GENERAL MARKET CONDITIONS

The US dollar sank against the euro after the European central bank chief signalled that it may raise interest rates next month. This statement lifted all metals and energies. Unless the Euro zone shrinks for two consecutive quarters, the ECB will not cut interest rates. For the rest of June and till the next ECB meeting, the speech of the ECB chief has to be followed by action. Action in the form of resilient Euro zone growth. If action falls short of words then only the euro will fall against the US dollar.

If the focus of global central banks shifts to managing inflation then short term global interest rates will rise. Gold and other inflation related investments will rise on this prospect. Expectations of higher interest rates will result in more investment flows in these instruments. Crude oil prices have jumped over five percent, corn, wheat soybean etc are higher. The successive higher base is getting lower in these commodities. Last time crude oil fell around $10 was from $119.93 to $110. Now from $135 to $121.60. Crude oil’s lower base is getting higher. Unless this stops inflation related instruments will attract jittery investors.

MCX is launching a crude palm oil futures contract from today. One tick implies the rupee’s one thousand profit/loss. Other details can be checked at the MCX website. Spread traders should look at spreads between crude oil prices and crude palm oil. This should provide an excellent spread trading opportunity. Later on if the government of India restarts refined soybean oil futures then spread trade between crude palm oil futures and refined soybean oil futures will be another excellent medium of investing.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $133.10

Crude oil can target $135 and $144 in the rest of June as long as $119.10 holds.

MCXARUN
9994500540