Futures Point To A Slightly Stronger Open
INTEREST RATES
03/04 OVERNIGHT CHANGE to 04:04 AM:BONDS-3 While
the Fed’s Beige Book takes some of the edge off the market’s concern that the
Feb payroll number will show a huge increase, there are certainly enough
negatives out there that may prevent the market from retesting the highs. The
Beige Book indicated that jobs growth was only rising slowly in most parts of
the country. The survey was done on data collected prior to Feb 23rd so Friday’s
employment data will be more comprehensive.
STOCK INDICES
03/04 OVRNIGHT CHG to 04:04 AM:S&P+50, DOW7,
NIKKEI , FTSE+13 Another mixes bag of economic data kept the stock market well
contained with in a narrow range. Unless today’s weekly claims number supports
the idea of better growth in the jobs sector, stocks are likely to creep
sideways waiting for Friday’s critical employment report. While the ISM
non-Manufacturing survey was a disappointment showing growth in the service
sector was less robust than in January, the Fed’s Beige Book report on the
status of the economy was more positive.
DOW
The March Dow is sitting right above its 40-day moving average and a solid break
below 10560 could inspire some technically triggered selling. Support below
there comes in at 10550 and then 10515, with resistance at 10615.
S&P
with technical indicators turning flat, March S&P is likely to trade within the
defined range between 1158.70 and 1133.20 until Friday’s report.
FOREIGN EXCHANGE
US DOLLAR
Now that the dollar has priced in a lot of good news
towards a recovery in jobs growth, the market may be setting up for a
disappointment if the payroll numbers are not near or above expectations. The
March Dollar’s failure at 90 suggests the market is likely to see some
consolidation this session before Friday’s big report. However, even if the
employment report is on the weak side we think the Dollar has likely put in a
bottom given Greenspan’s comments this week, which to us clearly indicated the
Fed’s next rate move will be up. While we are not saying that the Dollar cannot
break hard from current levels, we doubt there is justification for the down
trend to resume especially since the US economy overall is growing at a strong
clip, especially compared to Japan & the Euro-zone. While the ECB is not
expected to cut rates today, trade action could become volatile if a shift to
more accommodative rate bias is perceived. ECB President Trichet will hold a
news conference at 7:30 cst. There could be a wide range in the Dollar today if
the US weekly jobless claims or the ECB rate news are a surprise. Otherwise, we
look for some consolidation ahead of Friday’s employment report. Mar Dollar
Resistance at 90, support 88.93, 88.32.
EURO
The Euro traded weak over night, as weak economic
data out of Germany helped to pressure prices. But the market could see a
rebound today if statements from the ECB meeting suggest the Central Bank has no
plans to cut rates. Hawkish statements may be enough to rally Mar Euro back over
1.2250. Otherwise unless US jobless claims decline big, the Euro will likely
stay in a 1.2250 to 1.1944 range today.
YEN
Technical indicators in the Yen have fallen to
single digits so the market is over due for a bounce from current levels.
However, BOJ intervention over night kept the Yen weak. The BOJ continues to
have control of the currency against the natural flow of repatriation back to
Japan ahead of the fiscal year end and investment flows to Japan’s stock market.
Resistance is up at 91 then 91.86 in March futures, with support at 90. However,
a vigilant BOJ will likely keep the Yen contained below 92.
^next^
SWISS
We would think that the March Swiss will find a
temporary bottom above 76 unless Friday’s employment data is ultra strong.
BRITISH POUND
The Bank of England kept rates unchanged as
expected, but their bias is still tilted toward tightening which supports the
Pound against the Euro. With the Dollar making a broad based comeback, Mar Pound
could break further to 1.8000.
CANADIAN DOLLAR
While the sharp rebound in futures back over 74
suggest prices were too cheap below there, we are not convinced that 74 will
hold unless Friday’s employment data is weak suggesting US rates could stay low
longer than expected giving the rate edge to Canada temporarily.
METALS
OVERNIGHT
GLD+1.40, SLV+2.80, PLAT-0.50 London A.M.
Gold Fix 394.15 +$3.65 LME COPPER STOCKS 272,075 -3,150 tons COMEX Gold stocks
3.47 ml Unch Comex Silver stocks 126.3 ml +2.9 ml
GOLD
April gold remained under pressure for most of the
day yesterday as the dollar continued to rally and the Euro decline on
expectations of a recovery in US jobs and indications US rates have bottomed.
The close back over the late February lows at 391 helped support a positive tone
overnight. Hold the long June 390 put (+.40 to $10.80)/Short April 395 put (+.50
to $8.00) as time decay should limit the appreciation of the April put on any
coming weakness.
SILVER
Silver is following the economy and the currency
movements so the stronger economic numbers are supporting the industrial metal
while the strong dollar scares off investors. Resistance for May silver comes in
at 684.80 with support levels at 658.50 and then 649.20 which is a 50%
correction of the Jan-Feb rally.
PLATINUM
It seems unlikely that the platinum market will
recover in just one or two days of a correction off of a reversal from a 24 year
high. April platinum support at 869.70 held yesterday. Watch for significant
resistance today at 892.10 and position buyers can wait for a good correction
back to the 861.00 level before considering new buying.
COPPER
The market seems to be in a position of putting in a
major top but continued decline in stocks in London and the US and continued
evidence of a strong economy will keep sellers nervous. Do not look for a
straight down market as a consolidation or further tests of the highs could keep
the near-term action volatile. US shipments of copper and products in January
totaled 33.353 million pounds, up 12.6% from December and up 9.6% from last
year.
CRUDE COMPLEX
The an unexpected jump in API crude stocks
triggered an avalanche of profit taking in the energy complex, which was long
over due and could have some legs behind it considering the huge net long
position of the fund trader. A .382 retracement of the February rally is back at
34.79 for April crude, which is still well above the market’s 40-day moving
average. A sharp rise in imports was behind the crude stock increase and a rise
in the operating rate suggests refiners may begin to rebuild gasoline stocks
sooner than anticipated.
NATURAL GAS
With the fate of the Natural gas market tied to the
rest of the energy complex, the April contract was thrust lower and back below
critical support at 5.400. At this juncture, today’s EIA stocks report may have
little impact as the market unless crude & gasoline can stabilize. However, the
near-term outlook for natural gas is negative as the market is likely to see the
last big draw on stocks of the season.