Dollar Continues to Weaken on Inflationary Worries

Markets continued to strengthen in overnight activity in the wake of Ben Bernanke’s words of assurance that the recession appears to be behind us. His assurance was later confirmed by legendary investor Warren Buffet. (hmmm)

The Dollar continues to weaken on inflationary worries with traders holding their breath in advance of this morning’s Consumer Price Index report. Currency and metals traders are still thinking about yesterday’s surprise surge in the Producer Price Index. Wall Street expects the Consumer Price Index (CPI) to clock in with a rise of .3% versus last month’s reading of 0%. Traders are whispering the rise might be higher than the estimate. Last on the Euro $1.4679 up 44/100ths of U.S cent.

As we look overseas we find Silver up another 40 cents at $17.30. Gold is $12.00 higher at $1016.00. Palladium is $296.00 up $6.00. Platinum is $10.00 higher and changing hands at $1335.00.

Over in the energy markets we find Oil trading flat to a shade lower in advance of today’s Weekly Inventories. The estimate calls for a decline of 3 million barrels, but traders are taking no chances given the recent surge in the price of Oil.

Over in the stock market the Dow ended yesterday with a gain of 56 points and appears to be headed for another opening gain of 46 points. Today’s economic calendar also contains the latest look at U.S. Industrial Production where stock traders expect to see a rise of .6% compared to last month’s rise of .5%. In world matters Chinese officials indicated that they are pushing for a quick negotiated solution to the tire trade spat with the U.S.

Today’s economic calendar:

U.S. Consumer Prices
U.S. Current Account
U.S. Industrial Production
EZ Consumer Prices
U.K. Employment

Conflicting Beige Book Report

Stocks appear to be taking a breather this morning after yesterday’s 49 point gain in the Dow Jones Industrial Average. Traders are playing close to the vest after having had time to dissect yesterday’s Fed Beige Book where we got conflicting snippets like, retail sales are flat, loan demand continues to be weak, slight improvement in residential real estate, commercial real estate is weak, but overall economic activity seems to be stabilizing.

Traders are also standing pat in advance of this morning’s economic data where the Weekly Initial Jobless Claims are estimated to clock in at 560,000 versus last week’s 570,000. The July Balance of Trade is expected to show a deficit of $27.3 billion compared to June’s $27 billion. Given the recent precipitous decline in the value of our Dollar you might expect to see the next two reports show a significant easing in the deficit. Remember a weaker Dollar makes our exports more attractive to overseas buyers.

As for the Dow it appears to be headed for a 13 point lower open. The Euro eased to $1.4522 down a third of a U.S cent. Crude appears to be defying the stronger Dollar with traders awaiting today’s Weekly Oil Inventories where the latest estimate calls for a 1.8 million barrel decline in available Oil supplies, and a 1.5 million barrel drop in Gasoline. Last trade on Crude $71.68 up 37 cents.

As for the metals we find them flat to lower with Silver trading at $16.11 off 34 cents. Gold is $4.00 lower at $985.00. Palladium is $292.00 up $2.00. Platinum is off $5.00 and changing hands at $1279.00.

In other matters; President Obama laid out his new Health Care proposal in a one hour speech last night in front of the full Congress and the nation. While most agree that he did a masterful selling job; initial reaction shows no softening along party lines.

Today’s economic calendar:

BANK OF ENGLAND Rate Decision (volatile market event)
U.S. Initial Claims
U.S. Trade Balance
BANK OF CANADA Rate Decision (volatile market event)

Will PMI Break 50? Traders Waiting to See

In the currency market, last on the Euro $1.4274 down 76/100ths of a U.S cent. The Dollar is trading on a firm note with Wall Street expecting to see further improvement in the manufacturing sector this morning. The Chicago Purchasing Manager’s Index of Manufacturing (PMI) is expected to clock in with a reading of 47.2, up again from the prior month’s 43.4. Some traders think we might actually break the 50 level. A reading of 50 or higher represents expansion in manufacturing sector. This would be a very positive economic signal.

