STOCKS
Most Equity markets, except the Indian market, fell a little more on Friday. Yet, the markets remain a little indecisive from a medium term perspective.
The Dow (24753.09, -58.67, -0.24%) dipped a bit more despite fresh hopes of Trump and Kim Jong meeting up on the one hand and a sharp dip in Crude on the other. However, it still remains inside the “No Man’s Land” of 24600-25100.
The DAX (12938.01, +82.92, +0.65%) saw an uptick on Friday but needs to rise past 13100 (at least) to pick up bullishness afresh. At the same time, it has Support at 12800 which prevents further immediate bearishness.
Possibly, the Nikkei (22445.27, -0.025%) appears relatively more bearish than the others, especially while below 22600, but also needs to break below 22200 to confirm bearishness towards 21900 and lower.
The Shanghai (3147.62, +0.20%) dipped some more on Friday and might be able to test the bearish target of 3125-00.
Only the Nifty (10605.15) and Sensex (34925) seemed to snap their losing streak of the last 7-8 trading days, which again puts them into a kind of “No Man’s Land”. Watch Resistances at 10700 and 36000 respectively and Supports at 10300 and 34000 respectively.
COMMODITIES
Although we have been bearish on Crude for the last few days, Brent (74.94) and WTI (66.21) fell more sharply on Friday than expected, on continued talk from Russia of increase in output. Brent has broken support near 76-75 today while WTI broke support near 67. WTI is now very close to support near 65.5 which could hold in the near term. However, if this support breaks as well, it could prove to be very bearish for Crude in the weeks ahead.
As expected, Gold (1297.83) has come off a bit from Resistance just below 1310 and could test 1290 in the near term. It will become bullish if it bounces strongly again from 1290. we need to watch for that.
Copper (3.0835) contiunues to trade sideways between 3.05-15, as suggested. Which way the current sideways range will break is unclear.
FOREX
Dollar index (93.986) saw a high near 94.16 on Friday and is trading slightly lower today. Since US markets are closed, there might be limited movement in the Index today. However, looking at the next 1-2 sessions, it could test support on daily candles near 93.80 and then, if it stays above 93.8, it could again see a rise beyond 94 and towards 94.25. A break of 93.8 could lead to a test of 93.5 in the days ahead. The upside in the next 1-2 weeks might be capped by 95.00-95.65.
Euro (1.1704), exactly as we had expected, saw a low near 1.165 on Friday and has now risen back up from there. It could rise a little more till 1.173. We expect it to dip from there back towards 1.165. If it breaches 1.173, it could test levels near 1.178. In the next 1-2 weeks, the Euro should test 1.155-1.145 as the Dollar Index tests 95.00-95.65.
Dollar Yen (109.39), after breaking support on daily candles near 110.5 last week, tested a low near 108.9 and is now rising from horizontal support near 109. It could rise up till 110.5 in this week. After testing 110.5, it might again be pushed down, or else, it could breach that level to test resistance on weekly candles near 111.5-112.0 in the next week. We have been expecting Dollar Yen to turn bearish over the medium term in the weeks to come.
Euro Yen (128.04): Support near 127-128 on weekly line chart for Euro Yen is holding for the time being. It could see some ranging between 129.5-128.0 this week, after which, it could break the support on weekly lines and turn bearish towards 125.
Pound (1.3317): In this week, Pound might move down the channel which it is forming on daily candles. The upside might be capped by 1.335 and levels near 1.32 could be tested later in the week.
Dollar Rupee (67.78) : Watch Support at 67.65 and Resistance at 68.00.
INTEREST RATES
US yields have seen a dip towards supports on medium term charts after the Fed minutes last week were perceived to be dovish. We expect a rise in yields from these levels. An important question now is whether the June rate hike has already been factored in by traders. If that is so, we might not see as quick a rise towards 3.2% for the 10 Year yield as we had been expecting.
US 10 Yr Yield (2.93%), 30 Yr (3.09%), 5 Yr (2.77%), 2 Yr (2.48%):
The US 30 year and 5 year yields have dipped slightly below respective supports near 3.11% and 2.80% on medium term chart. However this could be a false break and the yields could rise back up from here. The 10 year yield is close to the support near 2.91% and could test it in the next 1-2 sessions before rising again.
The German 10 Year yield (0.41%) has seen a break of immediate support near 0.45% on short term chart and could now find support near 0.4%.
