Futures Point To A Slightly Weaker Open
METALS
GOLD:
Apparently some Chinese jewelry demand was detected around the lower levels
overnight and that might serve to keep some of the longs in place in the
US
market.
The Asian trade confirms that the focus remains on the direction of the Dollar
and with the Dollar slightly lower today, we suspect that gold will be able to
respect chart support. We still don’t see a near term catalyst to reverse what
appears to be a downtrend channel in the gold market.
SILVER:
Even with gold sloppy, the silver market has managed to maintain recent gains
and that is a major positive. In other words, the silver market is garnering
support off the hope for macro economic recovery and the anticipation of
improved demand. We would prefer to get confirmation of improved physical demand
by seeing a decline in COMEX silver stocks but that hasn’t happened yet.
PLATINUM:
The platinum market disappointed the longs with its 3-day correction off the
recent highs, especially since the stock market has been providing positive
direction. Trend line support in October platinum comes in close to the market
today at $644.7. Â
COPPER:
The US copper market comes into the session this morning 235 points above the
recent low and with indications that the Chinese are only moderately interested
in copper at current prices.
Shanghai
copper
prices were lower overnight and after the physical interest documented down
around 75.00 there has been little follow through interest. Strong performance
in other base metals prices has to help support copper but what copper really
needs is for macro economic numbers to be consistently improved.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE +9Â Â ,HEAT+11Â
,UNGA+23 Â The energy complex managed to recover after early weakness
Tuesday off ideas that OPEC had indeed reduced production in June and because
Nigerian Labor leaders hinted that they would ask for a wage increase 9in an
effort to offset excessive energy prices) it is clear that the Nigerian issue
hasn’t been totally put to rest. Because OPEC is still over producing by roughly
453,000 barrels per day, the 319,000-barrel per day June reduction is
countervailed.
NATURAL
GAS
Apparently
the natural gas market is getting some support off hurricane Claudette and
because the NWS is forecasting some hot temps for the July 14th through 18th
time frame. The trade is partially deflated off the Press reports of the record
build in storage in the month of June.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS +16 We have to think
that the bear camp in Treasuries took a little shot across the bow Tuesday, with
the Richmond Fed readings. In other words, with the bonds 8 full points off the
June 16th high and within striking distance of the March highs, we suspect that
the rate of decline in Treasuries will slow. In fact, we think that bonds and
notes might find the information to check up and consolidate around the recent
lows.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P-340
DOW -29 NIKKEI +92 FTSE -4Â The stock market seems to be prepared to open a
little weaker this morning if one looks to the European market action. However,
we detect an undercurrent of optimism off the increase in merger activity.
Therefore, some of the trade might be a little concerned about stepping into
fresh longs, with prices near contract highs and a series of key earnings
reports due out before the end of the week.
FOREIGN
EXCHANGE
DOLLAR:
Just like the
US
stock
market the US Dollar might be a little overbought and lacking the necessary
fundamental information to prevent a temporary slide. With the US Administration
taking hits off the “intelligence” behind the decision to attack Iraq,
soft numbers from the Richmond Fed and concern that US corporate earnings might
not justify recent equity price gains, the Dollar is vulnerable to a rising tide
of profit taking. Near term downside targeting in the Dollar is the bottom of
the holiday gap of 95.14. Some traders suggest that the Dollar will find support
closer in at 95.70, especially if the
US
stock
market remains in favor. In fact, we would think that the
US
equity
market is the most critical near term factor for the US Dollar. Therefore, the
Dollar goes in the same direction as the
US
stock
market.
EURO:
While we think the Euro is only capable of a near term technical bounce, we do
have to respect the bull camp for its dominance of the last 2-years. Therefore,
it would not be surprising for the Euro to rise back above 114.20 in the coming
three sessions. However, as mentioned in the Dollar section, the most critical
driving force for the Euro might be the direction of the
US
stock
market. It is clear that “numbers” haven’t been driving the Euro down
but “sentiment” and higher
US
equity
prices have been driving the Euro down. With German trade surplus readings
rising and the
US
equity
market showing a little early weakness, we have to expect a minor up tick in the
Euro today.
YEN:
The BOJ is out this morning deflecting concerns over the recent rise in long
term rates. The BOJ is also suggesting that an improvement in the Japanese
economy isn’t going to deter the central bank from its attempts to keep the Yen
down. Therefore the Yen will probably continue to respect the recent
consolidation highs just above 85.00.Â
SWISS:
A sharp reversal overnight would appear to be more than a simple technical
bounce in the Swiss. In fact down trend channel resistance lines would be
violated with a rise above 74.10 in the September contract.
POUND:
UK
trade
deficits widened and the Pound would seem to have made a very poor trade on the
charts overnight. However, as long as the Pound manages to avoid a close below
162.00 we don’t see a wholesale liquidation. In fact, aggressive traders might
buy the Pound at 162.45 and look to risk the position to 161.30.
CANADIAN:
The Canadian made a lower low move with the low Tuesday and that undermines the
bull camp. We think the September Canadian is vulnerable to a bigger break but
that won’t happen comes if the
US
stock
market falls off sharply.