Futures Trying To Stay Green
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS -10 — Draw a wide range around the December bonds for the coming week’s
action. Given the wide uptrend channel of the past six months, the critical jobs
data to be released this morning could cause prices to fluctuate wildly, without
altering the trend. The possible range in the December bonds today is seen as
109-11 to 113-15, with the bias still pointing to the upside. If the bonds were
totally poised for a soft number today, we would be concerned about a top, but
in fact the expectations for the non-farm payrolls were adjusted only slightly
lower this week.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM:
S&P +510;
NIKKEI -93; FTSE +37 — While the
posted some decent economic numbers overnight, the world is having a tough time
discounting the war threat. Overnight energy prices soared to another round of
new contract highs and that is certainly an undermine for the stock market. We
have to give the market credit for weathering a significant amount of negative
news this week, without even more damaging results but today we would be
surprised to see the market weave its way through without some pain.
FOREIGN EXCHANGE
Dollar: A major decision day
today, with the
improving its
odds of holding 106.00 support with the strong factory orders
release Thursday. However, for the Dollar to weather the economic report
turbulence today, the payrolls have to be positive or at least showing a 20,000
gain. The Dollar doesn’t seem to be overly impacted by the escalation of war
talk and that is possible because of growth forecast cuts by the Euro zone. We
have to think that the fundamentals could easily send the Dollar below support,
but for some reason our gut suggests that the Dollar will hold and avoid
tracking to the July lows. However, all
bets are off if the jobs reading fails to show a positive figure.
EURO: The
EU lowered its 4th quarter forecast to growth of only .3% to .6% and that is a
very low hurdle for the
to come in above. The 3rd Qtr EU growth was also lowered by almost .5% and that
simply takes some of the heat off the Dollar. Also undermining the Euro this
morning were slack Industrial production readings out of
for July. The German Industrial production reading actually contracted by 1% and
that means that the
economy is looking much better comparatively. Near term support is 98.47 and
that could be violated if the
payroll report shows a gain of more than 40,000 jobs.
YEN: The
Japanese stock market declined because the trade thinks that the government is
complacent in their efforts to battle a return of deflationary conditions.
Remember the Japanese economy is significantly impacted by high-energy prices
and that situation might weaken the currency over the coming weeks. If the US
Dollar manages to hold higher action after the payroll release, we think that
the Yen will correct to 84.00.
SWISS:
From the early setup, it would seem that the Swiss is also poised to correct but
only if the US Dollar comes through the report without a significant reaction.
Near term downside support in the Swiss is seen at 67.50 and 67.00 if the
report is better than expected.
POUND:
The
released an impressive industrial production for July, and that stands above
most of the other reports released this morning as a beacon of strength. If by
chance, the Dollar falls through 106 today the Pound will be the primary
benefactor. We don’t think the
numbers can sink the Pound today but they could stoke the rally in the Pound
easily.
CANADIAN:
The Canadian unemployment rate declined to 7.5% from 7.6%, with jobs increasing
by 59,400 jobs. Therefore, the Canadian should respect the recent lows.
Unfortunately, the flack off the no-hike early in the week, keeps the Canadian
from benefiting directly off the strong payroll report. The report nonetheless
helps firm the bottoming pattern.+
METALS
GOLD:
One can’t argue with the technical breakout action this week as the bull camp is
certainly being cheered on by the war talk. The Dollar was also predominately
weak and that fostered some additional long interest. We suspect that the market
is a little overdone but certainly not vulnerable to a massive correction unless
of course
suddenly agrees to allow weapons inspectors in the country.
SILVER:
While gold might be unfazed by the monthly payroll reports, silver should be
impacted, especially if the report is a surprise. Under an “as expected report”,
we think that silver will follow the lead of gold, whereas a soft report could
inspire silver to fall toward the bottom of the recent
consolidation around $4.455. If by chance the payrolls were much
stronger than expected and gold climbs above $323, then the December silver
might breakout above resistance $4.59.
PLATINUM:
A little more optimism toward the economy was seen off the factory orders and
auto sales figures and therefore platinum forged a
consolidation above the 534 low. However, while October platinum
might be capable of returning to 560 it will not be able to hold above 540 if
economic news is weak. Platinum traders need to watch the
bond market as a new high in bonds might mean that platinum prepares to fall
back into the 540 to 520 trading range seen back in July.
COPPER:
The
copper exchange continues to post some significant declines with another
7,612-ton decline posted in the latest week. Therefore, it would appear that
Chinese efforts to firm up prices are already underway and could have some
impact on world prices soon. Unfortunately, copper prices won’t forge a low and
plow through overhead resistance without better projections from the US economy.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM :CRUDE +50 ,HEAT+117 ,UNGA+84 The stats on OPEC production
continue to flow from OPEC and other sources and they would all seem to be
slightly bearish but the market is pre-occupied. In fact, the macro economic
case seems to be so poor at times one has to wonder why anyone is concerned
about demand.
NATURAL GAS
The
weekly inventory report showed a rather sizable increase in stocks of 65 bcf and
that could have hindered the natural gas market if other fundamentals weren’t so
strong. The trade reported less short covering and more outright buying, so it
might be that the anxiety toward
is driving natural gas prices.