Futures Point To A Weak Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
-1 — While the bonds have been respecting a well defined up trend channel, the
overnight low in the June contract came close to violating several key points.
Furthermore, it would appear that the trade is backing away from the bonds at
levels above 114-00, as both volume and open interest have contracted since the
bond pulled above that level. The unemployment report expectation would not seem
to be that intense today, as the expectations don’t call for much change.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-410, DOW -36,
NIKKEI -225, FTSE -53 — About
the only thing missing from the current downtrend pattern in the stock market is
panic. However, while it would appear that the
is still progressing toward war at some time in the near future, it would also
seem that we are not beyond the point of no return. The
President once again made it clear that the
is going to disarm
regardless of the UN stance, and that is certainly an impetus to dump more
stock.
FOREIGN EXCHANGE
DOLLAR: The temporary respite from war selling in the Dollar was
short lived. In fact, even if the weapons inspectors come back to the UN today
with favorable reports of Iraqi cooperation, we can expect the White House to
discount those hopes and say that
still has to disarm. Even when the President was pressed to explain why the
thought that
wasn’t disarming, when
and
seem to think that
is disarming, the President had no fresh intelligence to report. Therefore, the
world is even more opposed to an attack and we are certain that the forces
opposed to war will see any Iraqi cooperation, as a reason to avoid war. Right
or wrong, the
is seen as wrong and it isn’t providing the evidence necessary to alter world
opinion. Therefore, the Dollar remains the whipping post and more declines are
anticipated. In fact, if the
payroll numbers show weakness and create anxiety toward the
economy, there will be a double pressure on the Dollar. Even if the
numbers are much better than expected, the trade will probably discount them.
Next downside target in the Dollar is 97.00. If there is a bounce, off a
potential delay in the attack, that bounce should be sold.
EURO: The euro is gaining ground this
morning because of the Blix testimony, as the trade
assumes that the UN inspector will say that
is coming around and that means the French and German attitude is right with the
world and the Euro benefits as a result. Next upside target in the Euro is
110.90 but eventually the Euro pricing is going to be nearly as extreme as $40
crude oil pricing. In other words, the Euro might have as much as 400 points of
war premium.
YEN: With the Dollar apparently ready for
another downward slide, the Yen is potentially prepared for an upside breakout.
The BOJ was out overnight with a number of statements, most of which centered on
providing stimulus in the event of a war and also making it clear that the
Japanese economy is still in a very precarious position. In any regard, as the
build up to war continues, money looks to flow toward the Yen. Near term
resistance is seen at 85.60.
SWISS: Open interest shot up in the Swiss
when the Swiss rose above 74.00 and that suggests that the market has plenty of
buying reserve. We also get the sense that the Swiss could be stronger than the
Euro because of the economic concerns toward the Euro zone and the potential
that Euro zone countries are becoming mired in the UN debate. Therefore, new
contract highs are expected in the coming sessions.
POUND: We think the
Forex market is sensing that the
might separate from the
position on
and that is why the Pound is starting to rise. The
showed the ability to offer up compromises and that is a positive to the
currency. Near term resistance is 161.46 but if the
reconfirms their desire to attack, that could stem the rise quickly.
CANADIAN: The monthly payroll report from
showed a total employment gain of 55,200 and the unemployment rate was
unchanged. Therefore, the Canadian economy stands out as the strongest economy
in the G7 and a flight to quality currency. Therefore, expect gains to ramp up,
with a return to the 70.00 level possible in the coming month! Flight to quality
and a growing economy is a rare commodity in the world!
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +0.00, SLV
+1.7, PLAT +3.00,
CP +10; London Gold Fix $356.60,
+$3.35; LME Copper Warehouse
stks
845,900 ton, +1,925 tns;
Comex Gold stocks 2.32 ml, Unchanged;
COMEX Silver stks
110.4 ml oz, Unchanged; OVERNIGHT: Lower price action suggests Asia isn’t that
focused on UN issues
GOLD: Apparently the Bush Speech has done
little to stimulate aggressive long side interest, even with the President
suggesting the
would still attack regardless of what the UN decision on the Iraqi matter is. We
think that some gold longs are disappointed that a delay of a week and possibly
even 4-5 weeks might be seen. In fact, looking at past history, we would expect
Saddam to really turn up cooperation just in an effort to stall the threat of
war.
SILVER: The silver market continues to
discount the threat of slackening physical demand and concerns for the economy
and that is mostly because of persistent positive leadership from gold. We doubt
that the net spec long position expanded that significantly over the last week,
as the silver market is just barely above the price level registered in the last
COT report. However, since the February high, silver prices have slid 30 cents
and both volume and open interest contracted significantly and that should leave
silver in a position to breakout up, with the right information.
PLATINUM: Like gold, platinum is a little
disappointed in the political developments of the last 24 hours and with the
weapons inspectors set to testify at the UN it would seem that the platinum
might be headed for a minor corrective slide. Since the weapons inspectors have
already suggested that
is showing more cooperation we can hardly expected to see anything today but a
call for more time. A call for more time should serve to push some speculative
longs to the sidelines and see April drop to 681.
COPPER: Supposedly
and
copper prices were lower again overnight and that could leave the
session in a negative setup.
Shanghai
copper stocks increased by less than 1,000 tons and that is
insignificant, but slightly negative. The US copper chart would seem to suggest
that more losses are to be expected with at least a retest of the February lows
seen down at 74.40.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE
+3, HEAT +84, UNGA
+60 — The energy complex wasn’t really sure which way it wanted to head
Thursday, as it appeared that the US President was preparing to deliver an war
ultimatum but at the same time the UN was a flurry of activity with a number of
"compromise" plans that could be negative to energy prices. In most of the
rumored UN compromise plans, it appears as if
will be given yet another chance to disarm.
NATURAL GAS
The
weekly inventory draw was 176 bcf, which was mostly
expected but was still moderately above the historical average for the end of
February. While the natural gas market will continue to take its lead from the
regular energy complex, we have to think that the internal fundamentals in
natural gas have temporarily peaked.