Futures Indicate A Strong Open
METALS
GOLD:
While the gold market has managed to consolidate the early gains posted last
week, it is clear that the gold market will have to overcome investment
competition from the equity markets. It would also appear that gold will have to
overcome a stronger Dollar, as the Greenback looks to come into the week higher.
We have to think that the net spec long in gold will balloon considering that
the report was measured on the close of the big rally session last week.
SILVER:
Following the recent rally from $4.51 to $4.705 we suspect that silver will also
post a moderate overbought condition in the COT report, that will be released
after the close today. However, the magnitude of the net spec long in silver
shouldn’t be that excessive. We get the sense that the silver is tracking
higher off the idea that physical demand is set to improve and that is given
some credence by the consistently firm world equity price action.
PLATINUM:
The platinum would appear to be set to rise and possibly even forge a breakout
up in the action today. With favorable world equity market action this morning
and a good lift from the charts, maybe platinum will return to current
resistance of 670. Very impressive Asian equity action should give platinum
bulls a leg up in the action this morning.Â
COPPER:
The copper market was a little concerned about the soft US payroll readings late
last week but with world equity prices firm this morning that report is
evidently going to be discounted. With copper prices down hard for most of June
it would seem that the market is due for a little recovery bounce. Chinese
copper prices were higher and that should put the
US
market
in a favorable position to add some upside action.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE -29Â ,HEAT-31Â
,UNGA-55 Â The energy markets were a little weaker Friday during the
US holiday, as White collar workers in Nigeria broke ranks and decided not to
strike over what seems to be a minimal separation between the demands and the
government’s latest offerings. While the tensions might be a long way from
over, seeing the Union case divided certainly favors the bear camp.
NATURAL
GAS
The
natural gas market saw a weekly injection reading just a bit below the range of
expectations (97 bcf), but it would seem that the natural gas market isn’t
really responsive to as expected readings. With recent hot temps fueling
increased cooling needs, we might see some temporary support for prices, but in
order to get back into a bull market status, the natural gas market will have to
see some very supportive temperatures.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -8 The bond bulls have
to be in a state of shock, as the weak
US
payroll report not only
failed to inspire long interest, it appears to have prompted selling interest.
Apparently the Treasury market is taking its cues from the world equity markets
and not the scheduled economic reports. Some traders think that the unemployment
figures represent the low water mark for the jobs sector and that things are set
to get better over time.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P+820
DOW +77 NIKKEI +247 FTSE +44Â The stock market comes into the session today
under bullish steam. With the bull camp weaving its way through a potentially
disastrous monthly unemployment report last week, it would seem that the typical
“pre-holiday†rally will become a post holiday rally. Apparently the world
is willing to accept on faith, the recovery view, as the numbers certainly
don’t support such optimism.
FOREIGN
EXCHANGE
DOLLAR:
The Dollar bears have to feel like the Treasury bulls today, as the
US
numbers
late last week should have pushed the Dollar sharply lower but instead the
opposite is taking place. Even with the ECB and the BOE poised to cut interest
rates, the Dollar seems to be set to rise. In fact, given the strong overnight
rise in the Dollar, it would seem that the market is headed right back to the
June highs of 95.70. We still think that the Dollar trend remains down until the
September Dollar manages to close above 96.00 but if the Dollar isn’t going to
fade off the type of monthly payroll numbers released last Thursday, then one
has to wonder what will make the Dollar go down. Many traders are suggesting
that the Dollar is simply too cheap from a historical perspective and that more
short covering is on the way. Therefore, the 96.00 level becomes an extremely
critical zone in the coming sessions. In fact, some traders don’t think the
Dollar trend turns back up, until the September contract climbs back above
98.28. Just seeing such massive targets, off trend type systems, highlights the
potential volatility for the Dollar in the weeks ahead.
EURO:
The Euro doesn’t look to get much support from the numbers, or from the idea
that the ECB is set to cut interest rates. In fact, the idea that the ECB is set
to cut rates is apparently a negative toward the Euro, as that highlights the
weakened status of the European economy. In looking at the charts, the Euro has
downside targeting of the gap area of 112.68-112.49. Resistance in the Euro is
seen early this week at 113.62.
YEN:
The Nikkei continues to pound away with gains and that is serving to lift the
Yen. The BOJ is out this morning explaining away a JGB purchase suggesting that
the move wasn’t intended to guide interest rates. As it stands now, the BOJ
might be forced to intervene against the Yen sometime this week! Resistance in
the Yen comes in at 85.32.
SWISS:
Long term technical liquidation is underway in the Swiss, with the market
apparently headed to the March and April consolidation pattern. The March and
April consolidation pattern is bound by 73.00 and 71.48. We see no reason to
move to the bottom of that range unless US numbers manage to get progressively
better.
POUND:
With weak
UK
manufacturing data this morning, the market is fully expecting the BOE to cut
rates later this week. Therefore, the Pound also looks set to cave in under the
weight of the stronger Dollar. Near term chart support in the Pound comes in at
163.70 and unless something significant changes, we expect the market to slide
toward a lower trading range.
CANADIAN:
The real test of the Canadian is about to take place. With the US Dollar strong
in the face of poor
US
numbers, we suspect that the Canadian will be under pressure. The question
becomes, can the September Canadian hold above critical chart support of 73.07.
We suspect that the Canadian will manage to stay in the uptrend pattern, but not
without some near term weakening.