Futures Point To A Slightly Weaker Open
METALS
OVERNIGHT
CHANGE to 4:15 AM:GLD-0.50 ,SLV+1.2,PLAT+9.30, CP-20 Â London Gold Fix
$365.30 +$5.00 LME Copper Warehouse stks
736,150 tns -4,450 tns Comex
Gold stocks 2.468 -6,109 oz COMEX Silver stocks 106.1 ml oz +1,048,966 oz
OVERNIGHT: Not as much selling pressure but only a little fresh long interes
GOLD:
The gold market did an impressive job of rejecting the selling pressure Monday,
but the gold market is still under a liquidation watch. While the stock market
might not offer as much of a distraction as it has recently, (it is showing
lower indications from the overnight action) the trade will keep a close eye on
the direction of equities. Furthermore, the Dollar is a little firmer than it
has been recently and that might cancel out the benefit seen off a return to
stock market uncertainty.
SILVER:
If the gold trend is undetermined then the silver market is at risk of
liquidation. If the gold market is in for another $5 to $6 break, then July
silver might be capable of sliding to $4.46. COMEX silver stocks continue to
exhibit significant volatility but this time the stocks bounced back into the
old range with a 1 million ounce overnight rise.
PLATINUM:
Moving average support in July platinum comes in at $630 today but it would
appear that Platinum managed to form a weak bottom with the consolidation bound
by $627 and $640. Like gold and silver, the platinum market hasn’t really
decided if economic recovery is a positive or a negative to prices. With
platinum almost exactly in the middle of a very wide May trading range, we see a
bullish bias but also realize significant risk to fresh longs. Â
COPPER:
Chinese copper futures were mostly unchanged overnight and with the stock market
expected to come in weak this morning, we have to favor the bear camp. The talk
about producers returning some idled production is certainly a warning shot for
the bull camp, as the back of the bull market was built on the idea that three
main producers were holding back supplies in order to boost prices. We are not
sure if an 8 cent rally is enough for producers to go back to full output, but
that story is going to take away some of the upside momentum.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -15Â
,HEAT-4Â Â ,UNGA-14
 Apparently the trade took a couple sessions to factor in the tightness in
gasoline stocks from the inventory reports last week. The trade also suggested
that the vastly improved macro economic outlook inspired hedgers and specs to
buy unleaded and crude oil because of the perception that demand was set to
climb.
NATURAL
GAS
A strong
upward extension Monday highlights how easy the bull camp will control gas
prices, even in the absence of bullish summer weather in the
Midwest
. Apparently the trade is
expecting the natural gas to feed off the regular energy complex and off the
consistent forecasts for above normal hurricane activity.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+9 The September bonds come into the session this morning without as much
pressure as was seen early Monday. Certainly an investigation of IBM by the SEC
puts the brakes on the stock market temporarily and that in turn takes some of
the pressure off the bond and note markets. However, the stock market wasn’t the
only problem for Treasuries, as the
US
economic information has been
showing some fairly impressive readings of late.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-300 DOW -33 NIKKEI +17 FTSE -27Â The stock market
has been on a torrid upside swing and with fundamental news turning slightly
negative, its understandable that prices sag into the opening today. Concerns
over an SEC investigation of IBM accounting practices, is certainly cause for
investors to bank some profits, especially since the monthly non-farm payroll
report looms at the end of the week. The trade is certainly justified in fearing
the monthly payroll report, as many economists suggest that the jobs market
might be the last measure to recover.
FOREIGN
EXCHANGE
DOLLAR:
After the
US
President suggested that his Administration still favors a strong Dollar, the G8
meeting managed to spin out additional talk to support the greenback. If the
market really gets the sense that the G8 is capable of coordinated intervention
that really puts a crimp in the aggressive Dollar selling interest. The
US
economic numbers have apparently down graded the chance of a
US
rate
cut in June and at the same time the market is now seeing an increased chance
for an ECB rate cut. In other words, the interest rate differential (if anyone
cares) is possibly set to shift in favor of the Dollar. OPEC is also calling for
a firmer Dollar, as many oil sales deals are tied to the Dollar! Therefore, the
market sees forces that discourage selling of the Dollar but as of yet there
really isn’t a sense to “buy” the Dollar. In fact, until the June
Dollar shows the capacity to close back above 94.11, one has to assume the trend
is still down. In conclusion, the fun has gone out of the short side in the
Dollar.
EURO:
We have to think that more and more analysts are expecting a European rate cut
but with the IMF discussions this morning it would not seem like officials are
overly concerned about deflation in Germany and that would be the primary issue
pushing the ECB to act. The IMF is apparently in favor of seeing the ECB cut
rates in an effort to “balance risks” and that leaves the trade
expecting a rate cut in the Thursday time frame. In short, the Euro might slide
lower in the recent range but we see no reason to break out down below the
116.46 level.
YEN:
Some resistance is seen this morning in the Yen around 84.80. The Japanese Prime
Minister is attempting to play up the “talk” of a stronger Dollar from
the G8 meeting, as that gives the BOJ some assistance in controlling the Yen.
Japan
continues to show massive monetary base expansion and that in a way is a
stimulus and an effort to deflate the Yen. The path of least resistance is down
at least until Thursday.
SWISS:
The Swiss made another bad technical trade overnight and with the Euro slightly
undermined and the G8 talking up the Dollar, the path of least resistance is
down in the Swiss. Near term targeting in the Swiss is seen at 76.14.
POUND:
Near term corrective support in the Pound is seen at 162.90 but we don’t see the
currency coming out of the current range until some outside force is seen and
that outside force might be an ECB rate cut.
CANADIAN:
Its positive that the pro-Dollar talk at the G8 isn’t
undermining the Canadian. Therefore, the potential support for the US Dollar
isn’t going to stand in the way of the Canadian attempting to get back to the
recent highs. However, it goes without saying, that
the Canadian could rise more uniformly if the Dollar were once again falling
away rapidly.