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STOCKS

All indices are mixed. Dow and Nikkei has some scope of rising in the coming sessions while Dax, Nifty and Shanghai looks bearish.

Dow (25322.31, +0.023%) and Dax (12842.91, +0.60%) have both moved up slightly. Dow has room on the upside and could rise further in the coming sessions towards 25750 while Dax has immediate resistance at 12900 and need to break on the upside to move towards 13100. Overall upside for Dax could be capped at 13100 from where a medium term corrective dip is possible.

Nikkei (22867.41, +0.28%) and Shanghai (3054.48, +0.055%) are also up today. Nikkei broke above the daily trend resistance and if the rise sustains, the index could test 23500 in the next few sessions. Else a fall back to 22000 is possible. Shanghai is trading just and is likely to break below 3050 in the near term. That would open up chances of further downside towards 2950.

Nifty (10786.95, +0.18%) tested exactly the daily trend resistance at 10850 yesterday but could not sustain to close the session above 10800. While this resistance holds, the index could come off towards 10650 in the coming sessions. A break above 10850, if seen would turn bullish for the medium term.

COMMODITIES

Overall some bullish hope prevails for the metals and crude in the near term.

Copper (3.2524) is almost stable near current levels. A fall towards 3.22-3.20 is possible before another sharp rise is seen.

Brent (76.46) and WTI (66.19) show some directional differences just now. Brent has some support at 75 which if holds, could take the price to higher levels of 79-80 in the coming sessions. WTI on the other hand is trading along the earlier support turned resistance and could come off towards 65-64 if it does not manage to break the resistance immediately.

No major movement in Gold (1298.31) for now. The broad 1310-1290 region is holding well and some more of sideways range-trade is possible in the near term.

Gold-WTI ratio (19.67) has faced some rejection near resistance at 20 and while that holds, the ratio could come off towards 19.

FOREX

Dollar index (93.73) rose from levels near 93.4 yesterday and has seen a high near 93.89 today. It could now move lower from here, targeting levels near 93.0-92.8 in this week.

Euro (1.1766): Contrary to our expectation, Euro has seen lows near 1.174 since yesterday, but now looks like it could rise from the 21 days MA near 1.173 towards 1.1875-1.1900 in this week. Levels near 1.19 could be a crucial resistance zone.

Dollar Yen (110.24): Against our expectation, Dollar Yen has turned bullish (seeing a high near 110.5). It could rise further this week to target crucial resistance near 111.5.

Euro Yen (129.70): Euro Yen is continuing to stay near 129.5-130.0 as we had expected. The possibility of Euro moving past 1.18 and Dollar Yen touching 111 implies that Euro Yen could test higher resistance on daily candles near 131 in this week.

Pound (1.3364): As expected, Pound is moving lower towards 1.33 after having tested resistance on daily candles (near 1.347) last week. It looks bearish in this week towards levels near 1.33-1.32. On the downside, 1.31 is a crucial level, whose break could lead to medium term bearishness.

Dollar Rupee (67.4225) : Dollar Rupee is likely to trade within 67.30-67.50 with some chances of testing 67.10.

INTEREST RATES

Current yields: US 10 Year (2.94%), 30 Year (3.09%), 5 Year (2.79%), 2 Year (2.52%)

US yields have been seeing minimal movement over the past 7-8 sessions as the global bond markets gear up for an important 4 days ahead.

A host of key data releases and major events are lined up, which could have a significant impact on global yields :

• Trade tensions have already been aggravated due to the controversial G7 meet.
• The US-North Korea summit in Singapore is underway currently (however, we are skeptical if this event could have any impact on yields).
• US CPI data due later today: Consensus forecasts see only a moderate increase by 0.2% m-o-m in both headline and core CPI. If the actual data overshoots / undershoots this level, it will impact yields.
• FOMC meet tomorrow: A 25 bps rate hike seems already factored in by the markets. A higher rate hike will be extremely hawkish and should take the 10 year yield beyond 3%.
• US Retail Sales data release on 14th June
• ECB meeting on 14th June as well : expected to be hawkish, thereby taking global yields higher

Enough with the speculation and all the teasers, it's showtime!chil

Not surprisingly it was a quiet session overnight despite the abundance of commentary and conjecture for today's Trump-Kim Summit. FX interbank tapes indicated a staggering -45 % drop in electronic volumes as traders thought best to sit on their hands ahead of this week's significant risk events.

After quickly shrugging off the G-7 fight club in Quebec, investors latched on to the air of optimism circulating from the Singapore summit. And with Pro Euro signals emanating from the newly formed Italian government placating investors anxiety about the future of the Eurozone, the global risk was in the happy zone Monday.

Speaking of being in the happy zone, Kim Jong Un was embracing the moment enjoying Singapore's wonderous attractions while endearing himself to the community. A precursor of the civility to come?

Few traders are expecting anything definitive to come out of the summit. However, investors remain ever so vigilant for potential fireworks. But keep in mind, this is merely the beginning, and we're not even into the first chapter let along the epilogue.

