Markets Look To Open Flat
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
+7 — The sweep of economic news Wednesday was almost completely bearish for
bonds, unless one dissects the Beige book and garners some thin morsels of hope
from the broad-based Fed report. However, chart damage in the bonds was made
even worse by the significant upward probe in the stock market. We have to think
that the surge in the stock market could easily extend and that in turn could
continue pump up subjective economic reports.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +40,
NIKKEI +38, FTSE
-41 — We are not sure if the market is going to easily propagate the massive
upside seen Wednesday, especially after one discovers that the gains Wednesday
were the biggest gains ever on the day before Thanksgiving. With thinned holiday
conditions, prices zooming in the prior session and a shortened session, the
market might have to show strength from the opening to keep the trade involved.
It would seem that the market could behave badly today with the absence of
economic information, but only if some weaker opening action gives the injured
bears some confidence.
FOREIGN EXCHANGE
DOLLAR: The dollar simply didn’t impress the trade with its response
to the sudden improvement in
economic sentiment. One would have thought that the dollar would have soared
against the euro and possibly the yen, but instead the dollar only made small
incremental gains. The December dollar Index appears to have critical support on
the charts at 106.63. In fact, with a trade back below 106.47, the dollar could
actually violate an uptrend channel established off the November lows. Either
the dollar continues to rise straight away, or the bull camp could easily become
impatient. Given that the
economy has bulldogged its way through negative sentiment, has seen an
aggressive rate cut, and is seeing its stock market propagate recovery
sentiment, there should be no reason not to push the dollar back up into the
summer consolidation pattern. We would be willing to wait until early next week
for the dollar to show itself, but will become a little more skeptical with each
passing day. The trend is up, even if the results aren’t that impressive.
EURO: The Euro zone released some inflation
readings this morning that were muted and that helped the currency to a moderate
jump in thin conditions. Seeing lower inflation readings
means that the ECB could cut if they see the need. However, with business
confidence readings also climbing in the Euro zone that tempers the whole rate
cut theme. From the overnight action it would appear that the trade thinks the
odds of a cut improved and they are willing to bid up the currency. We suspect
that the euro has consolidated a bottom above the 99.00 level, but until the
99.50 level is taken out, we are not ready to suggest that the euro is primed to
resume the rally seen in late October and early November.
YEN: Negative chart patterns in the yen
suggest that the bull camp is losing its interest in the pattern of gains seen
since Nov. 25. In fact, the yen made such a poor trade overnight, that we fear
the 81.23 low, might fail in coming sessions.
SWISS: The Swiss continues to consolidation
recent losses with a chart that seems poised to pressure prices further. We have
to think that more flight to quality liquidation is expected ahead but in thin
conditions, support at 67.07 will probably hold the trade up.
POUND: The pound looks to have made a solid
bottom with the 154.70 level soundly rejected. Strong housing numbers this
morning continue to put a firm backbone in the
economy and that is recognized by the pound gains off the recent lows. The rise
above 155.00 overnight projects a rally toward 157.00 in the coming week.
CANADIAN: Regaining the 63.60 level
overnight would seem to preclude a return to the 63.60 to 64.40 trading range.
METALS
GOLD: Markets closed for
SILVER: Markets closed for
PLATINUM: Markets closed for
COPPER: Markets closed for
h
CRUDE COMPLEX
Markets
closed for
NATURAL GAS
Markets
closed for