Futures Point To A Strong Open
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM :BONDS +3 The bond market is doing a very good job of
standing up to what could easily have been an aggressively selling wave. It
seemed like the Note auction provided a countervailing force to the selling
pressure Thursday, but that type of support ran its course quickly. The fact
that the US stock market didn’t sustain all the gains on the session, might have
given Treasury bulls some additional hope but over time we have to think that
equity price action is going to sit on Treasury prices.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+180 DOW +22 NIKKEI +254 FTSE +14 The Nikkei soared
overnight in response to the improved outlook toward the US economy. However,
some economists are noting that Japan (a significant economic engine in its own
right) is beginning to show signs of a true recovery after 10 years of
recessionary conditions! In other words, the prospect of rising prosperity in
Asia, is something that could accentuate the improvement being seen in the US.
However, we are still a little disappointed with the performance of prices, as
the market seemed to hesitate over the last three sessions, rise sharply and
then was unable to hold all the gains.
FOREIGN EXCHANGE
EURO: The
correction appears to have run its course. Seeing an improvement in the US jobs
situation put pressure on the Euro but the market rejected that weakness and
appears to have a firm bottom under it. Near term upside targeting in the Euro
comes in at the recent high of 118.40. As the US Dollar returns to the lows, the
Euro should make a new high.
YEN: With
another aggressive rise in the Nikkei and very optimistic talk above the
Japanese recovery, there seems to be fewer penalties to the rise in the Yen. In
fact, maybe the recovery in Japan can take a significantly higher Yen. We doubt
that the BOJ is going to give up but they might also see near term intervention
as useless. On the other hand, if the market can mount massive gains in the Yen,
the bank might have little choice but to throw money at the market. Significant
upside until the Yen reaches 95.00.
SWISS:
After solidifying chart support and correcting its technicals, the Swiss seems
primed to return to the recent highs of 76.74.
POUND:
The Pound is really separating itself from the pack, by resisting higher action.
If the Dollar falls to new lows and the Pound doesn’t rise above 166.20, we will
suspect that the UK is doing light intervention. However, it would be very
surprising for the December Pound to fall below 164.87 in the current
environment.
CANADIAN
DOLLAR: A nice test of chart support resulted in the market repelling the
selling and seeing a number of buyers come in. The odds of a new high for the
move are good.
METALS
GOLD: It
would seem like gold market has managed to repel some of the selling pressure
emanating from the aggressive down day in the US session Thursday. It was clear
that the rising Dollar sparked the selling pressure in the gold Thursday but it
should be noted that the Dollar gave up a portion of the gains into the close.
Overnight the Dollar has set back slightly from the Thursday US close and that
could be responsible for the marginally higher overnight gold trade.
SILVER:
The silver market is lucky to have avoided a more aggressive liquidation
Thursday. It would appear that silver rejected its washout even more soundly
than did the gold market. It is possible that some of the industrial demand
aspect is beginning to provide silver with a layer of support.
PLATINUM:
The up trend pattern lives on, as the corrective tilt in platinum appears to be
repelled. In order to turn the trend down, January platinum needs to see two
closes below the channel at $718. It is possible that the sellers are just too
afraid to attack this market.
Chinese
copper stocks increased by 13,746 tons and that could serve to accentuate the
profit taking sentiment fostered in the COPPER: Chinese market over the last two
sessions. We would have to think that the US copper market is overbought and
vulnerable to a minor setback but one does have to remember that the fundamental
setup is pretty solid. In other words, seeing physical buyers balk at prices
might not be a reason to dump futures prices aggressively.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM :CRUDE -13 ,HEAT-30 ,UNGAS-141 While the Press claims that
the rally Thursday was inspired by the expectation for cold winter weather, we
have to think that the gradual improvement in the US economy and the Nigerian
threat were also factors behind the rise. The fact that natural gas
prices
soared in the face of neutral or slightly negative inventory readings gives
credence to the cold winter catalyst.
NATURAL GAS
The weekly injection report came in just a touch above the middle of the
expected range. In fact, the 75 bcf injection did manage to reduce the annual
deficit, but yet the market managed a significant upside price adjustment.