But let's hope the Thunderstorms forecasted for Singapore today is not a foreshadow things to come.

Oil Markets

Oh, the joys of headline-driven markets. Buyers returned after the President of OPEC said the US hadn't officially requested OPEC boost supplies and creating some doubt about OPEC supply cuts. Short term traders were caught leaning lower and ran for cover. All the while the general risk-on appeal in US equities is providing some support

But markets are caught between opposing views. Prices have probably fallen enough to keep end users content. All the while the deluge of US crude production continues to hold the top side in check.

But adding to the confusing narrative, Russia reportedly pumped 11.1 million barrels per day above its production cap compliance level of 10.95 which is leading to some speculation that Russia is providing some clear hints that its' time to turn up the taps.

Expect more of the same whippy markets driven by rumours and innuendos ahead of June 22 Vienna OPEC meeting.

Gold Prices

Gold prices are holding very steady ahead of the historic summit in Singapore. Unless there's an unexpected shocker from the Trump Kim summit gold will continue to move sideways ahead of the Fed and ECB. The Feds are widely expected to stay the course on forward, guidance, but the ECB is a bit tougher to handicap given the latest shift in QE guidance. But since the bag is now out of the policy hat, the ECB propensity to surprise is limited which should play favourably into the USD and dent Gold sentiment. But it comes down to the Fed, a dovish hike and gold move higher while a hawkish lean does the opposite for gold prices.

Currency Markets

EUR: Price action suggests the market is looking to get short ahead of the ECB meeting. The bar is high for a hawkish surprise after last week's ECB QE signals.

JPY: Remains very much a US yield driven play with traders positioning for a possible bounce in US CPI could see US 10's move to 3.05%

MYR: The Ringgit is catching an updraft from the positive regional risk vibe on the back of the Trump -Kim summit. But with the Fed and ECB looming, gains will likely be capped.

Gold is steady at the start of the trading week. In Monday’s North American session, the spot price for one ounce of gold is $1300.74, up 0.11% on the day. On the release front, there are no major U.S. events on the schedule. On Tuesday, the focus will be on inflation, with the US releasing CPI and Core CPI reports.

The Group of Seven appears to be in disarray, after a dismal summit in Quebec on Friday and Saturday. The summit exposed sharp disagreements between U.S. President Trump and the other six members, and shockingly, the leaders failed to produce a joint statement after the summit. Trump openly clashed with the other leaders over his recent tariffs against the European Union and Canada and tweeted that Canadian Prime Minister Trudeau, who hosted the summit, was “dishonest and weak”. Canada and the EU are furious over recent US tariffs, especially because of Trump pushed them through on the basis of ‘national security’. The glaring cracks in G-7 unity could cast a long shadow on trade relations between the U.S and the “G-6”, with business confidence and capital spending at risk if the tariff spat continues. This could unnerve investor confidence and boost gold, a traditional safe-haven asset in times of trouble.

Investors are keeping a close eye on the historic summit between US President Trump and North Korean President Kim Jong-un in Singapore on Tuesday. The meeting will mark the first ever face-to-face meeting between leaders of the U.S and North Korea. It remains unclear if the two leaders will sign any agreements, or will the sides treat the summit as a “getting to know you” opportunity. Given the magnitude of the event, traders should be prepared for movement in gold prices on Tuesday, especially if progress is made regarding the denuclearization of North Korea.

IMF managing director Christine Lagarde said yesterday that "the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say by the weekend", referring to what Trump did to the G7. She added that the biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organizations have been operating."

WTO Director-General Roberto Azevedo also criticized the that "the US has been focusing much more on bilateral — unilateral even sometimes — measures, which is not something that is support of the rules-based trading system." And, "they have been complaining about the system, they say that they want to improve the system, but we would expect a more constructive approach on their part."

The British pound has posted slight losses in the Monday session. In North American trade, GBP/USD is trading at 1.3318, down 0.18% on the day. On the release front, British Manufacturing Production declined 1.4%, well off the estimate of 0.3%. Britain’s trade deficit widened to GBP 14.0 billion, above the forecast of GBP 11.5 billion. There are no major U.S. events on the schedule. Tuesday will be busy, as the U.K. releases wage growth and unemployment claims. The US will publish CPI reports.

The markets were braced for a bumpy meeting between the Group of Seven leaders on Friday, but the sharp disagreements between President Trump and the other six members were far worse than expected. Trump openly clashed with the other leaders over his recent tariffs against the European Union and Canada and pulled back his endorsement of the traditional post-summit statement put out by the other members. The undiplomatic Trump also tweeted that Canadian Prime Minister Trudeau, who hosted the summit, was “dishonest and weak”. Canada and the EU are furious over recent US tariffs, especially because of Trump pushed them through on the basis of ‘national security’. The glaring cracks in G-7 unity could cast a long shadow on trade relations between the U.S and the “G-6”, with business confidence and capital spending at risk if the tariff spat continues. Trump has not slapped tariffs on Japan, but the export-based Japanese economy has plenty to lose if the tit-for-tat tariff battle escalates, which could snowball into a full-blown global trade war.

