Weaker Oil, Stronger Dollar

Metals are beginning the new trading week on a lower note reflecting weaker Oil, stronger Dollar, and in reaction to talks of the International Monetary Fund (IMF) selling Gold. Talks of the IMF selling Gold occurs like clockwork every year.

Stock an metals traders are also standing on the sidelines in advance of today’s Leading Economic indicators report. With that said we find silver 30 cents lower at $16.73. Gold is $11.00 lower at $997.00 per ounce. Palladium remains unchanged at $299.00. Platinum is $1310.00 off $10.00.

Over in the currency markets the Euro slipped 53/100ths of U.S cent to $1.4662. Energy traders are facing lower Oil this morning with the last trade at $70.53 down $1.51 per barrel. Oil gained $2.75 for the whole of last week.

In the stock market the Dow is indicating a 44 point lower open after last week’s total gain of 214 points. Traders are once again showing signs of worry regarding the extent of the stock markets run up relative to the underlying economic fundamentals. The question looming is; are we getting ahead of ourselves? While today’s Leading Economic Indicators are pointing to a rise of .7% compared to the prior reading of up .6%, traders are not so sure that the next 6 months will continue to show economic improvement.

In world matters President Obama is signaling yet another military strategy shift. In a TV interview the President voiced skepticism that more troops in Afghanistan would make a difference. Up until now the military officials expected a rubber stamp endorsement for added troops by the administration.

Today’s economic calendar:

Canadian Retail Sales

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 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.

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