Futures Point To Flat Open
INTEREST RATES
OVERNIGHT
CHANGE toÂ
AM
BONDS
-4 — The bond market showed clear-cut signs of rejecting the probe below 108-18
yesterday. We have to think that economic readings from the
continue to be soft enough that outright sellers are finding reason to pause.
With the retail sales reading to be released today and expected to post a slight
improvement, we seriously doubt that the bonds will see much in the way of
intense selling.
STOCK INDICES
OVERNIGHT
CHANGE toÂ
AM
S&P
+390, NIKKEI +82,
FTSE +5Â — The market continues to maintain a slight upward bias even
if it doesn’t seem to have significant extension capacity. We are still not sure
what has given the market the ability to shake off the recent payroll report and
the obvious military buildup toward war but the bulls seem to have a slight
edge. Maybe improving international economic activity is providing a lift to
sentiment, but it is also possible that the market is in fact looking beyond an
Iraqi war, to better times ahead.
FOREIGN EXCHANGE
DOLLAR: A new low probe for the move in the Dollar, suggests that the
recent respite from selling is over. The
continues to post significantly worse numbers that are being seen in Euro zone,
and
money has to be running away from the Dollar. About the only attraction to the
Dollar is the periodic strength documented in the
stock market and the hope that an aggressive stimulus package might change the
current situation for the better. In the meantime, traders should expect the
Dollar to continue to slide with the next downside target coming in at 101.10.
In order to turn the Dollar back up, the March contract would have to climb
above 102 for two consecutive sessions.
EURO: With the French releasing an increase
of 1.2% in industrial output, its clear that both German and French heavy
industry is coming alive and that should be another attraction to the Euro. One
has to accept that the Euro is going to continue to climb in the face of the
and
military buildup in the
Once again the
is bearing the biggest burden of the cost of securing the worlds future, while
those in the euro zone reap the relative reward of reduced oil import costs. One
should not discount the recovery edge that the Euro zone has because of the
import cost adjustment of energies provided by a soaring Euro. Next upside
target in the March Euro is at least 106.40.
YEN: Near term support in the Yen comes in
at 84.78 but with the overnight breakout up, it would not appear that support
will be tested unless the BOJ decides to intervene. Without the
economy showing some backbone we doubt that the BOJ will throw itself in front
of the current breakout. One would have thought that weak Japanese machinery
orders readings overnight, would have deflated the rise in the Yen, but right
now all currencies are reacting to Dollar weakness and not to internal
fundamentals.Â
SWISS: We don’t get the sense that the
flight to quality issue will dominate and lift the Swiss
aggressively, however we do think that the Swiss will be able to claw out
some minor gains. However, a trade back below 71.96 could damage the near term
upside tilt.Â
POUND: With the
posting favorable manufacturing output this morning, on expectations of a net
decline, there is certainly a benefit provided to the Pound. Solid support is
seen down at 159.16 with little in the way of resistance seen until 106.42.
CANADIAN: The Canadian might be a little
short term overbought and vulnerable today, but we suspect that solid support
will unfold at 64.58. However, if the economic outlook for the
were to darken significantly, that could undermine the recent Canadian breakout.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
-1.20,
SLV -0.5, PLAT +4.60;
London Gold Fix $353.75, +$1.40;
LME Copper Warehouse stks
854,750 ton, +775 tons; Comex
Gold stocks 2.04 ml, Unchanged; COMEX Silver
stks 107.0 ml oz, -187,055 oz; OVERNIGHT:
Minor losses attributed to Monday’s general weakness in
GOLD: Even though US economic numbers have
been soft, we have to think that over all macro economic anxiety buying in gold
is set to decline with German, French, Japanese and the UK all posting numbers
that appear to be hinting at sustained economic growth. However, with the Dollar
lower today and energy prices soaring yesterday, war support should continue to
provide the main underlying support to gold prices. So far, the potential for
“exile” instead of “war” in
seems to be a low probably outcome, but that potential is probably the biggest
risk to the longs.
SILVER: Trend line support comes in at
$4.755, with silver once again lacking favorable leadership from gold. In the
longer term, silver could eventually be supported by evidence of improving
French and German growth, but in the short term silver does not appear to be
tracking the industrial demand focus. With the recent COT report registering a
net spec long of 68,000 longs and silver making gains since that report was
measured, we have to gauge the net spec long to be roughly 70,000 long.
PLATINUM: The platinum fix comes in slightly
lower in
today and the charts make it appear as if a temporary correction is in order. In
fact, platinum appears to have lost its momentum and a trade below $609 could
mean $602.Â
COPPER: One has to be impressed with the
copper market, as it was able to buck the trend in the stock market Monday and
continue to hold almost all of the gains posted last week! Chinese copper prices
were higher overnight and that should leave a favorable tone for the
market in the action today. The copper market appears to be catching the same
far forward-looking mentality, as the stock and bond markets. In other words,
copper is seeing improving economic readings and predicting better future
demand, even if the
economy remains mired in a slow pattern.
CRUDE COMPLEX
OVERNIGHT
CHG toÂ
AM
CRUDE -26,
HEAT -65, UNGA -72 –Â This
morning the energy complex is weaker with both
and
promising to expand production. Those production increases come in addition to
the recently announced OPEC increases.
NATURAL GAS
It would
appear that the market is losing extension capacity considering the overbought
status present at the close Monday. Certainly the cold weather supports prices,
as the below normal temp projection comes at some of the coldest timing of the
season.