Futures Point To A Slightly Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS +12 We are not sure
why the bond market is higher this morning, as the economic report slate
Thursday fired another shot across the bow of the bull camp and the early
indications from the
US
stock market are for higher
action. While Treasuries might show periodic recovery capacity, the fundamental
news this week has been mostly damaging. Expectations for the durable goods
report and the housing numbers this morning call for 1%-2% gains and that should
keep a firm lid on prices.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+360 DOW +35 NIKKEI -22 FTSE -9.8 Â In retrospect
it is clear that the market lacks the punch seen in the 90’s, as the mix of
information presented yesterday morning, could have ramped up prices
aggressively. However, it would seem that the skeptics are in fairly large
number, as the trade quickly moved to discount the favorable initial claims
decline as a result of seasonality. In other words, the trade is just not that
easily convinced that the economy is turning the corner and that business
spending and hiring will improve anytime soon.
FOREIGN
EXCHANGE
Dollar:
It is a bad omen for the US Dollar to have seen so much favorable macro economic
news and generally supportive news from the corporate earnings reports and yet
the Dollar tracked lower. If favorable
US
numbers
can’t attract buyers then the short-term trend is down. In fact, there would
seem to be no support until the September Dollar falls to the moving average of
94.90. In fact, the bull camp in the Dollar should be back on their heels
following the action Thursday. Considering the lack of a clear-cut economic
dominance, the only thing supporting the Dollar would seem to be the idea that
more rate cuts might be needed in the Euro zone. However, with Spanish 2nd
quarter unemployment rates declining slightly, some traders might discount the
idea of more Euro zone cuts and that also undermines the Dollar. Therefore, in
the near term we expect the September Dollar to slide to support of 94.98.Â
EURO:
A critical moving average is regained at 115.08, which is an easy task for the
Euro today. Near term resistance is seen at 115.22 and then again at the July
high of 115.85. Slightly higher German inflation numbers this morning gives more
evidence that the German economy is capable of avoiding deflation and that is
positive to the Euro. Gains in the euro should continue at a slow pace, or at a
slightly faster pace in the event that US numbers are disappointing.
YEN:
A moderately large decline in Japanese CPI readings is a disconcerting sign for
the Japanese economy and that would seem to support the Yen. We continue to see
significant resistance in the Yen at 84.47. On the other hand, it could be
difficult to get the Yen below critical support at 83.92 without the US Dollar
showing more signs of strength.
SWISS:
A quasi-triple top in the Swiss should offer some resistance and a chance of
profit taking. Aggressive traders might get short the Swiss today on a rise to
74.59.
POUND:
More step-wise gains are expected in the Pound, especially if the
US
numbers
are soft. With a strong 2nd Quarter GDP reading this morning, the Pound should
be supported to more gains. Preliminary GDP showed a gain of +0.3%, which was
below the early expectations. However, the UK GDP is pretty good when one
compares that reading to the rest of the G7. Little resistance until the 162.00
level is regained and becomes support.
CANADIAN:
The pattern of higher highs is positive and the lack of significant US Dollar
buying off good
US
numbers
Thursday, is also a positive for the Canadian. We see near term targeting in the
September Canadian of 72.00.
METALS
GOLD:
While gold isn’t showing much strength this morning it was very impressive to
see the market managed to shake off initial profit taking Thursday and close
higher. With gold managing to forge gains after a massive rally that would seem
to suggest that even more buyers are waiting on the sidelines. In fact, in the
COT report tonight, we expect to see a moderately long spec and fund long
position but it should be noted that gold is no-where near its record net spec
long position like the silver market is.
SILVER:
As mentioned in the gold comment, the net spec long in silver is more than
likely at an all time record level (when adjusted for the action since the
report was measured). In other words, the small spec and fund “net
position” using futures and options might be as high as 82,000 contracts.
Critical support comes in at $501 in the September contract with an upside pivot
point regained with a rise back above $5.07.
PLATINUM:
A major failure in platinum overnight would seem to catch the market overdone
and vulnerable. Trend line support comes in down at $672. We have to think that
platinum is once again being used as a hedge against long gold positions and
that could see October platinum fall down to $660. Â
COPPER:
The copper market got spillover support from strong precious metals prices and
from the better than expected US economic numbers Thursday morning. Therefore,
copper looks to continue to benefit from the anticipation of global recovery.
Shanghai copper stocks declined -4,034 tons and that joins the consistent
declines in LME stocks for a supportive supply setup.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE -15Â ,HEAT-20Â
,UNGA+7 Â Energy prices finished strong Thursday and are getting
close to returning to the mid July consolidation. Seeing September crude oil
manage a climb back above $30.00 turns some of the technical indicators up but
we just don’t see the critical driving force to rationalize a return to the top
of the July consolidation.
NATURAL
GAS
While the
natural gas market has reached a fairly significant oversold technical
condition, there would seem to be little from the fundamental camp to alter the
downtrend pattern. Even with a middle of the road weekly inventory injection of
83 bcf, the natural gas market came under heavy liquidation pressure.