STOCKS
Dow (21271.97, +0.42%) is trading above 21200 and while that continues, it could be headed towards 21500-21600 in the next few sessions. Near term looks bullish.
Dax (12815.72, +0.80%) indeed tested 12800 last week and if it is able to break above 12850, we could see a sharp rise towards 12900-13000 this week.
Shanghai (3153.55, -0.15%) could possibly dip to 3130-3125 once before again rising up towards 3175-3200 levels. There is enough scope to rise on the upside in the medium term while the long term support near 3020 holds.
Nikkei (19944.14, -0.35%) has bounced from the 21-day MA acting as a god support near 19825. While it acts as immediate support, we could see a bounce towards 20000-20100 again in the coming sessions.
Nifty (9668.25, +0.22%) rose sharply, ending last week on a positive note. We may expect a re-test of 9700 in the next few sessions followed by a sharp break on the upside. Else the consolidation within 9700-9600 may continue for some more time before the upward rally resumes.
COMMODITIES
Gold (1266) remains in a slow corrective move which may take it to the support of 1242 but if the support holds, a quick bounce towards 1307can’t be ruled out. Silver (17.14) also continues to weaken and may decline to 16.90 in the coming days. We might see less volatility in the market ahead of FOMC meeting ( on 14th June 2017), which may add further directional clarity.
Copper (2.63) is trading within the narrow range of 2.56-2.67. Only above 2.67, higher resistances of 2.84 can come into consideration. We will remain bullish on copper while it is trading above 2.55 regions.
Brent (48.40) and WTI (46.09) had tested their respective supports of 47.40 and 44.20, and bounced a little, keeping the upside possibility of 50.22 (Brent) and 47.50 (WTI) open. If Brent and WTI manage to close above 50.30 and 47.50 in the next couple of sessions, another attempt for 52 and 49.55 can be seen. Bearish possibilities will come in consideration in case 47.40 for Brent and 44.20 for WTI break down.
FOREX
While keeping the rates unchanged as expected, ECB trimmed Inflation expectations through 2019, driving Euro lower. The Comey testament has been brushed off by the investors, boosting Dollar and UK is headed for a hung parliament, weakening the Pound. Overall Dollar strength.
The initial signal of an upside reversal in Dollar Index (97.30) is visible now and it may rise to 97.60-80 in a day or two. A break above 97.80 may fully confirm a near term reversal and open up higher levels of 98.40 and above. The bias turns bullish now with the support of 96.50 holding firm.
Euro (1.1195) has weakened from the higher levels exactly as discussed for the last few days. Technically it may decline further to the support of 1.1125-15 before any bounce can be considered but the German-US 2Yr (-2.08%) keeps the possibility of a recovery still open (Check Interest Rates section). Bias bearish but not with full conviction yet.
Dollar Yen (110.26) has bounced in line with expectations and may rise to 111.20 but as discussed yesterday, to negate the downside risk, it requires a break above 111.70. Till then, the larger trend remains down.
Pound (1.2746) has taken a major hit from the unexpected UK election results. With the initial shock digested, it may either grind in the range of 1.2700-1.2850 for a few sessions or continue the decline towards 1.2600 immediately. It may take one more trading session which is the more probable path.
Aussie (0.7532) remains indifferent to all the global events and untouched even by the general Dollar strength today. It may end the week in the range of 0.7500-0.7600.
Dollar Rupee (64.21) broke the range of 64.30-70 to the downside and now we have to watch crucial Support at 64.10. If that holds, there could be chances of sharp rise to 64.40-50 again. A break below 64.10, on the other hand, could lead to lower levels near 63.90
INTEREST RATES
The US yields have risen as expected. The 5YR (1.76%), 10Yr (2.20%) and the 30Yr (2.85%) are up from previous levels of 1.74%, 2.18% and 2.84% respectively.
The UK 10YR (1%) is testing support near current levels and could bounce back in the coming sessions to levels near 1.05%.
The Japan 5YR (-0.068%) has been rising sharply compared to the other longer term yields and looks bullish in the near term. The 10Yr (0.06%) could test 0.07-0.08% over today and tomorrow before coming off again in the medium term.
The German-US 10Yr (-1.94%) is almost stable just above immediate support levels and unless that breaks on the downside, there could still be some possibility of a bounce back in euro. But on the other hand if we look at the 2Yr yield spread (-2.11%), it has broken sharply below the support levels indicating a weaker Euro in the coming sessions. We would now have to look closely at the 10Yr yield spread for any indication of a break below support levels to get a better directional cue for the Euro.