“Brexit Day” is creeping ever closer, but talks between Britain and the European Union are largely stalled. Prime Minister May continues to be hampered by serious divisions in her government concerning Brexit, making negotiations with the Europeans all the more difficult. One of the thorniest issues is the future status of the Irish border. Currently, there is no hard border between Northern Ireland and Ireland, but some mechanism will have to be put into place once Britain leaves the European Union. Many ideas have been floated about, and the May government officially proposed a ‘backstop’ plan on Thursday. This means that Britain would remain of the EU customs union up to December 2021, unless the parties reached an alternative arrangement prior to this date. May is calling this proposal a “temporary customs union”, and it remains to be seen if the EU will accept the backstop solution.

Canada House of Commons displayed rare political unity an passed a unanimous motion standing by the government on retaliation against US steel tariffs, and reject personal attack on Prime Minister Justin Trudeau.

The motion is introduced by NDP's Tracey Ramsey. The House "strongly opposes the illegitimate tariffs imposed by the United States government against Canadian steel and aluminum works". And it "stands united in solidarity with the Government of Canada in its decision to impose retaliatory tariffs". And it "rejects disparaging ad hominem statements by the US administration which do a disservice to bilateral relations and will fail to resolve this trade dispute".

https://twitter.com/traceyram/status/1006255088095186944

Australia NAB business condition dropped -6 pts to 15 in My. Business confidence dropped -5 pts to 6. Both reversed the improves from March to April.

Alan Oster, chief economist at the NAB.

"Despite the easing in the business conditions index, conditions remain robust in the business sector. Conditions remain well above average across most states and industries."

"Confidence is highest in trend terms in Tasmania and Western Australia." "Queensland and South Australia are slightly above the National average while New South Wales and Victoria continue to lag the other states at below average levels."

"Both business conditions and leading indicators continue to suggest a pick-up in economic growth and that, over time, jobs growth should see the unemployment rate fall towards 5%,"

"The outlook for the labour market and evidence of a pick-up in wage growth remain key for monetary policy. Evidence of a genuine pick-up in wages growth and a flow-through to inflation more broadly will provide a launch pad for the RBA to begin lifting rates from current record lows."

"We don't expect this to occur until May 2019, as while the survey continues to point to a growing economy, strength in employment and a decline in the unemployment rate, these factors are yet to materialise in a significant pick-up in wages,"

The one-on-one meeting between Kim Jong-un and Donald Trump in Singapore has ended after 41 mins of talks. It's now entered into wider meeting with officials from both sides. After the one-on-one meeting, Kim said there will be challenges but will work with Trump. And Trump urged Kim to work together.

Just as they met for the first time earlier today, with handshake, Kim said "the road to this place wasn't an easy road". He added ""for us, there is a past that had ensnared our feet and wrong prejudices that sometimes covered our eyes and ears, but we have overcome them all and arrived here."

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The Japanese yen has posted slight losses in the Monday session. In the North American session, USD/JPY is trading at 109.90, up 0.32% on the day. On the release front, Japanese Core Machinery Orders impressed with a gain of 10.1%, crushing the estimate of 2.5%. Preliminary Machine Tool Orders was down sharply, with a gain of 14.9%. Later in the day, we’ll get a look at BSI Manufacturing Index and PPI. There are no major indicators in the U.S. On Tuesday, the US releases CPI reports.

The markets were braced for a bumpy meeting between the Group of Seven leaders on Friday, but the sharp disagreements between President Trump and the other six members were far worse than expected. Trump openly clashed with the other leaders over his recent tariffs against the European Union and Canada and pulled back his endorsement of the traditional post-summit statement put out by the other members. The undiplomatic Trump also tweeted that Canadian Prime Minister Trudeau, who hosted the summit, was “dishonest and weak”. Canada and the EU are furious over recent US tariffs, especially because of Trump pushed them through on the basis of ‘national security’. The glaring cracks in G-7 unity could cast a long shadow on trade relations between the U.S and the “G-6”, with business confidence and capital spending at risk if the tariff spat continues. Trump has not slapped tariffs on Japan, but the export-based Japanese economy has plenty to lose if the tit-for-tat tariff battle escalates, which could snowball into a full-blown global trade war.

Japanese officials are keeping a close eye on the historic summit between US President Trump and North Korean President Kim Jong-un in Singapore in Tuesday. The meeting will mark the first ever face-to-face meeting between leaders of the U.S and North Korea. It remains unclear if the two leaders will sign any agreements, or will the sides treat the summit as a “getting to know you” opportunity. North Korean missiles represent a significant threat to Japan’s security, and Japan will want to see significant de-nuclearization steps by North Korea before the U.S removes any troops from South Korea.