GENERAL MARKET CONDITIONS

The US dollar made a complete U turn after the Fed chairman once again expressed his concerns of a weaker US dollar causing inflation. US Treasury Secretary Paulson confirmed that the US government is not ruling out any policy tool including intervention. The last time the Federal Reserve intervened in the currency markets was shortly after the launch of the Euro. At that time, the currency fell to a low of 84 cents, triggering panic for the European Central Bank (ECB). In the first ten days of June the Fed and European central banks, the two major central banks shifting their focus to inflation, has resulted in a fight between US dollar bulls and US dollar bears. The Fed has surprised the markets more than the ECB. This has resulted in US dollar short positions getting covered and fresh long positions being created.

Metals will be volatile. Intervention is a strong word used sparingly by central banks. Unlike the ECB and bank of Japan where it has been all words and no action in the past. The Federal Reserve should mean business. Till the Fed meeting on 24-25th June, comments from various central banks will not let traders sleep.

SILVER -- JULY FUTURE -- INTRA DAY PIVOT $1713.0

If silver fails to break $1860 in June then it will fall to $1606 and $1550 in the short term. Comex silver July futures are expiring this month.

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