Futures Point To A Slightly Weaker Open
INTEREST
RATES
OVERNIGHT
CHANGE to 4:15 AM:
BONDS
+3 — The initial claims readings Thursday should only be a temporary
barrier to even higher prices in the bond market. In order to turn off
the concerns toward the
US
economy, the bonds
will have to see a series of economic readings that manage to come in
better than expected. While the expectations for the homes sales release
are for a moderate decline, we suspect that help wanted readings will be
even softer.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15
AM:
S&P
+10,
NIKKEI +13, FTSE -43
— We have to think that the market action
Thursday was impressive, considering the partially negative comparative
store sales readings from Wal-Mart. The big negative issue in the
headlines this morning is once again soaring crude oil prices off the
Venezuelan situation. In our opinion, the labor situation in
Venezuela
isn’t markedly changed but energy prices nonetheless managed another
sharp rise.
FOREIGN
EXCHANGE
DOLLAR:
About the only thing that the bulls came hang their hat on, in the
Dollar, is the fact that volume has declined dramatically on the
December slide. However, open interest in the Dollar has not liquidated
and that would seem to suggest that the downside move has not run its
course yet. Investors seem to be fleeing the
US
for
Asia
and other areas without political and economic uncertainty. With the US
numbers this morning, expected to show more weakness and the US stock
market just barely managing to hold above critical chart support, it is
possible that the bottom will come out of the Dollar before the day is
over. If US housing numbers are soft, that might hint that all sectors
of the US economy are fading, simply hoping for future US tax cuts is
certainly not be enough to alter near term economic deterioration. We
have to think that the next support level in the March Dollar comes in
down at even money 100.00.
EURO:
The Euro continues to win by default, with a Dow Jones article this
morning reporting the Euro to have an upside target of 105.00 by
“year-end”. In other words, the Euro looks to have few flaws
in the near term. With French Unemployment unchanged and a
firmer business confidence readings (the highest reading since
June) it is clear that the Euro zone is offering a better recovery look
than the
US
.
The euro zone is also not locked into a war track with
Iraq
and with a soaring currency the Euro zone is seeing soaring energy
prices mitigated! In the final analysis, things are going right for the
Euro and the 105-projection is probably a realistic target for the
coming sessions.
YEN:
Even
Japan
is posting decent unemployment numbers this morning and that helped the
Nikkei to the first positive weeks action in
the month of December. While Japanese unemployment didn’t fall, it also
didn’t rise and that also leaves
Japan
in a relatively better position, than the
US
.
Therefore, the Yen is probably set to forge a new high for the move but
the BOJ might not act until next week to dampen the rise in the Yen.
SWISS:
With oil prices rising again this morning and
world equity markets weak, we see nothing to discourage the Swiss from
extending recent gains. Monthly targeting in the Swiss comes in at
72.58. The trend is up and little looks to alter that pattern in the
near term.
POUND:
We have to think that the Pound is missing out on a rally that it would
normally participate in. Maybe the economy is faltering and maybe the
war track is pushing money toward
Europe
.
In any regard, we doubt that the Pound will come under aggressive attack
unless some more prominent catalyst is seen.
CANADIAN:
As we suggested early this week, it would appear that the problems in
the
US
and the disdain for the
US
recovery is beginning to influence the Canadian. Near term downside
targeting in the Canadian comes in at 63.45.
METALS
OVERNIGHT
CHANGE to 4:15 AM: GLD -0.40, SLV
-0.5, PLAT +3.80 — London Gold Fix $348.30, +$3.30;
LME Copper
Warehouse stks
855,775 ton, -1,525 tons; Comex Gold stocks
2.04 ml, Unchanged; COMEX Silver stks 107.3 ml
oz, +234,175 oz; OVERNIGHT: Firmer overnight gold prices in Asia off
year-end buying activity
GOLD:
While it would appear that the weak Dollar is beginning to take center
stage in the gold market, it should also be noted that buying interest
is becoming diversified around the world. Evidently the story circulated
yesterday, about “Young” Japanese investors buying gold,
sparked some interest as the overnight headlines suggested aggressive
year-end gold buying in
Japan
.
Concerns that the world equity markets offer little opportunity in the
coming year combined with the idea that
Iraq
might have hidden some weapons in other countries, keeps the market
poised to rally, regardless of the potential overbought status revealed
in the COT report tonight after the close.
SILVER:
The coattails of gold should continue to pull silver higher, especially
if March silver manages to climb above $4.752. Fresh longs in March
silver might have to risk positions to at least $4.61. From a strictly
technical perspective, the silver charts remain in a slow upward channel
but recent volatility around the top of a five-month consolidation
suggests a critical decision point is directly in front of the market.
PLATINUM:
A massive liquidation in volume and open interest in platinum would seem
to have forged a top. It would seem that platinum is behaving like a
demand driven commodity that is hurt by fears of the slowing economy.
Unless the war threat is capable of altering the negative bias in
platinum, we expect more downside action or at least a consolidation
down around the $570 level in the January contract.
COPPER:
Shanghai
copper stocks fell by a massive 13,000 tons on the week and that should
provide a buffer against the recent liquidation effort. If the stock
market can behave itself today, the March copper might be able to forge
an increasingly solid support shelf around 70.00. While Chinese copper
prices finished the session lower, the
US
session seems to be trading off it’s own
fundamentals with a slightly higher opening indication.
CRUDE
COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -18,
HEAT -16, UNGA
+3 — The DOE crude oil stocks posted a much smaller
increase than the API report and that provided support to prices after
they opened weaker Thursday morning. As a sign that conditions in
Venezuela
were not improving,
the
US
closed its Embassy on
Thursday, which would seem to anticipate a prolonged shutdown of that
country.
NATURAL
GAS
With
the correction off the recent high, the natural gas market is probably
partially balanced from the technical perspective. However, the recent 6
to 10 day forecast showed most of the
US
to have above or
normal temps out to January 5th and that is negative.