produce a dip.
Dollar Index (94.545): Yesterday’s forecast of a dip towards support near 94.0-94.2 on daily candles would be possible only upon a break of the crucial 8 weeks MA near 94.37. The 34 days MA on the daily line chart at 94.40 is also providing support. Our preference for a rise in the Euro towards 1.175 implies that Dollar Index could indeed break the above mentioned MA supports.
Dollar Yen (112.40): On weekly candles, there could be an interim resistance near 113 which could make Dollar Yen pause in its rally since last week. We still prefer a breach of 113 to extend upto 114-115 (horizontal resistance zone) which could possibly cap the current upmove.
Euro Yen (131.61): The 55 week MA near 131.58 might be providing decent resistance to Euro Yen in its upmove towards 133. However, we prefer a breach of this level in the next 1-2 sessions, followed by a rise towards resistance near 1.33 in the channel on daily line chart (by next week).
Pound (1.3232): Exactly as per expectation, Pound tested resistance on daily candles yesterday by seeing a high near 1.3293 and has then dipped. A dip towards 1.305 later in the week or by early next week seems possible. Levels near 1.305 are a crucial support zone, which when broken, could make Pound very bearish.
Dollar Rupee (68.575): We see a small range of 68.40-70 for the coming few sessions , followed by a possible dip below 68.40, to be limited to 68.25-15-00.
INTEREST RATES
US Retail Sales rose 0.5% in June and met market expectations. Moreover the growth figure for May was revised upwards. This has led to a rise in US Yields. However, at the same time, since the data couldn’t surpass expectations, the positive impact on yields might not be sustained. A fall in Brent Crude by more than 2.7% is something that could start affecting US long term yields, as long term inflation expectations might just get revised downwards.
US 10 year yield (2.86%), 30 Year (2.965%), 5 Year (2.754%), 2 Year (2.597%):
Our July ’18 US Treasury report will be released shortly. It explores the likelihood of a fall in the US 10-2 Yield Spread (0.26%) below 0%. A fall towards 0.2% by the 1st half of August is looking likely for now.
The German – US 10 year spread (2.5%) might be testing long term support at current levels. It might not dip lower towards -2.7% and could only rise from here. Let’s wait and watch.
