Market Morning Briefing

GOOD MORNING!

STOCKS
Dow (16921.46, +0.09%) recovered nearly all of the previous week’s loss and now may prepare to reach 17000-200 levels soon. As mentioned earlier, bulls would not be concerned till 16600-300 gets broken. The Dax (10004, +0.74%) is hitting the upper end of the range in 9800-10050 but another push up to 10300-400 remains on cards as long as it stays above 9800-700.

Nikkei (15373.50, +0.08%) broke above 15250 to end the correction and rallied to a five month high. This rally may face a bit of selling pressure from the 15400-700 zone. The Shanghai (2014.12, -0.48%) broke below 2040 to reach 2010 levels as expected. Now it must keep itself above 2000-1990 to avoid breaking down to the zone of 1960-50.

Nifty (7540.70, -0.23%) faced heavy selling exactly from our 7580-7610 area to retest the 7500 levels. A break below 7510-7480 will bring 7450- 7400 but for now Nifty may keep trading inside the two week long range of 7500-7700.

COMMODITIES
Gold (1313, -0.8%) has come off from mid-term resistance on the weekly near 1320 after rising sharply on FED outlook. The resistance is likely to hold keeping the range of 1280-1320 in the near term. The rise in Gold against WTI Crude mentioned in earlier reports have occurred now but may pause for some sessions before resumption.

Silver (20.69, +0.20%) shot up breaking the crucial 20.5 after consolidating near lower levels of 18.5-19.6. If this rise continues it may target the next resistance coming up near 22.5 soon.

Copper (3.0895) has been rising eventually targeting 3.10-3.125 in the coming sessions which if holds may push it again towards 3.05 else may target higher levels of 3.15-3.20.

Nymex WTI (106.70, +27%) has bounced from 105.10 signalling the end of the recent correction maybe. This rise if sustains may target 107-107.5 and even higher in the near term. Long term looks bullish targeting 110 on the upside.

Brent (114.93, -0.11%) fell slightly after testing resistance on the Weekly charts near 114.95-115 in line with our expectation. Need to see if the bulls are able to break this resistance and target 117 or see a correction towards 112 before resuming the uptrend. Long term remains bullish.

FOREX
The lack of any serious trigger has kept the currency market almost unchanged except some short covering seen in Euro. Dollar bulls are waiting yet to see strength but the seasonal June-July cycle of Dollar top may go against them.

Euro (1.3617) has given the initial signal of strength but it needs to confirm the bullishness by a break above 1.3680-90. A break above 1.3690 may lead to rallies to 1.38 or more.

Dollar-Yen (101.86) is rebounding from a dip to 101.60 last week. We see it ranging in 101.50-102.75 for the next several days. The Euro-Yen (138.70) still runs the downside risk of testing 137 but there is a bullish reversal possibility, suggested by indicators, to be confirmed only on a break above 139.50-60.

Pound (1.7047) is rising again after the correction and may achieve our next target of 1.71 within a day or two. Any correction should be limited to 1.69 now.

The Aussie (0.9410) is moving sideways in a very narrow range of 40 pips and needs a break above 0.9440 to assert the bullishness.

Dollar-Rupee (60.08) opened sharply lower yesterday and recovered some of its loss by the end of day. It may face selling pressure in the area of 60.15-20 and possibility of testing 59.60-45 remains as long as it trades below 60.25.

INTEREST RATES

Indian 10Yr GOI (8.69%) holding just below important Resistance at 8.70%. Has potential to fall as FIIs can step up investments again.

US Yields stable overnight. Retain chances of rise in coming weeks/ months. US 30-Yr (3.46%) bouncing from uptrend Support. US 5Yr (1.67%) looking tantalizingly like it wants to break on the upside out of a sideways triangle. Watch 1.75% Resistance on the upside.

Important: After coming down from 0.9415% since Jan-14, the German 5Yr (0.37%) is now testing a long-term Support that is valid since mid-2012. The German 10Yr (1.33%) also has a similar Support coming up at 1.2%. Implication, there might not be too much downside for German yields going forward. Could lead to some strength for the Euro (1.3619) in coming weeks. Keep an eye out for that.

The Resistance on the US-Japan 10Yr spread (2.03%) continues to hold for now, preventing Dollar-Yen from rising even though the Nikkei is bullish.

UK Gilts (5Yr 2.09% and 10Yr 2.74%) have been coming off from Resistances over the last few days and could limit Pound strength in the near term.

DATA TODAY

12:30 GMT or 18:00 IST CA Inflation Y/Y
...Expected 1.50 % ... Previous 1.40 %

DATA YESTERDAY

SNB Meeting
...Expected < 0.25 % ...Previous <0.25 % ...Actual <0.25 %

US Philifed Index
...Expected 14.30 ...Previous 15.40 ...Actual 17.80