Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
The marginal new highs without any kind of momentum in the US and European markets continue. The Asian markets trade in positive as the Chinese PMI expands at 50.8 for June against the May 49.4.
Dow (16947.08, +0.15%) is stuck in the range of roughly 16700-17000 (+/- 50) for the last 3 weeks and currently no sign for any extension beyond 16600 or 17200 is visible. It may keep trading in this range for a few more sessions. The Dax (9987.24, -0.17%) keeps trading in the range of 9800-10050 but another push up to 10300-400 remains on cards as long as it stays above 9800-700.
Nikkei (15412.58, +0.41%) has broken above our 15250 to end the correction and rallied to a five month high. But this rally may face a bit of selling pressure from this area of 15400-700. The Shanghai (2029.09, -0.12%) has bounced exactly from our 2010 levels to keep the broader sideways movement intact which may continue as long as the price holds above 2010-1990.
A lot of indecision is implied by the weekly candle created in Nifty (7511.45, -0.39%). 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
Commodities are overall up and the near term looks bullish.
Gold (1312.40, -0.32%) has come off from just below mid-term resistance on the weekly near 1320-1325. The resistance is likely to hold keeping the range of 1280-1320 intact while Silver (20.83, -0.80%) has risen sharply targeting levels of 21.5-22.5 now.
Copper (3.1410) has almost come near resistance at 3.15 after the better Chinese manufacturing PMI and if this resistance holds may push back prices to 3.10-3.07 levels. But if it manages to rise past 3.15, it may target weekly resistance near 3.22-3.25.
Nymex WTI (107.14, +0.29%) has opened with a gap up and is planning to stretch its rally targeting higher levels of 108.5-110 while above 107.5.
Brent (115.14, +0.29%) has also risen and while the rally continues we may see levels of 117 in the coming sessions. Note that the crucial 115 levels have been broken on the weekly charts. Overall near term is bullish.
FOREX
Even the usual events are not able to generate any real movement in the currency markets and the lack of any serious trigger has kept the currency market almost unchanged. Please keep note, the seasonal June-July cycle of Dollar top may go against the Dollar bulls.
Euro (1.3604) 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 (101.98) 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 (138.73) 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 (1.7033) 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 (0.9435) is hitting the 3-month high now and a close above 0.9440-60 today will open the door to 0.9550 levels.
In the absence of any triggers, Dollar-Rupee (60.18) may continue trading in the range of 60.00-50 for a session or two more. Trade this range with strict stoploss beyond the boundaries.
INTEREST RATES
Indian 10Yr GOI (8.72%) rose above the resistance at 8.70% and may target 0.75-0.78% in the near term.
US Yields are rising. The US 5Yr (1.70%) has risen and may now target resistance near 1.75% while the US 30-Yr (3.45%) may also rise higher.
The German 5Yr (0.40%) has bounced from long term support near 0.37% as expected. The German 10Yr (1.34%) has also risen a bit but has a Support coming up at 1.2%. This may indicate that the fall from current levels are limited on the downside and the yields may rise in the near term. The Euro (1.3602) seems to strengthen in the coming sessions.
The Resistance on the US-Japan 10Yr spread (2.04%) continues to hold for now while Dollar-Yen (101.98) is finding difficulty to rise above 102.
UK Gilts (5Yr 2.11% and 10Yr 2.76%) have risen again targeting the channel resistance on the daily charts. Pound (1.703) is trading just below crucial levels of 1.704-1.706 and may trade below these levels for some time.
DATA TODAY
14:00 GMT or 19:30 IST US Existing Home Sales
...Expected 4740 K ... Previous 4650 K
FRIDAY'S DATA
CA Inflation Y/Y
...Expected 1.50 % ...Previous 1.40 % ... Actual 1.70 %
The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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