Futures Point To A Slightly Weaker Open
METALS
GOLD:
The gold market posted a moderately impressive overnight rally, especially with
the Nikkei up over 200 points and the SARS issue not really dominating the
headlines. We do note that the Dollar reversed its attempt to rally yesterday
and that suggests to some gold bulls that more downside is ahead in the Dollar.
In fact, overnight the Dollar forged a new contract low move (4 year low) and
that is more than likely the primary driving force behind the gold rise.
SILVER:
The silver has responded to the bullish overnight action in the gold market with
a rise of 8 1/2 cents off the overnight low. Until the July silver encounters
resistance of $4.68 it should be able to rise. A key trend line is violated on a
recovery above $464.9 today.
PLATINUM:
The platinum market continues to adjust prices after reaching some rather
historic pricing in early March. We continue to see tight supply but the market
is apparently downgrading jewelry demand for platinum. It might be possible to
see July platinum slide all the way down to the December consolidation lows
below $580 given the fundamental setup.Â
COPPER:
Despite a strong catch-up rally in the Japanese stock market, the copper trade
apparently isn’t ready to leap out of the formation to the upside. However,
Chinese copper prices were higher overnight, as traders prepared for holidays.
Unfortunately for the bull camp in copper, the buying in the Chinese market
appeared to be short covering and not fresh position buying.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE +32Â ,HEAT+90Â
,UNGA+87 Â The energy complex made another bad trade Tuesday into the
close, setting the market on a path to log a significantly large net spec
position in crude oil. Â With the decline Tuesday, we have to think that the
crude oil net spec position is approaching the 40,000 contract short level,
which is overextended.
NATURAL
GAS
The
natural gas market managed a sharp short covering rally Tuesday, and that comes
in the face of regular energy market weakness and a bearish weather forecast,
which means that natural gas still has some long support. The trade might have
been short covering and it might have been paying attention to the flare up in
tensions inside
Iraq
.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -3 We really have to
question the Treasury markets ability to hold together in the face of the second
largest jump ever in consumer confidence, the sharp rise in employment costs and
against the recent strength in equity prices. However, it would seem that some
entities remain concerned about the pace of the global recovery as the BOE
surprised the trade overnight with a rate cut. Another issue that is quite
puzzling is how the US Treasuries are staying in favor, with the Dollar falling
so far out of favor.
STOCK
INDICES
OVERNIGHT
CHANGE to Â
4:15 AM
:S&P-40
DOW -6 NIKKEI +223 FTSE -10Â The up trend pattern remains in place, even if
the market looked a little vulnerable with its inability to hold the early gains
Tuesday. As we mentioned in the bond comment this morning, the trade seems to be
skeptical toward the global recovery and with European consumer sentiment weak
and the BOE cutting interest rates this morning, one has to concede that the
economy has yet to achieve solid footing. With US troops firing on Iraqi
demonstrators for the second time in 24 hours, one has to be concerned about a
political mess inside
Iraq
.
FOREIGN
EXCHANGE
DOLLAR:
A new low for the move and a 4 year low makes it hard to call for anything
except more losses in the Dollar. Even after
US
consumer confidence numbers posted the second largest monthly gain ever, the
Dollar is weak. Even with Euro zone confidence numbers coming in partially soft
the Dollar was unable to turn off the selling. In other words, there is no long
interest in the Dollar to speak of. Even the situation in
Iraq
is
contributing to the slide in the Dollar, as
US
troops
fired back at protestors for the second time in 24 hours. One would have to
target 96.65 in the June Dollar Index and possibly levels below 95.00 if the
week ending payroll report confirms ongoing economic slowing. It would seem that
the international trade theme for being short the Dollar, is that the
US
economy
remains mired in recessionary type conditions.
EURO:
When attitudes are bullish, the market manages to put a positive spin on the
numbers. This morning Euro zone consumer and industrial confidence numbers were
much weaker than the
US
numbers
posted Tuesday, but the trade instead focused on the fact that weak price
readings in the report would allow the ECB to cut rates. Therefore, the market
is bullish toward the Euro and it is not because of a flight to quality theme.
There would not seem to be a way to target how high the Euro could run because
there is no history for the market to act on.
YEN:
The Yen is playing catch up following the holiday Tuesday and with the Nikkei
gaining 223 points overnight that should give the Yen upside breakout some
staying power. Near term targeting in the Yen becomes 84.12. However, the Yen is
being held back by Japanese numbers, which showed a decline in housing starts
and a sharp decline in construction orders. Therefore, we would not chase the
Yen with buy orders.
SWISS:
The gains in the Swiss don’t look to be as impressive as the Euro, with the
chance for a top seen in the coming sessions. In fact we see ultra strong
resistance in the Swiss at 74.29.
POUND:
A quasi-triple top is seen in the Pound around 159.34 and therefore it will be
key to see the Pound hold above that level into the close today. The fact that
the BOE confirmed its concern over its economy, with a surprise rate cut is
apparently not going to discourage some buying in the currency. Minor gains
ahead, as the fear off the economy is a countervailing force for the bull camp.
CANADIAN:
With the US Dollar dropping to a 4 year low and seeing no end in the slide, the
Canadian sees a direct benefit. With the SARS issue possibly going away and the
Canadian breaking out to the upside, the up trend is resumed. In order to get an
upside technical target for the Canadian one has to use the monthly charts. Next
resistance zone basis the monthly chart comes in up at 69.92 or another 80
points higher.