STOCKS
Global equities remain broadly weak. Dow has room to see more downticks. DAX and Nikkei are vulnerable to break their key support and fall. Shanghai can continue to consolidate sideways. India’s Sensex and Nifty can outperform their global peers as they look bullish to rise further.
In line with our expectation, Dow (25347.77, -237.92, -0.93%) remains bearish and is heading towards the crucial support level of 25250. A break below 25250 (can’t be ruled out) would suggest a medium term top is in place and might portend 24500 or even 24000.
DAX (12027.05, -44.13, -0.37%) seems to lack strength. While it remains below 12200, it is vulnerable to break 12000 on the downside and fall to 11800-11600.
Nikkei (21020.72, -239.42, -1.13%) is oscillating between 20900 and 21500. While below 21500, the bias is bearish for the index to break below 20900 and target 20500.
Shanghai (2899.34, -10.57, -0.36%) is trading around the middle of its 2835-2955 sideways range and has equal chances of moving either up towards 2950 or down to 2850 from current levels.
Sensex (39749.73, +66.44, +0.17%) is getting support around 39500 and remains bullish to test 40200.
Nifty (11928.75, 4.00, 0.03%) seems to be getting fresh buying interest below 11900. The bullish view is intact for a rise to 12150. The level of 11900 will now act as a strong support.
COMMODITIES
Recovery in the dollar has pulled gold lower. Chart pattern in gold is signalling that a fresh fall is on the cards. Silver remains barish to test 14.25-14. The downtrend is Copper is likely to resume as the corrective upmove is facing resistance as expected. Oil’s corrective bounce seems to be losing steam as it nears the key resistance. In line with our broader bearish view, we expect the oil prices to reverse lower again. The charts are also giving early signs of a reversal.
Contrary to our expectation for a rise, Gold (1280.4) has fallen sharply. A head and shoulder pattern (continuation pattern in this case) is getting formed with the neckline support around 1270. A break/decisive close below 1270 can drag gold below its key range support level of 1265 and target 1250-1240.
Silver (14.37) has tumbled below 14.50 and keeps our bearish view intact to test 14.25 and 14.
Copper (2.70) has come-off after testing the resistance at 2.72. The expect the downtrend to resume targeting 2.60. A break below 2.68 will strengthen the downmove.
Brent (69.91) has come-off from 70.59 signalling that the resistance at 71 is holding as of now as expected. We may see the prices turning down towards 68-67 again thereby keeping our overall bearish view intact for an eventual fall to 66-64
WTI (58.8) has turned down from its high of 59.57. The resistance at 60 seems to be holding well for now as expected and keeps the bearish view intact. A break below 58 will accelerate the fall to our preferred targets of 56-54.
FOREX
US Dollar could attempt to strengthen further in the near term. Pound and Euro could see a slight dip while it is important to see if Yuan breaches 6.92. Rupee to remain ranged.
Dollar Index (97.93) is likely to remain above support near 97.25/50 and could move up towards 98.50-99.00 in the near term.
Euro (1.1164) has interim resistance near 1.1215 and while that holds, there could be a possible fall in Euro towards 1.11.Our longer term view of a fall below 1.11 remains intact but there could be another up swing from 1.11 before Euro bears come into the picture with full strength. For now preference is for a fall towards 1.11 before bouncing back from there.
Euro-Yen (122.12) has fallen as expected and could be at the end of the contracting movement coming from Mar’19. 122.0-121.5 is the low expected in the next couple of sessions before we expect a bounce from there.
Dollar Yen (109.38) could test 109.0-108.50 before bouncing back from there. On the weekly candles there is support near current levels which if breaks could pave way for a fall towards 108. Preference is for a bounce from 109 in the very near term with a maximum possible extension to 108.50.
Aussie (0.6927) is holding above weekly support near 0.6850 and could test 0.70 before again falling back from there.
Pound (1.2658) is holding below immediate resistance at 1.2750 and while that holds, Pound could face selling pressure. Although Pound saw some slight recovery on announcement of May’s resignation, the rise was temporary and the Pound could test fresh falls in the near term. A possible test of 1.2550 looks likely on the downside.
USDCNY (6.9135) has risen back to re-test immediate resistance near 6.92 but it would be important to see if the pair manages to break above 6.92 or come off from there back towards 6.90/87 levels. Watch price action near 6.92.
USDINR (69.70) closed near the upper limit of our mentioned range of 69.75-69.25. Movement today could be restricted within 69.75-69.35. USDINR is expected to hold below resistance near 69.75/80 just now.
INTEREST RATES
Globally yields are trading low. On one hand the markets expected better trade relations between Japan and US on news of Trump visiting Japan on Monday but his comment that the US is not interested to make a deal with the China raise concerns on continuity of US-China trade clashes. This has pushed the US yields down sharply yesterday after the US markets came back from the Monday holiday.
In the shorter term, the US 3mnth (2.365%) is trading low from 2.396% seen on 21st May last week. This is keeping a portion of the curve inverted while the 10yr (2.25%) and 30yr (2.69%) on the longer end fell sharply from 2.31% and 2.73% seen yesterday. While medium term looks bearish, we could see some immediate recovery in the yields.
The European yields are also trading low and are likely to remain bearish through June’19. The German 10yr (-0.158%) has fallen as expected and could test -0.2% before bouncing back from there.
The US-Japan 10YR (2.33%) has dipped further to test lower support near current levels. Failure to bounce back from here could pull down Dollar-Yen sharply in the near term. Preference is for a bounce from here towards 2.45%.
The Japan yields are bearish for the near term. A fall in the 10YR yield (-0.083%) towards -0.10% looks possible as mentioned yesterday.
