Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
05 Jul 18. 0852 IST or 0322 GMT or 2322 EST


STOCKS

Dow (24174.82, -0.54%) was closed yesterday. While support near 24000 holds, the index could trade sideways in the 24000-24800 region for some time.

Dax (12317.61, -0.26%) is trying to move up slowly and could attempt towards 12700 in the near term.

Nikkei (21680.09, -0.17%) could come down to test support near 21500-21200 levels and while that holds, it could bounce back again towards 21800 in the medium term.

While the US-China trade worries continue, Shanghai (2763.37, +0.15%) could test 2750-2700 on the downside followed by a bounce thereafter.

Nifty (10769.90%) is holding well above the 3-day candle support from where it has bounced 2-times already. If the supports turn out to be strong, Nifty could be pushed again towards 10800 in the next 1-2 sessions with some chances of a break on the upside in the near term. Watch out for a test of 10800 and price action near 10800. Sensex (35645.40, +0.75%) continues to trade in the narrow 35750-35250 region and while the narrow range holds, we could see some more of ranged movement just now. A break on either side is needed to give directional clarity.

COMMODITIES

Medium term looks bearish for the commodities. While Copper and WTI prices looks bearish immediately, Gold and Brent has some scope of a rise towards 1280 and 80 before they start to come off from there.

Brent (77.69) could trade sideways in the 77-80 region just now. While above 77, Brent could test 80 before coming off from there. On the other hand, Nymex WTI (73.84) faces resistance on the 3-day and weekly candles above current levels and could come off towards 70-68 in the medium term.

Gold (1256.9) has moved up from support near 1240 and while that holds, further downside could be negated just now and a possible rise to 1270-1280 can be considered. Near term looks bullish to 1280 while above 1240.

Copper (2.8685) has broken sharply below 2.90 and while the fall continues, it could test 2.75 on the downside. There is enough room on the downside just now and the copper may continue to fall in the near term on US-China trade war worries.

FOREX

Euro (1.1659): Euro seems to be waiting for a trigger to break the range between 1.1718-1.1508. Easing German political tensions and murmurs of hawkish statements from some ECB members could trigger bullishness. At the same time, inability to gain strength on reasonably positive economic data and also the impending release of US Fed minutes have the potential to make the Euro bearish. The 34 days MA near 1.167 continues to provide good resistance and seeing the scope on 3 day line chart for a further downmove towards 1.145, the chances of near term bearishness from here could be slightly greater (60%). Let's wait and watch.

Dollar Index (94.524): Dollar strength could react to the release of US Fed minutes later today. Given that the policy statement was hawkish, any deviation from that stance in the minutes could weaken the Dollar Index towards 94.3. However, the 3 day line chart reflects scope of a further upmove till 95.5-96.0 in the near term. Given this, we currently give slightly greater probability (60%) to the Dollar Index staying bullish in the near term.

Dollar Yen (110.40): Dollar Yen has dipped from levels near 111 (tested earlier in the week) and looks like it could soon turn bearish below 110.2. As we have been saying, higher resistance on longer term charts near 111.5 are expected to hold and could lead to Yen strength in the weeks ahead. A break of 110 could be on the cards next week.

Euro Yen (128.74): As expected, Euro Yen did stay ranged between 128-129 yesterday. With our above forecasts for Euro and Dollar Yen both being bearish, Euro Yen could drop to 127 by next week. Break of horizontal support on weekly line chart near 127 would require a week close below 127 - if and when it happens, it would make Euro Yen bearish towards 125-124 in the medium term.

Pound (1.3226): Pound could move higher towards resistance near 1.33 on daily candles in the next 1-2 sessions. In the weeks ahead, Pound seems to be bearish, with a retest of levels near 1.30 possible in the next week.

Dollar Rupee (68.74):
May test 68.60 today. Could go in either direction from there.

INTEREST RATES

Bond markets now await the release of the US Fed meeting minutes later today. Inspite of the policy statement having been hawkish, any hint of dovish sentiment among some FOMC members could lead to a further fall in yields. On the trade tensions front - US and China are expected to make the 1st round of official tariff declarations on Friday. With some uncertainty around whether this will actually happen, the impact on yields when it actually does happen could be quite bearish.

US 10 year yield (2.84%), 30 Year (2.97%), 5 Year (2.735%), 2 Year (2.532%):Repeating yesterday's comments: The US 10-2 Yield Spread (0.308%) had dipped towards 0.29% for the first time in 10-11 years day before yesterday . A further fall in the spread towards 0.2% in the weeks ahead seems very likely. With the prevailing risk averseness sentiment, US longer term yields might have already seen a top this year (10 Year yield’s top being near 3.125% in May). For July, a downmove for the US 10 Year towards 2.75% seems likely.

German 10 year yield (0.305%) could break below support near 0.3% on medium term chart. It's next downside target would be levels near 0.18% which could be tested by July end.


Author: Kshitij Consultancy Service
Website: http://www.kshitij.com
Kshitij Consultancy Service