STOCKS
The stock markets are al stable and no fresh impact is seen after the FOMC yesterday as it kept rates unchanged and reiterated its maintenance of the existing policy.
Dow (20957.90, +0.04%) is finding some difficulty to move above 20980 just now. The index could possibly test levels near 20800 before bouncing back towards 21000-21200 in the medium term. Note important resistances seen near 21200 and 21400 respectively.
Dax (12527.84, +0.16%) is slowly inching up towards 12550-12600 levels from where a short dip could be possible. The channel on the daily charts are holding well for now.
Shanghai (3126.44, -0.28%) lacks the upward momentum required to take it above 3160 and while trading below, it could test 3100 or even lower in the coming sessions. But note important channel support on the 3-day charts which of holds could lead to a sharp rise in the longer run.
Nifty (9311.95, -1.85%) could spend the rest of the week in the 9300-9400 levels and a fresh move could be expected next week. Note 9400 is an important resistance and is expected to hold in the medium term.
COMMODITIES
Bullion had moved lower due to recent strength in Dollar Index and trading near their key support areas. Gold (1241) is hovering around its crucial support of 1239. We might see some corrective bounce towards 1260 due to short term oversold condition. A close below 1235 could open up 1220 and 1200 as well.
Silver (16.43) is highly Oversold on the near-term charts and trading within the range of 15.73-16.94.The bias will remain bearish while it is trading below 17.50 levels.
Copper (2.52) had failed to close above 2.62 levels and came down in line with our expectation. Current trading range could be 2.45-2.54. There are supports at current levels of 2.50-52 which may hold for few days but a close below that could open up 2.45 levels as well.
Brent (51.73) and WTI (47.70) both had moved lower in line with our expectation. They are within their trading ranges of 50 -52. and 46.20 – 48.80 respectively. Brent may consolidate within these levels for few more sessions though the possibility of a corrective bounce towards resistance can’t be ruled out. We will remain bearish while Brent and WTI are trading below 53 and 51 levels respectively.
FOREX
The Fed kept the rates unchanged and shrugged off the poor first quarter weakness in US (0.7% annualized). The June rate hike odds have jumped from 70% to 90%, strengthening the Dollar in the process.
Boosted by the continued Fed confidence in the economy, Dollar Index (99.32) has rallied to test our resistance area of 99.35-50 but yet to rise above it to confirm the near term reversal. It’s a tough and go situation right now for Dollar and a similar situation is seen for Dollar Yen (112.80) which is trading close to the immediate resistance of 112.90-113.00. The pair is already enjoying the longest rally in 2017 from 108.10 to the current swing high of 112.89 and it should be clear in a day or two if the rally is to continue or reverse to the downside.
Euro (1.0892) has corrected a bit due to the recovery in Dollar Index but it isn’t too affected yet as the correction remains shallow so far. The near term strength remains intact as long as it trades above 1.0850.
Pound (1.2874) is consolidating at the higher levels but it may bounce back towards 1.3000 in the next couple of sessions if the immediate support of 1.2830 holds.
Aussie (0.7418) has fallen in a much sharper way than previously expected as the largest decline in Copper (2.538) since 2015 has affected the currency (Check Commodities section). Immediate support comes at 0.7380-70 which must hold to keep any chances of a bounce open.
Dollar-Rupee (64.15) may test 64.00 with a maximum extension to 63.80 before rallying towards 64.20 and higher this month. Immediate downside below 63.80 is not preferred for Dollar-Rupee in the near term.
INTEREST RATES
The US yields could remain stable and move sideways in the near term. The 5yr (1.86%) could move to 1.9% and then come back towards 1.80% while the 10yr (2.32%) could rise towards 2.4%. The 30yr (2.97%) could come down to test support near 2.9% before again moving higher in the longer run.
The Japan-Us 10Yr (2.30%) is rising for the past couple of sessions and in case it rises above 2.32%, we could see some Yen weakness against the US Dollar going forward. Else the yield spread could come off towards 2.2%.
The UK-US 10Yr (-1.25%) is coming off and is likely to move down towards -1.235 or lower in the near term, indicating that the upside for pound could be limited in the coming sessions.
