Futures Indicate Stronger Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
-9 — The currency markets are selling the Dollar because they fear that the
economic recovery is faltering and that same sentiment has lifted bonds 1 ½
points off the January low. Surprisingly the consumer credit readings released
late in the session yesterday showed a contraction in consumer credit and that
either argues against the theme that the consumer is tapped out or suggests that
consumers are so concerned that they pared back the use of credit. With the
Press dredging up plenty of anecdotal evidence of a coming war and the
stock market falling through a number of critical chart support levels, we have
to think that the bias in bonds will remain up.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +50, NIKKEI
-19.87, FTSE -50 — The stock market failed
at a number of key support levels Wednesday, as consumer and investing sentiment
is turning sour. Even the Forex markets are fearful
that the
recovery is faltering and that is simply accentuated by the Press reports that
the
is now sending its bombers into position in the
With gold leaping $7 in the
fix this morning, the Dollar falling moderately and bonds showing upside
potential, it would not seem to be a favorable environment for the bulls.
FOREIGN EXCHANGE
DOLLAR: The negative sentiment toward the Dollar is back in force
today, with the European trade citing a lack of confidence in the
recovery process. With the Dollar failing to turn back up on the stimulus plan,
it is clear that sentiment is entrenched in the bear camp. However, we suspect
that US initial claims and the monthly payroll report will only serve to temper
the negative pressure being seen in the Dollar. There was the chance that the
BOE would cut rates but they passed on a move and that could have altered the
sentiment toward the Dollar. However, given the track of sentiment toward the
Dollar, seeing a
rate cut would probably have exaggerated the downside in the Dollar. Next
targeting in the Dollar comes in off the weekly chart down at 100.80 and then
again down at 100.00.
EURO: With German unemployment rising by
28,000 and the EU revising 4th quarter GDP down to +0.1% from +0.4%, it is clear
that the Euro zone growth isn’t good enough to explain the sharp rise in the
Euro. We have to think that escalating war talk is damaging the Dollar and
giving the Euro an undeserved lift. Some traders are suggesting that the
European numbers this morning, add to the potential for a rate cut in the Euro
zone. The EU will also announce their posture on rates this morning but few
suspect a cut is coming. In the near term the Euro
wins by default. We have to think that the Euro will trade in sync with crude
oil, meaning when and if the war threat ends, the Euro might top. In the mean
time the next upside target in the Euro is seen at 105.45.
YEN: The Yen appears to have lost momentum
on the charts and is seeing an unusually thin flow of economic news. With the
Chinese posting a significant trade surplus and projecting 8% growth, we have to
think that the
is standing in better position than either Euro or the
However, the Japanese business model depends on extensive exports to the
and therefore we find it hard to think the Yen is capable of breaking out to the
upside under the current news flow. Near term resistance is seen today at 84.29.
SWISS: After a massive range Wednesday the
Swiss has sorted out its opinion and that posture is bullish. Fears toward the
recovery,
bombers heading to
and soaring gold prices all favor the bull camp in the Swiss. Next upside
targeting in the Swiss comes in at 72.60.
POUND: The BOE decided to leave interest
rates unchanged and that would seem to argue against a near term attack launch
by the coalition. The charts look a little toppy in
the Pound, with a potential critical pivot point coming in at 159.92.
CANADIAN: Evidently the Canadian isn’t
negatively impacted by the international concern toward the
recovery. As we have suggested before, Canadian payrolls will probably continue
to outperform the
and that alone justifies the recent strength in the Canadian. The Canadian might
be capable of making 64.00 become critical support instead of critical
resistance.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
+1.30,
SLV -2.7, PLAT +2.90;
Gold Fix $354.60, +$7.85; LME Copper
Warehouse stks 853,725 ton, -900 tons;
Comex Gold stocks
2.04 ml, +3,943 oz; COMEX Silver
stks 107.9 ml oz, +553,351 oz; OVERNIGHT: Asian headlines
partially negative but
fix countervails
GOLD: It would appear that
gold was able to overcome some weakness in
where the Press was reporting pressure off sagging energy prices. We would not
expect much additional weakness in energy prices, unless the rumors that Saddam
might seek asylum gather momentum. News that the
is sending Bombers to the
is another development that confirms the track toward war and that certainly
played a role in the firmer
fixing this morning.
SILVER: The market looks to continue to claw
its way higher but will need strong leadership from the gold market. Since
silver rejected the corrective tilt yesterday and repelled away from the 478
level, that level should now be viewed as solid support. Top of the channel in
the March silver is seen at 497.
PLATINUM: The platinum gapped higher
overnight and is apparently primed to rise to an old resistance level of $634.
We have to think that platinum is now getting some spillover buying from traders
put off by the overbought technical status present in the gold market. In other
words, platinum and silver are both gold surrogates
COPPER: The surprise rally in the
session Wednesday prompted
and
copper prices to firm this morning in a delayed reaction. We have to think that
production cutback rumors fueled the rally yesterday, because the gains came in
the face of a fairly significant contraction in the
stock market. We think the copper rally yesterday is a gift to get short at a
level we didn’t think the market would offer.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +24,
HEAT +77, UNGA
+66 — The energy complex comes into the action this morning firmer as the Press
was reporting US bomber movement to a base in Qatar and that the UK was booking
space on ships for tanks to be sent to the Middle East. In other words, the war
track kicks back in and that discounts the surprise from the API and DOE
reports.
NATURAL GAS
With the
weather shifting back into a colder pattern, the natural gas market took no
chances and rushed to bid up prices. With the EIA suggesting that 2003 winter
energy demand will increase by 8.7% over the prior year, the cold weather
forecast was all the market needed to spike higher