STOCKS
Market seems to be turning cautious ahead of the US-China meeting this weekend coupled with the ongoing political tensions between the US and Iran. The rally in the equities have paused. Dow, DAX and Shanghai can see intermediate dips before their overall upmove resumes. India’s Sensex and Nifty remains mixed within their sideways range in the near term. But the broader bias is bearish for them to break the range on the downside and fall in the coming days.
Dow (26727.54, +8.41, +0.03%) is not gaining strength to rise past the resistance at 26900 immediately. While below 26800 an intermediate dip to 26600 and 26450 is possoble in the coming days before the uptrend resumes targeting 27200 and 27500.
DAX (12274.57, -65.35, -0.53%) has declined below the 12300-12285 support zone which we had expected to hold. The index can test 12200-12170 on the downside now and then can reverse higher again towards 12400-12500. The broader bullish view is still intact to see 12600-12800 on the upside.
The support at 21190 mentioned yesterday is holding well on Nikkei (21235.08, -50.91, -0.24%) as of now. But Nikkei has to surpass 21350 decisively to bring back the bullish momentum. While below 21350, a fall to 21000 cannot be ruled out in the coming days.
Shanghai (2983.32, -24.83, -0.83%) seems to lack strong follow-through buyers above 3000. A corrective fall to 2950 can be seen now after which the uptrend can resume towards 3000 again.
Sensex (39122.96, -71.53, -0.18%) is holding above 39000. While above 39000 it can remain stuck in between 39000 and 39650 in the near term. But the bias is bearish for it break 39000 and fall to 38500. Also while below 39,500 Sensex can test 38000 on the downside in the coming weeks.
Nifty (11699.65, -24.45, -0.21%) looks relatively weaker than Sensex and can fall to 11600 in the near-term. An eventual break below 11600 can drag it to 11500 and 11450. Resistance is in the 11800-11850 region.
COMMODITIES
Commodities are trading higher. While the commodities look bullish in the near term, they could be heading towards important resistances in the near term. Oil prices may test immediate resistances and probably stabilize a bit before the OPEC+ meet due early next week. The EIA weekly US Crude inventory data is to be released tomorrow and is expected to decrease by -1.077mln barrels which could push Crude prices higher in the next couple of sessions.
Gold (1429.60) has risen sharply. Note that the break above 1360/80 has been crucial indicator of medium term bullishness for Gold prices and while it sustains above 1400, gold could target 1500 on the upside. View is bullish for the rest of the sessions this week.
Silver (15.48) has risen and could head towards resistance near 15.60/65 mentioned yesterday from where a short corrective dip is possible. Near term view is bullish for silver.
Copper (2.7165) has risen sharply and could test resistance near 2.75/80 in the near term from where a small dip looks likely. While the longer term trend is bullish, we may face short rejection from 2.75/80 in the near term.
Brent (64.92) has dipped after testing 65.76 yesterday. 64 is an important support on the downside and while the price holds above 64, there is room on the upside towards 67 to fill in the gap that was made on 32st May when Brent opened with a gap down.
Nymex WTI (57.72) has daily resistance at 60 which is likely to be tested in the next couple of sessions followed by a dip from there.
FOREX
Continued Dollar weakness has boosted major currencies to rise sharply. Euro looks bullish towards 1.15 while Dollar Yen is holding above support at 107. Pound, Aussie and Rupee could strengthen a bit from current levels.
Dollar Index (95.94) is sharply down and while below 96, the index could break below immediate support at 95.78 and head lower targeting 94.60 on the downside. Near term is bearish while below 96.0-95.75.
Euro (1.1402) has been dragged higher in line with our expectation in spite of lesser than expected German IFO data yesterday. A break above 1.1350 has triggered buying for the currency and bias for the near term is tilted to the upside. While the rise continues, Euro could head towards 1.15 in the near term.
Dollar-Yen (107.07) is almost stable. The weakness in Dollar has not pulled down Dollar-Yen below 107. But if Nikkei moves lower and the dollar continues to weaken, Dollar-Yen would be forced to fall below crucial support at 107. Note that below 107, important support zone of 105.50-106.00 would come into the picture. For now, we may expect 107 to hold.
Euro-Yen (122.05) is trading at daily resistance and could move up gradually towards 123-124 in the medium term. Overall view is bullish. Any rejection from 122.50 could be limited to 121.
Aussie (0.6956) has moved up but could face resistance above current levels from where a dip back towards 0.69 is possible. A sustained break above 0.6970 could take it higher towards 0.70. Overall Aussie could come down after a few sessions of upmove.
Pound (1.2745) is also trading higher. Pound looks bullish for the near term towards 1.28 or higher.
USDCNY (6.8803) has come down and could test support at 6.85/80 as seen on the 3-day candles before again bouncing back to test higher levels of 2.90.
USDINR (69.36) closed lower yesterday and has scope of testing 69.25/20 on the downside before bouncing back from there. Broad range is likely to remain between 69.20-69.75 for the near term.
INTEREST RATES
The ongoing political tensions between the US and Iran and the upcoming meeting between the US and Chinese Presidents this weekend are keeping the market cautious. As such the bonds trade higher. The yields continue to remain lower and have dipped across tenors.
The US Treasury Yields have been inching lower within their overall downtrend. The US 30Yr (2.54%), 10Yr (2.02%), 5Yr (1.75%) and 2Yr (1.74%) have dipped yesterday. The near-term view is negative for the yields. While below 2.60%, the 30Yr can test 2.50% – 2.48% in the coming days. The 10Yr can test 2% and the fall can accelerate on a break below 2%.
The German 30Yr (0.26%), 10Yr (-0.31%), 5Yr (-0.65%) and 2Yr (-0.76%) have inched further lower. The German IFO data release showed a dip in the Business Expectation Index to 94.2 in June from 95.3 in the previous month indicating weakness in the sentiment and a possible slow-down in the economy. This could keep the yields lower. At the current pace of fall, the 30Yr can dip to 0.20% and the 10Yr can test -0.38% and even -0.40% in the coming weeks.
The 10Yr GOI (6.9882%) oscillated around 7% and has closed on a mixed note. The near-term outlook is mixed. As mentioned yesterday, we can see a sideways consolidation between 6.90% and 7.10% for some time before the overall downtrend resumes towards 6.80% and 6.75% in the coming weeks.
