Oil Breaks the $70 Psychological Barrier, Dollar Continues to Slide

The new trading week opens with the metals trading on a positive note. Silver leading the complex. With the U.S economic outlook brightening; commodities across the board are rising in the anticipation of higher demand. Silver is up 28 cents at $14.20. Gold is $2.00 higher changing hands at $956.00. Palladium is $265.00 up $3.00. Platinum is up $6.00 at $1217.00.

Metals are keying off of Oil which has broken through the $70.00 resistance level. Last on Crude $70.01 up another $1.56 per barrel. In the currencies the Dollar continues to slide against the Euro reflecting the rise in Crude prices. Last on the Euro $1.4292 up 32/100ths of a U.S cent.

Over in the stock market the Dow looks about 88 points higher on the growing positive economic sentiment which includes today’s economic data. Traders are anticipating more bad but better economic numbers with June Construction Spending expected to show a decline of .6%; better than the prior month’s decline of .9%. Wall Street also expects to see added improvement in manufacturing when the Institute for Supply Management index of Manufacturing (ISM) reports for the July period. Look for a reading of 46.5 compared to June’s 44.8.

Later today the auto manufacturers will report their July sales. Given the positive response to the Cash for Clunkers stimulus; the Street expects to see a surge in July auto sales. Truck sales are in question. This weeks trading activity will also reflect and lead up this Friday’s U.S Employment data where traders around the world expect to see a sizable improvement in the number of lost jobs. More on that later in the week. On the global front Iran continues to hold mass trials for reformist leaders charging them with attempting to overthrow the current regime.

Traders Selling Dollars in a Big Way

As the final trading week of July comes to a close the metals finished on a higher note. Silver went up 38 cents to $13.92. Gold tacked on $19.00 closing at $954.00. Palladium edged up $2.00 finishing the day at $262.00. Platinum gained $20.00 to $1201.00 per ounce. Trading volume was moderately heavy.

Once again our regular day to day barometers of Oil and Euro led the way. Today’s key event was a 1.76 cent surge in the Euro against our Dollar. While the Euro got some support from an additional $1.31 rise in the price of Oil, it was not the primary driving catalyst. According to sources in London, a powerful rumor started circulating throughout Europe regarding General Electric. The rumor indicated that GE’s financial arm GE Capital will announce the need for an additional $12-14 billion in bail out capital. (THIS IS A RUMOR ONLY) Even so, traders started to sell Dollars in a big way. Last on the Euro $1.4256.

Meanwhile Crude is trading at $68.25. Today’s economic data came in mixed with only the GDP worth mentioning. It clocked in with a smaller than expected decline of 1%. However;the prior quarter’s decline of 5.5% was revised lower to a 6.4% decline. Over in the stock market the Dow remained calm in the wake of the data and is apparently ignoring the GE rumor; at least so far. Last on the Dow 9180 up 26 points. When things get going next week traders will be focusing in the next Non Farm Payroll Report due out next Friday. On Monday the calendar contains a fresh look at Construction Spending, the ISM Manufacturing Index, and Auto Sales.  Have a great weekend.

Crude Stayed Under Pressure Overnight

Crude Oil continued to stay under pressure in overnight trading on growing concerns over potential trading restrictions in the energy markets. Click here for a better understanding of the perceived problem surrounding oil speculation: CFTC Considers strict limits in energy trading. Snipped from the article:

“The CFTC’s hearings came amid dramatic changes in energy prices and the Obama administration’s call to limit exotic derivatives trading. Oil futures traded on the New York Mercantile Exchange jumped to almost $150 a barrel last year, only to fall back to below $40 this spring before rising again to $70.”

Another snip from the end of the article: ” Steven Strongin, managing director of Goldman Sachs, one of the biggest commodities traders, said last week in a Senate committee hearing that “attempts to regulate volatility have rarely — if ever — succeeded.” “Yet they often have unintended and significant consequences,” said Strongin.”

Crude is now trading at $65.69 down another $1.54 per barrel.

Precious metals are trading lower in sympathy. Silver is $13.65 down 13 cents. Gold is $2.00 lower at $936.00. Palladium slipped $2.00 to $260.00. \Platinum is off $10.00 and trading at $1189.00.

In the currency markets Euro traders seem to be keying off the Oil /Dollar relationship rather than today’s today’s U.S. economic data where Wall Street expects to see weakening in Durable Goods. Durable Goods are the more expensive items we purchase; such as furniture, appliances, and autos. Since they are expensive consumers’ willingness to buy them is closely correlated to their economic outlook and confidence. Wall Street expects to see a .6% decline compared to May’s surprising rise of 1.8%. As for the Euro, it is currently trading down another 35/100ths of U.S cent at $1.4134.

In the stock market the Dow ended with only a marginal decline of 11 points yesterday. The insignificant decline was surprising given the pronounced drop in consumer confidence. This morning the Dow is being called to open 24 points lower on anxiety in advance of this morning’s Durable Goods report. Traders are all but ignoring the freshly announced long term alliance between Microsoft and Yahoo.

In other matters; at 2pm eastern the Fed will release it’s monthly Fed Beige Book which is an anecdotal compilation of business conditions within the 12 Federal Reserve districts. This may cause some added volatility in the final hours of stock trading today.

Tuesday Market Wrapup

Metals ended the trading day on a subdued note after Fed Chairman Bernanke’s Capitol Hill testimony suggested the Fed was keeping vigilance over inflation. The Dollar recovered early session losses on the news with the Euro now trading at $1.4179 off 31/100ths of U.S cent.

Metals lost further support as the price of Oil slipped into neutral territory with the August futures contract set to expire today. Last on crude $64.02 up 4 cents. As a result Silver finished the New York session at $13.53 off 12 cents. Gold fell $4.00 ending at $948.00 per ounce. Palladium was our lone exception closing at $256.00 up $1.00. Platinum closed near the lows at $1175.00 off $14.00.

Stocks turned lower during the past hour as recent leaders such as financial and technologies came under profit taking. Traders figure that after 6 straight days of advance and with the pending release of Apple and Yahoo earnings due after the close; this might be a good time to step to the sidelines. As for tomorrow the calendar remains idle with the exception of the Weekly Oil Inventories.

Tuesday in the Currency Market

In the currency markets the Euro is trading flat at $1.4208; off 2/100ths of U.S cent. Crude Oil is a shade higher at $64.14 up 16 cents per barrel. Oil gained 42 cents yesterday. In stock trading the Dow ended yesterday’s session with a 104 point gain. Early indications are calling for an 11 point rise this morning. Before the markets open we will get earnings form Dow components Coke and Caterpillar which may well change the opening indication. Things are quiet for the moment on the geo-political front.

Metals are trading mixed with a slight negative bias this morning. Traders seem to standing on the sidelines given today’s idle economic calendar and little action in the Oil and Euro currency markets. Silver is changing hands at $13.56 off 9 cents. Gold is unchanged at $948.00. Palladium is $256.00 up $1.00 per ounce. Platinum is $15.00 lower with the last trade at $1175.00. Today’s Capitol Hill appearance by Ben Bernanke is having little to no impact on trading with much of the Chairman’s testimony already having been leaked to the press.

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