The Dow Jones (12604.53, -48.59) was down as the Fed Minutes offers no clue about the stimulus package and puts off taking any aggressive steps before economy weakens further. The index recovered from its low of 12534 to close above its support of 12600 which hints that the support may hold in the near term.
The Nikkei (8765.38, -85.62) is lower and is trading below its 21 EMA on the daily charts; we can expect it to come down to the 8720-8700 Support. If broken that is broken, we could see 8500-8400 on the near term.
Shanghai (2162.79, -0.58%) is still in a down trend and can slip further if it breaks 2160-2150, although a bounce to 2200 cannot be ruled out in case of short covering.
Nifty (5306.30, -39) is still expected to achieve its target of 5400, but yesterday’s fall makes the picture just a bit mixed. Overall, though there is not much upside left, with 5400 being a strong Resistance.
Significantly, Dax (6453.85, +15.52) has moved above its 100 and 200 EMA and is headed towards 5800-6000 in the near term, provided there is no bad economic news to stall its progress.
Nymex Crude (85.69) remains mixed and ranged between 83.50 and 87 over the last few days. The unexpected fall in the US Crude inventory data release triggered a rise yesterday and while above 84, the chances of testing 90 on the upside will be high.
Brent Crude (100.18) has risen back above 100. Important Resistance is there at 102 and a strong rise above it would wipe out the downside threat and can take it further higher to 110-115 levels once again.
The Fed's june meeting minutes release showing that further monetary easing will be done only if the economy weakens further has disappointed the metal space. The Gold (1572) remains below 1600 and could revisit 1550-25 Support region.
Silver (26.94) is hovering around 27 and looks weak for a test of its important Support in 26.20-00 region.
Copper (3.41) can remain ranged between 3.25 and 3.50 and within this range it can fall to the lower end now.
Dollar remains strong. Fed's june meeting minutes said that it is open to further asset buying only if the economy weakens further. The Dollar Index (83.46) remains strong for a rise to 84.60-85 with Support at 83.
The Euro (1.2238) remains weak for a test of 1.2130 and 1.2050, but the momentum of fall seems to be slow now. 1.2300 continues to be a strong Resistance. Dollar-Yen (79.52) witnessed a sharp rise from the low of 79.13 to 79.79 and is coming off from the high now. Overall the 79.00-80.10 sideways range remains intact as expected. The Euro-Yen Cross (97.31) remains mixed, but broadly weak although it is continuing to trade above 97. The Cross looks vulnerable for a fall to 95.50 and 94.50.
Dollar-Swiss (0.9811) has risen above 0.9800. Although it is not gaining strength to extend its upmove strongly above 0.9800, with immediate Support at 0.9785, the overall picture is bullish for a test of 0.9950. The Pound (1.5510) failed to sustain the upside break above 1.5550 and has come back into its 1.5450-5550 sideways range thereby keeping the outlook to be mixed. Aussie (1.0192) has come off sharply just now after the bad labor force data release. The Support in 1.0160-50 region can be tested once again.
In Asia, the Bank of Korea has cut the interest rates by 25bps to 3%, the first cut since February 2009. The Korean-Won is trading near 1146. The Sing Dollar is trading near 1.2661 and looks to be ranged between 1.2600 and 1.2750. Dollar Rupee had closed at 55.62/63 and can rise to 55.80-56.00
Further respite for Spanish bonds from the spending cut announced by Spain yesterday. The 10-Yr yield has fallen sharply to 6.58%, from 6.81% earlier. The German 10-Yr (1.27%) continues to fall towards our targets of 1.25% and 1.20%.
As a result, the KSHITIJ E-4 10-Yr has fallen sharply to 2.56% from 2.70% earlier. The recent high was 2.82% on 27-Jun. It will be a big relief for the market if this remains below 2.70% now. The Spain-Germany 10-Yr spread (5.30%) has come off from 5.70%. Again it will be a big relief if this can remain ranged between 5.75-4.75% for the next few days and not move up above 5.75%.
Korea and Brazil have lowered interest rates. The Bank of Japan might increase its monetary/ quantitative easing programme today, with an aim of weakening the Yen.
With the Australian Labour Force contracting 27K (against expectation of +0.3K), there could be pressure on the RBA to cut rates. Remember, the RBA had held rates at 3.50% in its recent meeting on 3rd July last week. The next meeting is on 07-Aug.
As mentioned yesterday, interest rates are going down everywhere apart from India. This will increase the pressure on the RBI to something in its month-end meeting.
June Australia Labour Force
...Actual -27K...Expected 0.3K ...Previous 38.9K
2:37 GMT or 8:07 IST BOJ Meeting
...Expected <0.10% ...Previous <0.10%
9:00 GMT or 14:30 IST May EU IND Prodn (MoM)
...Expected 0.0% ...Previous -0.8%
9:00 GMT or 14:30 IST May EU IND Prodn (YoY)
May US Trade Balance
...Actual $ -48.7 Bln ...Previous $ -50.60 Bln