Futures Point To A Stronger Open
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS -8 — Overnight
comments from the US Federal Reserve Chairman, undermine the bonds as the
Chairman aggressively discounted the prospects that the US economy would fall
into a severe deflationary condition. The Fed Chairman was perhaps a little more
upbeat on the economy than the financial markets had been factoring earlier in
the week, as he suggested that the
economy should be capable of working through the soft spot especially once calm
in the financial markets becomes an entrenched condition. With the
stock market showing stronger opening indications that could give the bonds a
little added pressure early.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +760,
NIKKEI +19, FTSE
+32 — We have to think that the short term oversold status of the market or
triple witching effects are responsible for the overnight strength in stock
prices and not a sudden improvement in sentiment. Certainly, comments from
Greenspan overnight reduce the fear of deflation, but the Fed Chairman’s
comments didn’t bring forth any new revelations from the Fed icon. The Fed
Chairman continued to predict that the economy would recover from the soft spot
with sustained calm in the financial markets.
FOREIGN EXCHANGE
DOLLAR: Maybe the early
stock market strength and comments from Greenspan will temper the selling
incentive in the Dollar today. However, the trend would seem to be remain down
in the Dollar, with the trade unwilling to upgrade the
economic outlook and unwilling to discount the potential negatives toward the
economy in the event of a war with
With energy analysts suggesting that OPEC might not be able to compensate for
both
and
being out of the oil export market at the same time, traders are right in
fearing for the
economy in the weeks ahead. It is possible that US economic numbers today will
provide a little confidence and a short covering in the Dollar. Unfortunately,
the
numbers today are old and revised numbers and therefore their impact might be
mitigated. Traders can probably expect a bounce to 104.20 but should then be a
seller of the currency. After all, Greenspan suggested that Geopolitical risks
and sagging corporate profits have to improve for the economy to recover and
that means the
isn’t recovering yet. Sell the Dollar on a rally but watch for surprise gains in
US stocks off triple witching.
EURO: The Euro zone trade surplus narrowed
slightly in October, which is only a slight negative to an overbought currency.
However, recent inflation data from the Euro zone leave the currency in the
uptrend, even if there is a minor corrective tilt seen early today. Traders
should hope for a correction to 101-86 to get long the March Dollar Index. We
still think the trade adjusted cost of energies will give the Euro zone a better
chance of recovering than the
in the coming two months.
YEN: The charts look overbought and without
momentum in the Yen. However, the Yen could fall to 82.64 without really
altering the recent consolidation pattern. The Japanese Ministry of Finance is
expected to show a moderate increase in government bond issuance and that might
highlight the burgeoning debt the government is piling up in battling deflation
and bad loans. Near term traders could sell the Yen this morning looking for a
45 point break.
SWISS: Temporary lull in international
anxiety and a slightly higher
stock market opening might prompt some profit taking in the Swiss, but we
suspect that the Swiss will avoid aggressive selling. Near term corrective
targets in the Swiss are seen at 69.92.
POUND:
stocks were higher this morning, which might serve to temper the corrective tilt
in the Pound. With the UK talking tough toward Iraq and suggesting that Saddam
has his finger on the trigger of war, one would think that some investors would
steer away from the Pound considering its strong rise off the November low. The
trend is up in the Pound, but risk and reward to the longs, seems to be
extensive and growing. Without the threat of war, the Pound might be headed to
the 1996 to 1999 consolidation pattern bound by 160 and 170.
CANADIAN: Thus far, the Canadian is being
seen as an alternative to the US Dollar in the face of war threats. It would
appear that the Canadian wants to return to the June and July consolidation of
64.50 to 65.70 but is finding it difficult to maintain positive momentum around
64.50. +
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -3.80, SLV
-5.5, PLAT +0.10;
London Gold Fix $343.10, -$2.65;
LME Copper Warehouse
stks
857,400 ton, -325 tns;
Comex Gold stocks 2.04 ml, Unchanged;
COMEX Silver stks
107.3 ml oz, Unchanged; OVERNIGHT: Asian profit-taking, particularly in Japan
ahead of a holiday weekend.
GOLD: The gold market will have to shake of
a profit taking mentality in the early going today, as a massive rally this week
(at its peak gold was up $22) has left the market significantly overbought. In
looking at the COT report tonight, traders can probably add in another 10,000
spec and fund longs into the reading, for the gains made since the Tuesday
markoff. Therefore, we think the gold spec position
will come in at 106,000 net spec long, with the adjusted position probably
standing around 116,000 net long, as of the Friday close.
SILVER: Bull traders might be disappointed
with silver, which has seriously underperformed gold, but should be heartened by
the relatively balanced technical position in silver and favorable Press reports
on the metal. A Dow Jones article on silver, suggests it might begin to see
spillover long interest, from those not wanting to pay up for gold. The Dow
article also correctly points out that silver fundamentals are much more
impressive than gold.
PLATINUM: The platinum market fell right to
critical long term support levels on the charts but with the stock market
showing higher indications this morning and the Fed Chairman talking up recovery
we would assume that platinum will be able to hold support and manage a recovery
bounce.
COPPER: The chart pattern in the March
copper looks pretty vulnerable but with the
equity market showing a little better opening, there could be some resistance to
a decline, toward the next support level of 71.00. Shanghai copper stocks rose
4,739 tons to 88,195 tons and that is a minor negative. With both
and
copper markets softer, the copper will certainly have an uphill battle against
the sellers.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -12,
HEAT -26, UNGA
-26 — The energy complex failed to hold aggressive gains made early Thursday
because the trade appeared to be pent up for something major from the UN and
didn’t get anything significant from the Press conference on Iraq. The UN didn’t
feel the need to convene some special council to restrain the
and promised to revisit with a January briefing.
NATURAL GAS
A draw of
159 bcf,
extends the annual deficit to 560 bcf, a level that
could be considered tight. However, we have to think that an overbought
technical status, combined with a trend to warmer
temps, is going to keep the natural gas market under pressure.