Futures Point To A Slightly Stronger Open

• June 16, 2003
• Brice Wightman

METALS

OVERNIGHT
CHANGE to 4:15 AM:GLD+2.50 ,SLV+1.0 ,PLAT+4.90, CP -15  London Gold Fix
$359.00 +$5.05 LME Copper Warehouse stks 692,7500 tns -3,050 tns Comex Gold
stocks 2.472 -104 oz COMEX Silver stocks 105.7 ml oz Unchanged OVERNIGHT: Firm
price action in Asia but the primary focus is the Dollar.

GOLD:
It is very clear what drives the gold market and that is the Dollar. As we
suggested last week, the Dollar had to come out of the month long consolidation
to the downside and that is what it did last Friday afternoon. With the gold
market managing a rise above critical chart resistance of $360, the next
resistance zone jumps up to even numbered $370.

SILVER:
The silver market is taking the cue from the gold market and managing some gains
this morning. However, there would appear to be significant overhead resistance
and a lack of fundamental buzz to propagate a massive rally. We are still not
picking up a consistent pattern in COMEX stocks and there isn’t that much hope
for strengthening demand.

PLATINUM:
The platinum market appears to have righted the ship with a gap higher move
overnight, but we are still finding it difficult to establish the focal point of
this market. Macro-economic conditions are disjointed, the net spec long is
moderate and the charts show a lack of conviction. We define the expected
trading range in the October platinum this week as $638.7 to $658.3.  

COPPER:
The charts continue to look ugly with the market slowly losing ground. In fact,
we continue to expect a sub 76.00, trade with our best guess for a low this week
coming in down at 75.50 in the September contract. With Chinese copper futures
were lower overnight and the macro economic outlook for copper suspect we have
to favor the bear camp.

CRUDE
COMPLEX

OVERNIGHT
CHG to   Minute=”15″>
4:15 AM
  
:CRUDE +14  ,HEAT+55 
,UNGA+38  The energy complex collapsed Friday under the
psychologically important restart of Iraqi exports. While it might still be
premature to suggest that

Iraq

has restarted exports that
would look to be the case.

NATURAL
GAS

The COT
report showed a net small spec long 36,689 contracts, which was a new record
long for that category. However, in order to set a record in the small spec and
fund position combined, the market would have to have almost twice the long
position in place as of last Tuesday.

INTEREST
RATES

OVERNIGHT
CHANGE to   Minute=”15″>
4:15 AM
:BONDS +4 The beat goes on
for the bull camp! With macro economic readings remaining soft and the stock
market choppier than it was in the end of May, it would seem that the bulls
remain fully in control of the Treasury market. With the COT report showing a
net spec short position in the last report, this market doesn’t even appear to
be classically overbought despite the 14-point gain in Bonds since the March
lows. In looking forward to the report schedule this week, we expect to see more
weakness and possibly even a show of deflation in the CPI report.

STOCK
INDICES

OVERNIGHT
CHANGE to
4:15 AM
:S&P-200
DOW -25 NIKKEI -140 FTSE +11 The market remains vulnerable in the near
term, as risk has become a little more prominent than reward. In other words,
players are now questioning the pace of the recovery and for the first time
since the mid May correction, traders are concerned about prices being
overvalued. To summarize, this market needs some confirmation that positive
growth will become entrenched before the up trend can resume.

FOREIGN
EXCHANGE

DOLLAR:
The Dollar fell out of a month long consolidation late last week, when it became
apparent that US economic readings were slackening. The fact, that consumer
sentiment readings softened, was a real blow to the recovery hopes and the
numbers early this week don’t look to alter that opinion. However, the market
might be able to gather some support for the Dollar, off the idea that the US
Fed is going to cut rates in the next meeting. In fact, some traders think that
the US Fed might cut rates by as much as 50 basis points and that would
certainly give the Dollar a fighting chance. If the September Dollar manages to
regain 92.80, that could cause a short-term stop loss buying move and a return
to the 93.54 level. Dollar shorts do have to worry about intervention talk from
the BOJ and maybe even the ECB. Therefore, it would seem that the easy money in
the short side of the Dollar are probably past. 

EURO:
The Euro apparently didn’t like the levels seen around the highs overnight, as
it couldn’t hold those levels. We have to think that fresh longs in the Euro
risk seeing the ECB attempt to talk the Euro down. In other words, the ECB might
try a war of words to limit the gains in the Euro, before they actually step
forward with an intervention. Given the foot dragging that was seen in cutting
interest rates in the Euro zone, we have to think that a decision to intervene
would take equally as long. In the end, weak

US


economic numbers are expected to give the Euro a slight additional lift.

YEN:
As long as the US Dollar avoids tracking into new low ground, the Yen should not
breakout to the upside. Critical resistance is seen at 85.34 and then again at
85.59. Critical support should be solid at 85.00.

SWISS:
The Swiss is primed to trade a little higher but we have to think that the gains
will be limited to the May highs. We also think that the Swiss will remain
locked to the Euro and that intervention talk against the Euro will quickly
limit further gains in the Swiss. The Swiss probably won’t fall below 76.84 this
week, unless something major happens.

POUND:
A strong new high for the move overnight sets a very positive tone for the Pound
this morning. We have to think that the sloppy consumer numbers from the

US

on
Friday opened the door for a Pound charge to the 1998 highs of 173.00. 

CANADIAN:
Next resistance and a target for the Canadian comes off the monthly charts up at
75.51 or 37 ticks above the opening today. The slack

US

numbers
simply open the door for the C$ to climb to a new trading zone.