Futures Indicate Stronger Open

INTEREST
RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS
+21 Gains in the Treasuries continued overnight leaving the impression that
more short covering is taking place. In our opinion, seeing September bonds
rise above 108-27 suggests that some fresh buying is taking place in addition
to short covering. We really don’t get the sense that the Treasury market is
in the process of reevaluating the recovery potential, but with the stock
market slightly higher and the US economic report slate empty, it would appear
that something significant is unfolding.

STOCK
INDICES

OVERNIGHT
CHANGE to  4:15 AM:S&P+80 DOW
+7 NIKKEI +61 FTSE +54 Given the recent firmness in Treasuries and the
overnight gains in the bond market, it would seem that the outlook on the
economy is coming back into question. With an empty report slate today that
slightly bearish view might not be dislodged. However, the stock market has
managed to recoil away from the recent lows and post some very favorable early
action this morning.

FOREIGN
EXCHANGE

Dollar:
The Dollar is coiling and appears to be fighting against the recent downtrend.
It should be noted that interest in US Treasuries is improving and that the US
stock market is also showing positive action overnight. Therefore one might
expect to see minor interest in the long side of the Dollar early. The
economic report slate from the US is empty and that could mean that the market
is without a clear-cut trend. We also think that no G7 country is head and
shoulders above the others and therefore consolidation action is to be
expected. The thing that makes us come down on the bear side of the equation
in the Dollar is that currencies that have been unable to gain against the
Dollar (Yen & Canadian) have been gaining against the Dollar recently.
Therefore, we see a minor downward bias and that aggressive traders might be
advised to sell the September Dollar on an early bounce to 96.45 today.

EURO:
Surprisingly the Euro is showing early weakness this morning and that might
hint at a temporary slide to 113.00. With the ECB suggesting this morning that
Consumer Confidence is stabilizing, that should serve to support the currency
after a minor slide this morning. Italian Preliminary GDP was -0.1% on the
quarter and that might be part of the early weakness in the Euro.

YEN:
The Yen looks to consolidate the recent gains but we have to think that the
BOJ is attempting to hold the Yen down. The question is can the BOJ overcome
the power of the broad market. Now that the Yen is back up in an old
consolidation zone we have to think that the rate of gain will slow markedly.

SWISS:
A bad technical trade overnight would seem to point the Swiss down to next
support of 73.30. However, the Dollar just doesn’t seem to be a formidable
opponent capable of pressing the Swiss sharply lower.

 

POUND:
Heavy resistance is seen in the Pound at 161.46 and support doesn’t come in
until 160.00. There really isn’t a dominating trend in this market, so traders
should expect a weak drift down in the currency. CANADIAN DOLLAR: A minor
upward bias is seen but tat might not preclude the market from sliding down to
a low today of 70.99. Still no major trend decision in the Canadian but the
bulls have something to prove.

METALS

OVERNIGHT
CHANGE to 4:15 AM:GLD+0.60 ,SLV+1.7,PLAT+2.70, CP +50 
 London Gold Fix $353.50 +$2.35 LME Copper Warehouse stks 607,925
tns -525 tns Comex Gold stks 2.74 ml oz Unchanged Comex Silver stks 105.4 ml
-3,022 OZ OVERNIGHT: More minor gains in Asian gold were topped off by a firm
close.

GOLD:
A positive bias exists into the opening this morning as the Asian trade was
positively biased and the gold market is in its 5th straight day of gains.
However, the Dollar is slightly stronger this morning and an Australian
analyst thinks that gold hedgers will not lift as many hedges next year, as
has been seen this year. Recently Commercials in gold had short futures and
options positions in excess of 100,000 contracts and early in the year they
had the largest short ever.

SILVER:
Like gold, silver has fleshed out a trading range of $4.91 and $5.17 with a
critical pivot point of $5.10. We think that the COT report tonight will
continue to show a moderately but slightly pared down spec and fund long.
Unfortunately, COMEX silver stocks are only showing minimal daily declines but
one might conclude that there is a trend toward lower stocks.

PLATINUM:
The charts continue to be bearish for platinum but a good strong gain in the
equity market could easily alter that setup. Impala mines in South Africa is
warning hold out Zimplats shareholders that they will pay for the costs of an
extensive development program if they decide to hold their shares and that
could be seen as a slight negative as that indicates an attempt to expand
production. Thus far, expanding African production is simply not seen as a big
offset to the slack output from Russia. In other words, lofty historical
pricing in platinum looks to remain in place.  

With
the market focused on the potential for a strike in Chile, prices are seeing a
firm bid this morning and that comes after a firmer Shanghai session. However,
Shanghai copper stocks increased by a rather large 4,326 tons to 92,426 tons
and that might be the COPPER: result of higher prices attracting supply and
discouraging delivery at the exchange. Slight more favorable attitudes toward
the US economy and higher equity prices would certainly help copper prices
extend their early gains but we are not sure that copper can expect to see
that much outside assistance.

CRUDE
COMPLEX

OVERNIGHT
CHG to   4:15 AM  
:CRUDE +2   ,HEAT-5  
,UNGA-28  While crude oil didn’t manage to post another new high
for the move on Thursday, it did manage to post a new contract high close!
Therefore the bull camp would seem to have control over prices. Apparently the
energy complex fed higher off the idea that US imports were falling, which in
turn could lead to even tighter supplies in the weeks ahead.

NATURAL
GAS

The
natural gas market spikes higher off long-term short covering and because of
extremely hot temps in the Southern US and the forecast for very hot temps in
the last two weeks of August. The trade suggested that the market also leaped
higher on the inventory injection of 74 bcf, which was at the lower end of
some estimates.