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.

Crude Rebounds, Foreign Currencies React

As the NY trading day opens, it would appear that the recent panic in the Oil markets may have run it’s course. Crude Oil is trading 89 cents higher in the electronic market at $64.24. By the close of trading yesterday oil wound up losing $3.88 per barrel on trading restriction worries and a 5.1 million barrel surge in the Oil supplies. This morning’s Oil rebound is causing a corresponding bounce in the Euro as well as a number of other foreign currencies.

Last on the Euro $1.4072 up 52/100ths of cent against our Dollar. Accordingly, the metals are trading on a firmer note. Silver gained 13 cents to $13.45. Gold is $6.00 higher at $934.00. Palladium jumped $6.00 to $261.00. Platinum edged up by $2.00 and is currently changing hands at $1175.00.

Traders in all markets will be keeping a wary eye on Oil for the balance of the week for directional guidance. On the domestic front the economic calendar is light today with only the Initial Weekly Jobless claims for traders to contend with. The estimate calls for a slight improvement in the number in first time claims for unemployment compared to last week. Look for 560,000 versus 575,000. Which is again, bad but better.

As for the stock market the Dow ended Wednesday with it’s second straight day of losses. The averages slipped another 26 points. This morning the Dow is being called to open 63 points higher; more than erasing the prior two-day loss. Corporate earnings will continue to dominate the news.

The economic calendar ends the week tomorrow with a barrage of data that includes an advance look at our Gross Domestic Product (GDP), Core PCE Inflation, and the Chicago Purchasing Managers Index of Manufacturing (PMI Manufacturing).

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.

Dollar Currency Traders are Nervous

In the currency markets we find the Euro trading 59/100ths of U.S cent higher at $1.4274. Dollar traders are nervous in advance of today’s U.S economic data.

While the calendar is thin; it contains an important report in the form of Consumer Confidence for July. Economists are calling for a reading of 49; down a shade from June’s 49.3. Consumer Confidence is the overriding driving force behind consumer spending. Spending drives our economy. The slight deterioration is giving traders reason to pause.

Today’s economic calendar also carries the Case Shiller Home Price index for May where the estimate calls for home prices to be down by 17.9% compared to last month’s annualized decline of 18.2%. It’s another case of bad but better.

Metals are trading lower this morning Silver is $13.99 down 4 cents. Gold is $2.00 lower and changing hands at $951.00. Palladium is down 1 dollar at $259.00. Platinum is $1,214.00 down 1 dollar in overnight trading.

Over in the energy sector Crude oil is flat with the last trade at $68.27 off 11 cents. In the equities market stocks as measured by the Dow Jones Industrial Average ended yesterday with a marginal gain of 15 points. This morning the Dow looks 29 points lower.

Asian markets closed a shade lower with Europe in the process of following suit. In world matters Israeli officials warned of a possible strike against Iranian nuclear facilities. The comments were made during Secretary of Defense Gates’s visit to Israel.

On the domestic front it appears that the contentious Health Care Reform Bill will not be voted on before the pending Congressional recess.

Resurgance in the Dollar

The metals eased from the morning opening highs to close only a shade higher in New York trading. Traders were quick to move to the sidelines after both the Euro and Oil gave up their gains. A resurgence in the Dollar came on the coat tails of a stronger than expected New Home Sales report which clocked in at 384,000 units. Not only did we get an 11% jump in the number of new homes sold; prices were also solidly higher. As a result the Euro slipped to the current level of $1.4215 down 15/100ths of a cent versus our Greenback.

Metal traders decided to lighten up on positions. Silver finished the day at $14.03 up 16 cents. Gold closed unchanged at $953.00. Palladium closed with a $2.00 gain at 260.00. Platinum closed at $1215.00. up $25.00.

Trading volume was moderate. Crude Oil took it’s cue from the Dollar as well as some negative technical trading commentaries. Crude is presently up a mere 10 cents at $68.16.

Over in the stock market the Dow has also turned negative over nervousness surrounding this week’s large U.S treasury auction along with only mixed corporate earnings results. Last on the Dow 9069 down 23 points.

With today’s positive home sales report behind us; traders will now focus in on tomorrow’s Case Shiller Home Price Index along with a fresh look at Consumer Confidence. In the morning I’ll have the latest estimates along with any overnight global developments.

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