Bears reared their heads again yesterday and might try to assert themselves further today.
Trump's nixing of the Singapore summit with North Korea yesterday is credited with pushing the Dow (24811.76, -0.30%) down a bit. As mentioned yesterday, the Dow needs to breaks its immediate range of 24600-25100 to pick up a direction.
The DAX (12855.09, -0.94%) had already seen a further fall yesterday before the US came on. A day-close below 12800 today, if seen, will confirm the break of uptrend since 11710 (March '18). A rise past 13100 is now needed to negate the bearishness.
Asian indices are trading indecisive today, within the decline that started a few days ago. The Nikkei (22443, 0.03%) just about trades in the green while the Shanghai (3152, -0.09%) looks like it could break below 3150. Both look like they can dip to 21900 and 3125-00 respectively.
Although the Nifty (10513.85, +83.50, +0.80%) recovered a decent part of yesterday's losses, it needs to rise past 10600-700 if it wants to be seen as bullish. At the same time, it needs to break below 10400 to increase near-term bearishness. The Sensex (34663) too might come down if it is unable to build on yesterday's bounce and rise past 34750.
Commodities are trading at interesting levels, and look like they are waiting for a stimulus from somewhere to become volatile soon.
Brent (78.67) is falling towards 78, as suggested yesterday. May test 77 also, but decent Support is seen there. News that Russia is talking of hiking output is credited with the dip. Importantly, the WTI (70.60) has dipped below trendline at 71 and may test crucial Support at 70 soon. Need to see if that is as strong a Support as 77 might be on Brent.
Gold (1302.14) trades higherin line with our expectation of a small rally to 1310. Need to see price action at 1310. If it holds, there might be chances of a break below 1290-1280 in the medium term.
Copper (3.0905) continues to trade sideways between 3.05-15, as suggested. Which way the current sideways range will break is unclear.
Silver (16.63) trading sideways. If you are looking for stability, this is the place to be.
Dollar index (93.921), as per our expectation, tested support near 93.6 on daily candles yesterday but did not dip further towards 93.3. While above 93.7, it should again test 94. The next 2 sessions could see it move up towards 94.2-94.4, after which there could be another dip towards 94. The upside might be capped by 95.00-95.65.
Euro (1.1710), exactly as we expected, rose to a high near 1.175 yesterday and has again dipped from there. It could now dip further towards 1.165 in the next couple of sessions, followed by some retracement back towards 1.17. As we have been saying, the Euro should test 1.155-1.145 as the Dollar Index tests 95.00-95.65.
Dollar Yen (109.57) had broken support on daily candles near 110.5 on Wednesday and tested a low near 108.9 yesterday. We had written that there might be some horizontal support near 109 and that seems to have produced a bounce. Dollar Yen might again be pushed down from levels near 110.5. However, if it goes above that level, then it could test resistance on weekly candles near 111.5-112.0 in the next week. We expect Dollar Yen to turn bearish over the medium term in the weeks to come.
Euro Yen (128.29): After breaking support near 129.5 on Wednesday, Euro Yen tested lows near 127.7 yesterday as the Dollar Yen tested 108.9. However, earlier mentioned support near 128 on weekly line chart for Euro Yen might just hold well for the time being. In the weeks ahead, the possibility for Euro Yen to turn bearish towards 126 are increasing as the Dollar Yen is expected to turn bearish soon (while the Euro continues its downmove as well).
Pound (1.337): Pound seems to be forming another downward channel on daily candles and could dip towards support in the channel near 1.3275-1.3250 next week. The current downside target for the next couple of weeks is horizontal support
near 1.31 on 3 day candles.
Dollar Rupee (68.3475) : Trend remains bullish, with Supports at 68.30, 68.15 and 68.07.
Against our expectation, US yields had dipped yesterday after the Fed minutes were perceived as dovish. The 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 (2.99%), 30 Yr (3.14%), 5 Yr (2.83%), 2 Yr (2.52%):
The 10 year, 5 year and 30 year yields are still continuing to stay near respective supports on short term and medium term charts..
Yesterday we said that we expect this to be a temporary dip only and that there could be a rise from these supports in the sessions ahead. We still maintain this view - however, there might be some scope for the 10 year to dip more towards 2.9% in case the support near 2.98% is broken decisively.
8:30 14:00 UK GDP
...Kshitij Expn 0.54 % ...Expectd 0.2 % ...Previous 0.1 %
9:00 14:30 GER IFO Business Climate
...Kshitij Expn 102.61 ...Expected 102.0 ...Previous 102.1
9:00 14:30 GER IFO Business Situations
...Kshitij Expn 106.59 ...Expected 105.5 ...Previous 105.7
9:00 14:30 GER IFO Business Expectations
...Kshitij Expn 98.28 ...Expected 98.5 ...Previous 98.7
12:30 18:00 US Durable Goods Orders
...Kshitij Expn 0.61 % ...Expected -1.40 ...Previous 2.65
US Existing Home Sales
...Kshitij Expn 5605 K ...Expected 5560K ...Previous 5600 K ...Actual 5460 K