Futures Indicate Stronger Open
style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>INTEREST
RATES
OVERNIGHT
CHANGE toÂ
— The bonds understandably
were extremely disappointed by the Fed’s description of the risks to the
that the risks are balanced to the
the towel, as they were expecting to see an acknowledgement that the chance of
recession was rising. Maybe the Fed was attempting to
shore up sentiment ahead of a possible war with
statement.
style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>STOCK
INDICES
style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial; mso-bookmark:FOREX”>OVERNIGHT CHANGE to 4:15 AM:
S&P +140, NIKKEI -14,
DOW +1.6, FTSE +52
–Â The stock market dodged a bullet
Wednesday, as prices started the session out extremely weak and could easily
have ended up in panic type liquidation. However, the Fed averted the crisis
with a more upbeat assessment of the economy than equity prices had been
factoring. While the technical action yesterday qualified as a classical
technical bottom, the signal didn’t come off of a massive gap down washout,
which typically precedes major lows.style=”mso-bidi-font-weight: normal”>style=”COLOR: navy”>
style=”mso-bidi-font-weight: normal”>style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>FOREIGN
EXCHANGEstyle=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>
style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>DOLLAR: The difficult issue for the
Dollar style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>today,style=”mso-bookmark: METALS”>
is that little has changed from the fundamental front, but the Dollar was
massively oversold at this weeks lows and probably deserves a surprising bounce.
In fact, with more European countries showing support for the
position on
we understand some of the pressure coming off the Dollar. However, we are not
sure that the change in events actually causes fresh Dollar buying. In order for
the US Dollar to sustain a bounce, the
numbers will at least have to come in positive and might have to come in above
expectations. There were some slightly weak European economic readings this
morning, but we just don’t think that the Dollar is being driven by economic
differential arguments. A normal retracement off the
January decline would project a bounce to 100.81, with the 50% class=SpellE>retracement coming in at 101.36. If the
garners additional support from either
or
in the Iraqi situation, that could allow for an even more significant rise in
the Dollar.
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EURO: A private German economic
survey showed muted projections for economic growth, while
posted basically muted inflation readings. In other words, the Euro zone
economic readings are not such that the slide in the Euro will be averted.
However, the Euro was massively overbought and could surprise some traders with
the magnitude of the corrective slide. Near term targeting the Euro comes in at
106.62, which is the first retracement point on the
January rally. A 50% retracement in the March Euro
comes in at 105.93.
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YEN: The Yen is about to make a bad
trade on the charts and could see some stop loss selling in the action today. A
failure below 83.95 projects a decline to 83.55. However, with a report
overnight suggesting that Japanese investors were taking profits on foreign
bonds, one might fear repatriation of that foreign bond capital and that could
provide the Yen support down the road.
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SWISS: It goes without saying, that
flight to quality sentiment is reduced following the February 5th UN meeting
deadline extension. We also have to think that seeing more European countries
give their support to the
in the Iraqi situation reduces the flight to quality tilt and that should force
the Swiss down to 72.77.
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POUND: The Pound was also a little
overbought around this week’s highs and that might mean a correction in the
Pound. Furthermore, with
consumer confidence readings contracting, fears over that economy has to apply
some pressure to the currency. Near term downside targeting comes in at 162.50.
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CANADIAN: The BOC is suggesting that
the Canadian economy is strong and that higher rates might be needed in the
future and that robs the Canadian of a strength that was developing into a nice
trend. We don’t see the rate threat derailing the upside tilt but it certainly
takes out some of the upside steam. +style=”mso-bidi-font-weight: normal”>style=”COLOR: navy”>
style=”mso-bidi-font-weight: normal”>style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>METALSstyle=”mso-bidi-font-weight: normal”>style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>
style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>OVERNIGHT CHANGE to
AM
PLAT +5.50, CP
+30;Â
Gold Fix $363.00, -$6.85; LME Copper Warehouse stks
835,025 ton, -4,875 tons; Comex Gold stocks 2.139 ml,
-6,012 oz; COMEX Silver stks 107.0 ml oz, -301,604 oz;
OVERNIGHT: Slightly weaker Asian action but no clear cut trend was
defined
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GOLD: With the Dollar higher this
morning and no clear-cut direction thrown off by the Asian action, we have to
think that gold will remain weak. With pressure on prices right into the
February rollover, we suspect that some weak longs will decide to exit, rather
than roll directly into the April or June contracts. With open interest in the
February contract still large at 40,041 contracts, there is certainly a large
amount of positions open, especially with Friday being “first notice”
day.
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SILVER: Fortunately for silver
longs, the macro economic condition isn’t posting overly weak readings, at the
same time that the gold market decided to mount a correction, or prices could
really have softened. However, silver is vulnerable on the charts, with critical
pivot point support seen at $4.76. In fact, silver already appears to have
violated trend line support with the overnight
slide.
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PLATINUM: There is no corrective
tilt seen in platinum, with the market gapping higher overnight. However, with
the news this week, the demand outlook for platinum is positive and supply from
continues to be crimped. Platinum seems to be getting flight to quality interest
and physical demand interest, which makes it the most balanced fundamental story
in the metals sector. Unfortunately, platinum prices are also at very expensive
historical price level of $650. Â
Â
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COPPER: The copper market action is
nothing short of impressive and with another large LME stock decline class=GramE>overnight, favorable equity and Dollar action this morning,
the market might be able to add to recent gains. Evidently, the trade is looking
beyond the war and is adequately heartened by the ongoing strength in the
auto and housing sectors. Just to emphasize the bullish theme in copper, it is
telling that copper managed to stay firm overnight despite an Australian copper
miner reporting copper output increasing to 73,000 tons from 63,000 tons.style=”mso-bidi-font-weight: normal”>style=”COLOR: navy”>
style=”mso-bidi-font-weight: normal”>style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>CRUDE
COMPLEXstyle=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>
OVERNIGHT
CHG to
AM:
CRUDE -7, HEAT -41,
UNGA -25, NG +75Â — The API and DOE reports were pretty shocking in that the
products tightened and became a significant issue again. There was also a fire
at a refinery in
in the session.style=”COLOR: navy”>
style=”FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial”>NATURAL
GAS
style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>Expectations for the weekly
inventory report call for 250 bcf draw and that is getting near the all time
record draw and that should keep prices firm. Weather looks to cool slightly in
the coming 5 days, but nothing that extreme is currently projected