Japanese Nikkei index rose 1.3% while Chinese Shangai Index lost 2.4%. Hong Kong Hang Seng Index erased early losses to trade 0.2% up, and South Korean Kospi Index fell 0.4%. Australian S&P Index gained 1.1.
Investors risk appetite has been dampened by worries about a potential surge on bank lending in China, to support government's massive economic stimulus, which could help to create a stck bubble.
Buying interest emerged as crude oil dropped below 70 and the benchmark contract ended the day +0.8% higher at 71.97. Heating oil and natural gas prices also surged, by +2.9% and +1%, respectively, while gasoline price plunged -0.3%.
US Energy Department reported another week of crude build despite decline in imports. Refinery runs fell -0.171M bpd to 14.43M bpd, as refiners trimmed production in light of weak product demand. Cushing stocks rose +1.2 mmb and we believe this will render WTI time spread under pressure as Cushing is where WTI crude is stored.
Although heating oil price soared due to reduction in distillate stockpile, the draw was because refiners have shifted production from distillate to jet fuel (jet fuel stock gained +1.4 mmb). Overall, product demand remained bleak.
Gold price sank to 961.1 before recovering to 966.3, -0.4%, as disappointing ISM non-manufacturing data halted rallies halted rally in stocks and boosted USD. Dip in crude oil price shortly after inventory report also pressured the yellow metal.
Despite recent sluggishness in gold price, we retain our long -term bullishness as worldwide central banks' exit strategies from stimulus will not be smooth. In the quarterly monetary policy report, the People's Bank of China once again warned that the monetary easing by developed nations will cause serious inflation and currency volatility.
On the other hand, silver added +0.4% to settle at 14.76. We believe recent strength in silver price has been driven by investment demand as its fabrication demand remained weak.
Stock markets show mixed performance in Asia today. In china the Shanghai Composite Index plunged -3% as investors viewed current valuations too high. In Japan, Nikkei 225 Stock Average gains +0.9% despite a more than -10% slump in Nikon shares. In Australia, the S&P/ASX Index adds +0.8% after the employment report showed unexpected increase in job positions (+32.2K, consensus: -18K) in July.
CURRENCIESMarkets continue to tread water as traders are cautiously waiting for ECB and BoE announcement today. Aussie is seen firmer across the board after solid employment report. Nevertheless, it's still staying in very tight range against dollar, just as other major currencies do. Elsewhere saw Nikkei up over 1% even though DOW was mildly down by -39pts yesterday. Crude oil stays firm above 70 level as sideway trading continues while gold retreats back to below 970 level. After all, no inspirations are provided to the forex markets.
BoE is widely expected to keep rates unchanged at 0.5%. Focus is mainly on any news about the bank's asset purchase program. Contrary to market expectation, the BOE did not extend the 125B pound asset buying program (ended last week) at July's meeting. It's believed that policymakers would like to gather more information from the revised growth and inflation projections from the Quarterly Inflation Report before making a decision. Solid economic data released from UK also lowered the chance of any change to the asset purchase program in this meeting. And if BoE just release a simple statement, it could be a non-event.
ECB is also widely expected to keep the main refinancing rate unchanged at 1% again. Focus of the meeting will be ECB's stance on economic outlook and timing and/or plan to exit from non-standard measures. Trichet will probably state current risks on growth and inflation remained 'balanced' but recovery may not been seen in the middle of 2009. Concerning monetary policy, although it's widely expected that the generation-low 1% interest rate is probably the floor, we doubt if the ECB will confirm verbally.
On the data front, Australian job market unexpectedly added 32.2k jobs in July versus expectation of -18k contraction. Unemployment rate also stayed unchanged at 5.8% comparing to a rise to 6.00%. However, the positive headline data is dampened by the fact that full time employment still lost 16k in July. On the contrast, New Zealand unemployment rate rose sharply from 5% to 6% in Q2, highest in almost nine years and the biggest quarterly jump in history.
Looking ahead, other data to be watched include Germany factory orders which is expected to rise 0.6% mom in June, fall -26.5% yoy. Canadian building permits is expected to rise 1.00% mom in June. US initial jobless claims is expected to rise to 595k.
Technically, despite edging lower to 77.43, lack of follow through selling in greenback sent the dollar index back into established tight range. With 4 hours MACD staying above signal line, we're expecting further consolidation in near term. Outlook remains unchanged. Upside of recovery is expected to be limited by 78.48 resistance and bring fall resumption. As discussed before, note that decline from 89.62 is displaying a five wave structure and some sizeable rebound should be seen after completing the five wave sequence. Secondly, the fall from 89.62 is indeed viewed as the third (and also the last) leg of whole consolidation pattern that started at 88.46 and such consolidation is expected to end with the current fall. Hence strong support should be seen inside the current 75.89/77.69 support zone and we'll monitor for loss of momentum and reversal signal as the index approaches 75.89 support level.
---------------------------------------------------------------------------------Gold is still moving upwards, influenced by oversold divergence. Now, it's in the early stage of forming a bearish candlestick structure as seen on the 4h chart while RSI-RVI combination and AROON indicators with a pattern suggesting that we may see the continuation for this anticipated bearishness in the later part of the day based on the intraday basis. The daily and weekly chart also shows that, the metal is definitely overbought and some consolidations may be expected within the short term period.
The trading range for today is among the key support now at 947.00 and key resistance now at 1000.00.
The general trend is to the upside as far as 820.00 remains intact with targets at 1035.00 and 1060.00.
Support: 960.00, 956.00, 952.00, 947.00, 938.00
Resistance:975.00, 984.00, 996.00, 1000.00, 1005.00
Note: The metal is moving according to our expectations as mentioned in our morning note with a pullback towards the upside. However as far as this swing did not crossover the 975.00, we regard this as a downside corrective wave.
COMEX SILVER - U9Silver is declining from 61.8% Fibonacci level, which we defined to be the areas where the metal will show a reversal sign depending on the previous explained heavy negative divergence in addition to the technical possibility of forming [D] areas of a medium term bearish harmonic structure. This negative scenario is to resume based on the candlestick structure later part of today and the consecutive closing below the mentioned level while indicators support our negative overview.
The trading range for today is among the key support at 14.05 and key resistance now at 15.75.
The general trend is to the upside as far as 10.95 remains intact with targets at 16.85.
Support: 14.65, 14.55, 14.43, 14.25, 14.06
Resistance: 14.85, 14.96, 15.00, 15.05 15.10
Note: Based on the charts downside momentum is likely to be the theme of the day with possible targets between 14.45 - 14.10 cluster zones. Only a break of 15.15 will invalidate this downside anticipation.
COMEX CRUDE - U9Crude oil was able to achieve the awaited downside movement towards the key support, while attempting to quickly breach it, but the price rebounded to reach the upside targets for yesterday. We expect a continuing upside intraday trend targeting levels around 74.50, while paying attention to the minor resistance level at 72.10 which may stall the expected incline ; while, some negative signs appear on the stochastic. Chances of achieving the incline for today remain intact if trades remain above 70.60.
The trading range for today is among the key support at 70.20 and the key resistance at 74.50.
The general trend is to the upside as far as 47.20 remains intact with targets at 76.25.
Support: 71.15, 70.60, 69.35, 68.50, 68.00
Resistance: 72.80, 73.00, 73.55, 74.50, 75.35
Note: Based on the charts should support at 69.00 remains intact, we maintained and upside bias. The resistance level at 72.25 has been broken and hence as far as this momentum continues we anticipate an eventual test at the 74.00 resistance level.
FX
No comments:
Post a Comment