Futures Point To A Stronger Open
METALS
GOLD:
The gold market appeared to gather momentum yesterday off the initial Dollar
reversal but then rose even more off news that Merrill Lynch was raising its
2003 average price range by 3.1%. The private forecast apparently pegged the
2003 average gold price range to be $350 to $375. Therefore with nearby futures
trading nearly $5 below the bottom of that projected range, it’s logical that
some buying interest was generated.
SILVER:
The gold rally apparently lifted silver out of the doldrums and it apparently
prompted September silver futures to peak out above the last two weeks
consolidation. Like the gold, we see little to hold silver back from a minor
bounce but in order to climb above down trend channel resistance, September
silver will need to close above $4.66. We still have not seen much movement in
COMEX silver stocks and we also don’t see the silver getting as much
investment demand interest as gold and therefore silver will be almost totally
reliant on gold to generate a bullish buzz.
PLATINUM:
The platinum appears to be poised to make another upside bid and that bid might
be aided by favorable equity market action. With the S&P making a classical
reversal off its lows Tuesday and the overnight equity market action positive
the platinum might be primed to return to near term chart resistance up around
the $670 level. Â
COPPER:
The copper market showed little sign of recovering along with the gold market
Tuesday, but with Chinese copper prices rising slightly overnight and world
equity markets also strong, prices might find the resolve to bounce. Since we
have continued to see consistent declines in LME warehouse stocks and somewhat
favorable world economic numbers, there would appear to be no reason to keep
copper prices down. However, until the world is confident in widespread
recovery, the copper market might not transition into a bull market.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -1Â Â ,HEAT+18Â
,UNGA+23 Â The energy market managed to reverse a corrective pause in
the middle of the session Tuesday to close impressively. It would seem that the
estimates for the weekly inventory report were expecting a build in crude
stocks, but when it came right down to the close, few wanted to bet on such a
forecast.
NATURAL
GAS
The
natural gas market got almost no support from the recovery in the regular energy
complex, as the domestic supply situation in natural gas is evidently secure
enough, that few buyers want to step into play. Apparently the hot weather means
nothing, as the trade is already attempting to factor in another triple digit
inventory injection on Thursday morning.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -16 No matter how one
looks at the action Tuesday, it has to be disappointing to the bull camp in
Treasuries. While many financial markets took the steep decline in construction
spending as a sign that the
US
economy was still struggling,
that news gave bonds and notes only limited support. While the ISM readings
countervailed the weak construction spending readings, it is clear that the bull
camp is no longer dominating daily price action.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P+260
DOW +29 NIKKEI +313 FTSE +54Â The stock market rejected the bear case and
forged a very impressive “classical technical reversalâ€. In fact, as we
predicted in the comments yesterday, the stock market finished off the June
correction with just the type of action that historically has precluded
significant rallies. While the macro economic information wasn’t that stellar,
there were some hidden gems in the ISM report that could suggest a favorable
unemployment report on Thursday.
FOREIGN
EXCHANGE
DOLLAR:
The Dollar certainly failed yesterday but we don’t get the sense that the
market is primed to push the Dollar sharply lower. With US equity market action
possibly created a little pre-holiday euphoria, it could be a difficult
environment for traders to attack the Dollar on the short side. However, in
order to keep the sellers on the sidelines, it might take a slightly favorable
factory orders release from the
US
this
morning. The trade is expecting
US
factory
orders to have risen by +0.2% but keep in mind, the prior factory order report
for the month of April, showed a significant decline. Even if the
US
equity
market action discourages selling in the Dollar, the Greenback might still be
headed down to the middle of the last month’s consolidation. In other words,
we still see the potential for the Dollar to track down to 93.00. In fact, those
that want to be short the Dollar might want to hold on for the monthly payroll
report Thursday morning, as that report could easily cause the Dollar to slide
aggressively.
EURO:
While the Euro managed an impressive rise yesterday it would not look like the
Euro is going to garner the long interest to throw it into a sharp upward rise.
With Euro zone PPI showing a 0.4% decline one could easily dredge up deflation
concerns for the Euro zone and more than likely the trade sees the scope for a
rate cut, with the PPI readings. Therefore, we are not interested in being long
the Euro, even with the Dollar in a weak posture. In fact, the Euro won’t make
as much upside off a coming Dollar slide, as the Canadian, Pound and Yen because
it lacks a favorable view towards its economy!
YEN:
The Yen has apparently rejected prices below 84.00 and with the Nikkei making
another massive upside bid overnight, it is possible that money could flow
aggressively toward
Japan
and the
Yen. Therefore, we would expect to see the Yen rise toward 85.50 in the
September contract.
SWISS:
Until the Swiss encounters overhead consolidation up at 75.00 it could easily
forge consistent but muted daily gains.
POUND:
The Pound should be primed for more gains, especially if the US Dollar fails to
be lifted by favorable
US
equity
market action. Favorable retail sales readings from the CBI, should leave the
Pound in favor and capable of rising to resistance of 166.50.Â
CANADIAN:
The Canadian has a nice base to work higher from, but will need help from its
monthly payroll readings to really plow through overhead chart resistance. The
only problem for the Canadian, might be that the US Dollar only shows moderate
weakness in the coming sessions.