Futures Point To A Slightly Stronger Open
METALS
GOLD:
Its possible that the gold market needed a 50 basis point cut, as the chart
action overnight suggests that more liquidation is ahead. We suspect that the
net spec long is still above 80,000 contracts and that leaves the gold market
vulnerable to wholesale liquidation. In the near term, we would not be surprised
to see the August gold slide to $340.
SILVER:
The silver is not being pulled down as aggressively as many would have expected
given the failure in gold, but silver wasn’t as overly long and could be
garnering some hope for increased physical demand. Those that bought silver at
$4.50 might consider banking a quick profit at $4.58 and then look to reset the
long play on a decline back down to $4.46. There really wouldn’t seem to be
cause to “deflate” silver prices below the June low of $4.44 but we do
suspect that September silver will periodically slide below $4.50.
PLATINUM:
Apparently, platinum couldn’t maintain the bullish interest necessary to remain
within striking distance of the recent highs. The near term economic outlook is
diffused enough to discourage buyers of platinum and with the rest of the metals
falling out of favor, we suspect more declines are ahead. Near term downside
targeting in the October platinum is now seen at the $638.7 level.Â
Â
COPPER:
Minor losses in China and London this morning leave the US market is a bearish
posture. However, with the September copper right on solid support we suspect
that downside interest will wane. Certainly the copper market is a little
disappointed with the Fed move yesterday, but as long as the
US
equity
market doesn’t exhibit excessive weakness, copper should be able to build a
consolidation around 76.00.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE -16Â ,HEAT-70Â
,UNGA-57 Â The energy complex saw a clean sweep of bullish inventory
numbers Wednesday and fortunately the energy market didn’t see a major macro
economic disappointment as a result of the Fed meeting. In the end, the sharp
decline in
US
crude inventories and the
moderate decline in the refinery operating rates allow the bull camp to seize
control of the market.
NATURAL
GAS
The
market expects the weekly storage report to push 110 bcf into storage, but with
temps now slated to fall sharply in the
Midwest
the bull impetus is defeated.
If the natural gas market can’t rally into 90-degree temps it is going to take a
major change in the weather to rekindle the uptrend pattern.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -22 We are not sure
the bull camp could come out of the FOMC meeting with a significantly favorable
result. However, seeing a 25 basis cut might have been about the best outcome
the bulls could have hoped for. As it stands, the Fed went ahead and cut rates
to levels that were mostly factored into prices.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P+500
DOW +41 NIKKEI -8.85 FTSE -13Â Apparently the rate cut wasn’t enough to
alter the liquidation tilt in place since the June 17th high. Like a number of
other markets, the stock market had a 25 basis point cut factored in to prices
and possibly needed a surprise to get the market away from what is becoming an
entrenched lackluster attitude toward the future. We still don’t get the feeling
that the liquidation trend is anything but profit taking.
FOREIGN
EXCHANGE
DOLLAR:
We are pretty surprised that the Dollar has managed to forge higher action in
the face of a 25 basis point cut. Apparently the trade is confident in the US
Fed’s ability to control the destiny of the
US
economy, more so than the ECB. The overnight action brings the Dollar to another
new high for the move but longer-term traders suggest that the trend isn’t
turned up until the September Dollar rises above 96.00. We hardly expect US
economic numbers this morning will yield anything significant but they will
probably be just good enough to allow for more minor gains in the Dollar. Top of
the near term trend in the Dollar is 95.29, with support off the current up
trend channel coming in at 94.09.
EURO:
The French numbers continue to be soft, with Business confidence readings fell
to the lowest level since November 2001. Therefore, the liquidation trend in the
Euro is expected to continue but it would seem that the Pound and the Canadian
might benefit as much as the Dollar in the face of Euro weakness. Near term
downside targeting in the September Euro comes in at 113.33 and then again down
at 112.55. It is also possible that the
US
economy
will actually show signs of solid growth ahead of the Euro zone and that could
result in the Euro sliding all the way down to 110.00 in the coming two months.
YEN:
Apparently, the Yen was disappointed in the weak US Fed move. The Japanese
economy needed to see the
US
spark
sentiment with a big
US
rate
move, in hopes that the export action from
Japan
would
be given an additional lift. In the near term, the September Yen looks set to
slide to consolidation support down around 84.00. With Japanese retail sales for
May down, the Japanese economy really needs some outside help. The May decline
was the 26th straight monthly decline and that highlights the ongoing precarious
situation in
Japan
.
SWISS:
A major chart failure in the Swiss would seem to spark some long-term stop loss
selling. The next downside target in the September Swiss comes in at 74.00.
About the only thing bullish about the current situation in the Swiss is that
volume on the decline has been extremely thin.
POUND:
The trade doesn’t seem to want to push the Pound below channel support and the
economic report slate would not seen to offer up enough information to justify a
downside breakout. Certainly the Pound has been in favor versus the Dollar, but
it also appears to be in favor versus the Euro. Therefore traders should
probably buy the September Pound on a correction to 165.08.
CANADIAN:
Since the Canadian made it through the post FOMC action without significant
pressure, we have to assume that the currency will remain in an up trend.
However, with the Dollar rising above more chart resistance in the early action
today, the Canadian could be hard pressed to be positive on the session. The
trend is up but momentum could be much lower than in the past.