STOCKS
Dow (20981.94, +0.41%) could test immediate horizontal resistance near 21200 in the coming sessions before coming off to lower levels near 20800. Near term expected to remain sideways.
Dax (12807.04, +0.29%) is trading near resistances seen on the 3-day and Weekly candles. If that holds, we may expect a corrective dip in the coming sessions. Else there could be some sideways movement for 2-3 sessions before testing 13000 on the upside.
Shanghai (3068.50, -0.70%) came back to lower levels after testing 3080 on the upside, indicating that the bears could possibly dominate the price action for the coming sessions. In that case, an immediate recovery may not be on the cards and we could expect a fall towards 3045 in the near term.
Nikkei (19876.27, +0.03%) looks bullish in the longer term. The current sideways movement within 20010-19700 could be there for a few more sessions before the index finally shoots up towards 20250 and higher.
Nifty (9445.40, +0.47%) is not willing to see any downside correction now and seems to be in a rather consolidation mode within 9400-9500, where immediate support and resistance levels are seen near 9350 and 9500 respectively. Looking at the longer term charts, it looks bullish but we need price confirmation on a break above 9500.
COMMODITIES
Recent weakness in Dollar index had boosted Bullion near their key resistance areas. Gold (1234) is trading above its support of 1230. Recent trading range could be 130-1260. We will remain bearish on gold while it is trading below 1260 but chances of a short term bounce back towards its interim resistance can’t be ruled out.
We were expecting a bounce back in Silver towards 16.90 levels since 11th May onward as the scrip was highly oversold and yesterday Silver (16.63) made a intraday high of 16.73. Current trading range could be 15.70-16.90. The bias will remain bearish while silver is trading below 17.50 levels.
Copper (2.52) has found resistance at 2.54 levels. Only above 2.55, higher resistances of 2.60 can come into consideration. In the medium term 2.44 are going to be a strong support now but a close below that could open up 2.40-35 leves as well.
Brent (52.01) and WTI (49.04) both had moved higher in line with our expectation. They are within their trading ranges of 51-52.80 and 47.15-49.31 respectively. We have U.S weekly crude inventory tomorrow at 8:00 pm which could help to determine the future path but the bias will remain bearish while Brent and WTI are trading within 53 and 51 levels respectively.
FOREX
The combination of weaker than expected US macro data and the increasing possibility of political stability returning in Europe keeps the G-10 majors strong against the Dollar. Rupee rallies on the back of encouraging inflation and IIP data (new series).
Euro (1.0985) is close to the old resistance of 1.10 once again on the back of a surprise win for the German Chancellor Merkel’s party which suggests a possible easing of political risks. The break above the interim resistance of 1.0950 has boosted the chances of a rise above 1.10, bringing 1.1130-1.1200 into consideration. EURJPY (124.64) managing to sustain above 1.24.10-00 would be beneficial for the general strength of Euro.
A break above 1.10 for Euro may weaken Dollar Index (98.82) considerably, which has already tested our support of 98.85 and a successful Euro breakout may push Dollar down towards the long term support of 98.00.
Dollar Yen (113.43) has been holding above the immediate support of 113.10 for the last 2 sessions but the chances of sideways consolidation in the range of 113-115 or a silghtly broader range of 112-115 must be considered now.
Pound (1.2907) continues trading sideways in the range of 1.2800-1.3000 as expected and it may go on for another couple of sessions. With the medium term trend still up, a retest of the interim support of 1.2840-30 by the end of the week may trigger a sharp bounce.
Aussie (0.7411) tried but failed to rally above the resistance of 0.7425 once more. The larger downtrend is expected to resume for the target/support of 0.7300-0.7290 any day now as the weakness persists below 0.7500 which may cap any short covering rally.
Dollar Rupee (64.06) has broken and closed below the support of 64.25 to signal fresh downside momentum. It is Oversold in the near term, and it may take some time to break below 64.00-63.90. Once the break happens, of course, further decline towards 63.50 will come into picture.
INTEREST RATES
The German yields are almost stable near resistance levels and could come off in the near term while the US yields are stable near previous levels.
The UK yields have bounced a bit looks overall bearish for the longer term. The 10-5Yr UK differential is moving up and could test levels near 0.69% before coming off sharply.
The 10 Yr GOI yields (6.8065%) has come off in line with our expectation as the resistance near 7% has held well so far. The yield could come down towards 6.75% in the coming sessions before bouncing back to higher levels.
The Japan yields have broken above immediate resistances on the 10Yr (0.05%) and the 5Yr (-0.11%). Both the 5Yr and the 10Yr looks bullish for the near term.
