Futures Point To A Slightly Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+12 The bond market really didn’t act very impressively following the massive
decline in Consumer confidence. However, the bonds are mounting a comeback bid
in the overnight action but it is still clear that the trade won’t be easily
derailed from the recovery view. Certainly, the Treasury sellers needed to be
made aware of the ongoing precarious nature of the employment situation, but we
have to caution that the Consumer confidence readings were for June and that it
seems like the regularly scheduled July numbers have improved over the June
figures.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P+300
DOW +25Â NIKKEI -201 FTSE +1Â The
stock market dove sharply following the unexpected decline in consumer
confidence readings Tuesday. Because the Conference Board specifically indicated
a concern for the jobs market one can’t simply discount the report. While there
were countervailing reports of an increase in
New York
City
payroll
tax flows in the Press this morning, the market is still a little unnerved by
the information seen during the session Tuesday.
FOREIGN
EXCHANGE
Dollar:
We are actually surprised to see the minor gap up move overnight in the Dollar
Index. If the Dollar is able to rally into the face of obviously weak economic
numbers it almost leaves the impression that the currency markets are looking to
favor those currencies with a chance to see additional interest rate cuts. While
many have assumed that the
US
is
moving toward recovery, the information Tuesday,
makes the monthly payroll readings at the end of the week really critical. While
we have to think that the September Dollar has solid support down around last
weeks lows, we just don’t see the basis for the Dollar to rise above the July 21st
low of 96.30. In fact, we think the best trade in the Dollar would be to
see a rally in the September Dollar to the 96.30 level and then to get short the
Dollar at that level.
EURO:
The euro made a slightly negative technical trade overnight but we don’t get the
sense that a major rollover down is ahead. However, it would not be surprising
to see the September Euro slide to support of 113.72. Right now, the Euro
doesn’t seem to be playing off the macro economic differential issue.
YEN:
A sharp decline in the Nikkei off very weak Toshiba earnings, creates just
enough uncertainly in the Japanese economy to shut off the recent selling
pattern. In other words, things inside
Japan
are
apparently precarious enough to suspect some light repatriation. In the near
term, the Yen has probably found near term support around 83.50.
SWISS:
A critical downside failure on the charts in the Swiss leaves the currency
vulnerable to more selling. A near term target in the Swiss is seen coming in at
73.80 and then again down at 73.32.
POUND:
A very sharp rise in CBI retail sales should leave the
UK
economy
on a pedestal and the Pound in favor. July retail sales in the
UK
increased from a +10 index reading to a +27 index reading and that should send a
loud message of recovery for the
UK
economy.
CANADIAN:
The Canadian failed to extend the upside probe and now has to fight negative
technical ramifications. In fact, we see a near term downside targeting of 71.25
and possibly even 71.01. In order to shut off the recent selling pattern
Canada
, will
have to post some impressive monthly payroll readings.
METALS
OVERNIGHT
CHANGE to 4:15 AM:GLD-2.00 ,SLV-5.5Â ,PLAT-3.50,CP+10
 London Gold Fix $359.10 -$4.90 LME Copper Warehouse stks
616,950 tns -1,250 tns Comex
Gold stks 2.74 ml oz +3,954 oz Comex
Silvr stks 111.1 ml oz
+1.07 mil oz OVERNIGHT: The New York sell off extended into the overnight Asian
action
GOLD:
Chinese and
London
price
action was lower but the Chinese action seemed to add to the
New York
slide
instead of simply replicating the Tuesday declines. Maybe
the news that 1st half Chinese gold production rose 13% on the year, added to
the selling interest. Chinese gold production is significant at 88.12
metric tons.
SILVER:
Since the silver market was significantly more overbought than the gold market
was, it probably deserves more downside liquidation before a near term bottom is
forged. Yesterday our pick for support basis the September contract was $4.93
and we see no reason to deviate from that targeting. Initial support might be
found at $5.01 but that type of correction really isn’t enough to balance the technicals
and leave the market in a position to launch into another upside pulse.
PLATINUM:
The Chinese started spot platinum trading today and that could end up being
supportive for platinum, as a narrowly traded market, with a tight supply setup,
could easily benefit from expanding the players, even if the players are
speculative traders. Platinum would violate a trend line support line with a
move below $687 today. Angloplat’s reported 1st half
platinum production to be down 12% and that simply reconfirms the tightness in
platinum fundamentals. Â
COPPER:
Chinese copper prices were slightly weaker overnight, probably off the slightly
injured global macro economic outlook. It really appears to come down to what
the
US
equity
market does, as the copper market is intently focused on the prospects of global
recovery. There continues to be concerned over a number of labor issues and
other idled facilities, but we have to think that the copper rally of the last
four weeks has been primarily derived off the hope for recovery.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE -4Â Â ,HEAT+7Â Â
,UNGA+21 Â Early selling was shut off in the energy market Tuesday as
the trade wasn’t bearish enough to remain short this market into the weekly
inventory report this morning. There is still a concern that the backlog from
the hurricane disruption might manifest in an isolated increase in crude stocks.
NATURAL
GAS
Since the
natural gas market continues to forge new lows for the move with each session
and
US
weather is showing only minor
signs of heating up, we seriously doubt a low is in the offing. With the weekly
injection report looming again, it might not even matter that the net short
position is at or beyond a record.