Futures Indicate Stronger Open
METALS
GOLD:
While gold managed an impressive rally yesterday and that rally came right in
the face of a strong Dollar, it would not seem like the Gold has the same
following it had in April and May. Certainly the action Thursday would suggest
that the gold market is attempting to find another focus but we are not sure
what that focus would be and if it would be strong enough to build even more
longs into a market that is already pretty long in the spec category.
Apparently, Chinese gold price action was limited by hedge selling overnightÂ
and that isn’t a good sign for the Asian interest in gold.
SILVER:
Apparently some in the trade are making the Kodak earnings forecast out to be a
dampening influence for silver. Certainly, silver use in photography has been
disappointing and that undermines the current price structure but if and when
prices return to near term support of $4.50 they are pretty close to the
“deflated” prices seen in March, when many thought the world economy
was really in trouble. Therefore, with silver within 15 cents of recession type
pricing, we have to think that the downside is limited.
PLATINUM:
The outlook for the Asian economy remains good and the Nikkei closed higher for
the 4th session in a row and that would seem to be lifting the fortunes of
platinum. In fact, with the macro economic view consistently improving, the Fed
possibly poised to cut rates next week and the stock market action capable of
cheering on platinum more gains are expected.
COPPER:
Shanghai copper stocks were up +16,397 tons and that is a big enough reading to
concern the trade. In fact, Chinese copper prices were down overnight and that
might be specifically off the large stock increase.Â
In a partially supportive development yesterday,
Chile
‘s
Escondida mine showed less production expansion in May and that tones down the
concern that producers are moving back toward full production.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE +21Â ,HEAT+68Â
,UNGA+53 Â Maybe the market has found a temporary bottom, as the
trade seemed to reject the lows on Thursday. The trade continues to think that
the
US
is having trouble fully
restarting Iraqi oil exports and is also picking up on the idea that Venezuelan
RFG shipments are still basically shut down.
NATURAL
GAS
The
natural gas market managed an impressive rally despite what appeared to be a
bearish weekly injection figure. One might suggest that the injection had an
artificial 11 bcf added into the 114 bcf figure as an adjustment and therefore
the injection wasn’t as significant as it appeared.
INTEREST
RATES
OVERNIGHT
CHANGE toÂ
4:15 AM
:BONDS +18 It should never be
easy around a major top. In fact, what goes up fast might also come down a
little quicker than many would expect. In the near term, it is possible that the
bonds and notes see a little recovery bounce, as the nearing reality of the
coming FOMC meeting has the trade doubting the “50 basis point” rate
cut forecast.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+210 DOW +15 NIKKEI +9.88 FTSE +17Â We wouldn’t not
be surprised if the market opened higher because of the triple witching
arbitrage influence and then prices decided to fade a little. The fact that G.E.
might offer up a negative view on their business prospects later today, might
mean that the stock market has a negative fundamental point to focus on.
FOREIGN
EXCHANGE
EURO:
Since the Euro rejected the downside bid the sellers are discouraged. At the
current time the Euro seems to be getting support off the idea that the
US
will
cut by only 25 basis points, but if the Fed were to go 50 basis points that
could be a different story. In our opinion, the
US
economy
would stand a much better chance of outperforming the Euro zone economy, on the
recovery move, if the Fed cuts by 50 basis points. However, the odds for a 50
basis point US cut aren’t that high. We see the Euro tracking back up toward the
center of the consolidation at 117.04.
YEN:
Slightly better Industrial activity readings and a 4th straight day of gains in
the Nikkei should give the Yen a little near term support. However, with the
Dollar possibly seeing a little weakness today and the
US
economic report slate empty that could mean the Yen has a slight upward tilt in
prices.
SWISS:
The Swiss chart still looks pretty vulnerable and while the Swiss is partially
oversold, it appears to be lacking a fundamental reason to rally. In other
words, the Swiss will have to see a big reaction in some other currency to make
a big move.
POUND:
A
UK
poll
suggested that there is less favor toward membership in the EU and that could
serve to undermine the Pound at current levels. A critical trend line is
violated today with a decline below 166.02 in the September contract.
Furthermore, a massive liquidation of open interest could suggest that the
recent build in of longs isn’t going to hold and that a bigger correction might
be expected next week.
CANADIAN:
We don’t see significant direction from the US Dollar but what little we see,
might help support the Canadian. One has to think that the September Canadian
remains in an up trend, but a trade back below 73.62 might be cause for concern
in the bull camp. Declining open interest figures might also suggest that some
longs are losing interest in the up trend.