Metals are trading flat to lower this morning after last Friday’s sharp gains. Traders are pointing to a 6% decline in Chinese stocks; and a bounce in the U.S Dollar for this morning’s lower levels. Silver is down 10 cents at $14.65. Gold is $3.00 lower and trading at $954.00. Palladium remains $1.00 higher with the last trade at $287.00. Platinum is $1234.00 down $11.00.

Over in the energy markets the price of Crude is down $1.66 per barrel on nervousness surrounding severe Chinese stock market losses. Last on Oil $71.08. U.S stocks finished last Friday with a 36 point loss snapping an 8 or 9 day run of positive closes. On an overall basis the Dow gained 38 points for the whole of last week. This morning the index is being called to open 62 points lower in sympathy with Asian and European markets.

On the geo-political front; Japanese voters ushered in a new era in Japanese politics with a sound thrashing of it’s Liberal Democratic Party at the polls. Voters have decided to turn to new leadership after 50 years of business as usual.

Today’s economic calendar:

U.S. Chicago PMI
U.K. Markets Closed

Consumer Confidence in Third Month of Decline

Metals closed the final New York trading day of the week higher. The metals continued to react positively to a lower Dollar sending Silver up 54 cents to $14.75. Gold surged $11.00 to a closing price of $957.00. Palladium ended the day and week at $286.00 up$4.00. Platinum gained $1.00 closing at $1238.00. Trading volume was light to moderate.

The Euro maintained most of it’s early session gains after the Michigan Sentiment Index of Consumer Confidence clocked in at 65. While the number was 1 point higher than the estimate; traders took a broader view pointing to the fact that index has declined for three straight months running. The Euro is 83/100ths of cent higher versus our Dollar at $1.4350. This change represents the price difference from yesterday’s wrap up level through today’s wrap up.

Stocks also turned lower in face of the Sentiment numbers supporting our theory of positive economic data addiction. The Dow is currently down about 47 points having been down almost 80 at the session lows.

Meanwhile the price of Crude was like a roller coaster throughout the day but is presently up 44 cents at $72.93. When we return on Monday traders will get a fresh look at manufacturing when the Chicago Purchasing Managers Index of Manufacturing (PMI) hits the tape.

Monday’s economic calendar:

U.S. Chicago PMI
U.K. Markets Closed

Markets Lifeless as Traders Await Today’s GDP Reading

Markets are trading or expected to open flat this morning with traders expressing nervousness over the pending 2nd Quarter release of our Gross Domestic Product (GDP). Despite all the optimism having been thrown about in the wake of recent economic data; traders will face the stark reality of what it all means when the GDP gets released this morning. GDP is the sum total of all goods and services produced in our country. In other words it’s the bottom line result of all our economic data.

The current estimate calls for a preliminary 2nd Quarter reading of -1.5%. This is an unfavorable comparison to the first quarter where our economic contraction was only 1%. If correct it will have traders scratching their heads.

Today’s other report of significance will be this week’s Initial Jobless Claims. Wall Street expects to see a number of 565,000 versus last week’s 576,000. Core PCE Inflation is expected to have remained unchanged at 2%.

As for the markets; Silver remains unchanged at $14.25. Gold is $2.00 higher at $947.00. Palladium is $283.00 up $1.00. Platinum is flat at $1235.00.

Our day to day barometers are mixed and quiet. Crude is 52 cents per barrel lower at 70.92. The Euro is 28/100ths of U.S. cent higher at $1.4258. Over in the equities market the Dow finished the Wednesday trading day with a 4 point gain. This morning the index is being called to open 2 points lower.

On the geo-political front it appears the predicted public uproar surrounding the planned visit to New Jersey by Libya’s Moammar Gadhafi has already started according to a front page article in today’s Wall Street Journal. It’s sort of reminiscent of Iran’s Ahmadinejad visiting New York City.

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