Futures Point To A Weaker Open
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
-4 The Treasuries wasted not time in reacting to the better than expected US
economic information released Thursday. The aggressive nature of the slide was
certainly fostered by the magnitude of the bounce off the lows at mid week and
because the stock market solidified the improvement in the numbers with a
euphoric reaction of its own. Like the copper market, the Treasury market has
certainly factored a favorable set of numbers this morning.
STOCK
INDICES
OVERNIGHT
CHANGE to Â
4:15 AM
:S&P+140
DOW +29Â NIKKEI +48 FTSE -13Â Despite
the sharp rise off the numbers Thursday, the charts aren’t exactly flashing a
bullish signal this morning. In fact, it would appear that the stock market is
coiling for a major decision. Certainly the economic information Thursday
morning bailed out the bear camp from a deteriorating macro economic outlook,
but in order to push sentiment forward on the recovery view, the jobless
recovery threat has to be mitigated.
FOREIGN
EXCHANGE
Dollar:
The international Press this morning is really skeptical of the Dollar rally. In
fact, the world is quite surprised in the Dollar performance but as long as the
US
economic report slate throws off a positive tilt, the Dollar might remain in
favor. However, the penalty of seeing disappointing numbers could be quite
severe. With the Dollar rising from 94.83 to this morning’s high of 97.72,
there is certainly a partially overbought condition in place. The bulls in the
Dollar could point out that early in the week, the Dollar managed to make gains
in the face of soft
US
numbers. In other words, maybe the Dollar is in an uptrend regardless of the
information thrown off by the
US
economy! In the overnight action, the Dollar Index managed to rise above an 11
month old down trend channel resistance line and that might kick some technical
systems into the Dollar on the long side. From a macro economic perspective, the
Dollar seems to be defying gravity and will need to see decent numbers today to
entrench the bull tilt.
EURO:
There would seem to be little to prevent the Euro from sliding down to the July
lows of 110.93. Even with the Euro zone posting the 1st rise in manufacturing
PMI since February, the trade is uninterested in the long side of the Euro. In
our mind, the market is anticipating that the
US
economy
is simply going to grow faster than the Euro zone and nothing will change that
view short of a “badâ€
US
payroll
report. It could take a rally back above 112.26 to turn the down trend off in
the Euro.
YEN:
A minor rise in Japanese auto sales seemed to diffuse some of the down action
seen overnight. With the Yen making a new low for the move overnight, the bears
still seem to have control. We would have to think that the BOJ will not be
poised to act today, because the volatility off the
US
payroll
report could simply overwhelm their efforts. Therefore, it might be possible for
the Yen to bounce a little more than most traders would expect, but a big bounce
only takes place if the Dollar fails on its own accord.
SWISS:
The Swiss is simply in a downtrend. Early this week a Swiss Bank asked the Swiss
government for help in bailing out Swissair and that shows there are ongoing
problems in the Swiss economy. Near term downside targeting in the Swiss is seen
today at 72.46, but it would take a rise back above 73.30 to turn the trend
around.
POUND:
A slight rise in the
UK
manufacturing PMI for July is supportive to the Pound, but the
US
numbers
are all encompassing this morning. It would not be surprising to see the Pound
slide to 159.48 today if US numbers are as expected, or
better than expected. If US numbers are softer than expected, the Pound should
be expected to forge the biggest gains against the Dollar.
CANADIAN:
Today could be a very important day in the determination of the trend in the
Canadian. The chart setup in the Canadian doesn’t appear to hold much hope.
Consider buying 2 August Canadian 70 puts for 14 ticks; they have 7 days until
expiration!
METALS
OVERNIGHT
CHANGE to 4:15 AM:GLD-1.60 ,SLV+2.5Â ,PLAT-0.70,
CP +25 Â London Gold Fix $353.05 -$2.70 LME Copper Warehouse stks
612,425 tns -2,475 tns Comex
Gold stks 2.74 ml oz -103 oz Comex
Silver stks 106.5 ml oz -4,691,604 oz OVERNIGHT: No
clear direction in Asian gold possibly because $ range was tight
GOLD:
The gold and silver markets behaved impressively yesterday as the sharp rise in
the Dollar was apparently offset by the improved outlook for the
US
economy.
In other words, gold gets support from the hope for a stronger economy and that
means that gold is becoming more diversified in its market focus. The fact that
the US Dollar is stronger is a drag against gold, as is more news that gold
production is on the rise.
SILVER:
The silver market certainly showed Thursday that the outlook on the economy is
an important fundamental for the bull camp. Traders should also note that COMEX
silver stocks fell by a massive 4.69 ml ounces
overnight and that could suggest something major developing if more declines are
noted. The large drop could simply be a bank moving supplies around and that is
why more declines are needed to really give the market a lift.
PLATINUM:
Maybe gold traders are really concerned and are stepping aggressively into short
platinum protection as platinum is technically in a breakout on the charts in
the overnight action. The next support level in the October platinum comes in
today down at $670.00. Â
COPPER:
The copper market remains poised in the upside breakout zone and is certainly
being lifted by the favorable view toward the
US
economy.
We mentioned that because the copper market will have to clear an important
monthly payroll report this morning, without seeing the optimism toward the
economy tainted. Chinese trade stories from Dow Jones suggested that fund
traders pulled capital from soybeans and pushed the money into copper futures.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE +10Â ,HEAT+44Â
,UNGA+28 Â The most important development seen Thursday might not
have come from the OPEC meeting, as the outlook for the US economy improved and
the head of the IEA was a little ticked off that OPEC didn’t respond with
expanded production, considering the lofty price of oil. In other words, the
market has reasonable concerns that energy demand might already be on the rise
and that given the current world inventory situation, even higher prices could
be ahead.
NATURAL
GAS
We are
very impressed with the action Thursday. Not only did Natural gas manage to
completely discount a large injection reading, but it also ignored early
negative technical action to close higher.