[Base Metal]Metals and Currencies Daily Market Watch July 28, 2015 - Emkay Commotrade

By Paul Ploumis 28 Jul 2015 Last updated at 06:30:23 GMT

Macro Headlines

•Chinese market closed down 8.5%, to its biggest one day fall since February 2007 on collateral debt obligations

•U.S. durable goods orders jumped to 3.4% in June from -2.2% in May

•Germany business confidence rose to a seasonally adjusted 108.0 this month, up from a reading of 107.5 in June and beating forecasts for 107.2

•Australian dollar falls below Singapore dollar for the first time since 2009 added, industrial commodities dragged down

•Investor focusing on Fed meet as it’s expected to move towards first rate hike since 2006

Currencies

•USDINR: The Indian rupee dropped sharply on buyout US durable goods orders and awaiting for Fed rate decision on rate hike which due tomorrow. Dollar index is stabilized around 97 levels on euro, GBP strength but overall bullish trend towards 100 is still intact until rate liftoff on cards. Indian equities selling on china concerns added bullish bets for dollar. The rupee opened at 64.1400 per dollar, as against yesterday’s close of 64.1850. As per the earlier forecast USDINR buying likely to continue or the target of 64.20 followed by 64.80-65 levels in near term.

•EURINR: The Euro gaining against major pairs as debt issues in the region have eased and European markets started to resume to normalized mode after Greece debt deal. As per the earlier forecast, EURINR uptrend is still not over, buying on dips likely to be continued for the target of 70.90. Fed meeting may bring some corrections on lower side but that can be buying opportunity for the pair.

Commodities

Base Metals: Base Copper slid for a fifth day, the longest run since January, and nickel dropped as the biggest sell-off in Chinese equities since 2007 added to concerns about the economy. Other base metals, dragged down by a rout in the Chinese stock markets. Tracking Aussie sell off against USD LME metals fell more than 1% while Nickel fell 3% yesterday. US durable goods supported the sentiments but after China equities plunge more than 8.5% added concerns of margin calls on which commodities offloaded. Copper tumbled to a six-year low as the latest slide in China's stock markets. Today there will be some bargain buying or short covering in the base metals but that recovery will bring short lived rally as there is no as such fundamental trigger to be found on demand –supply conditions. Today one can buy Nickel and Lead on lower side.

Event       Country  Time (IST)        Estimates

Prelim GDP (QoQ)    UK    02.00 pm 0.7%

Flash Service PMI     US    07.15 pm 55.1

CB Consumer Confidence        US   7.30 pm   100.1

Richmond Manufacturing Index      US    7.30 pm   6

Precious Metals: Gold prices rebounded a little to $1100 levels after global equities sell off on China sell off but margin call funding against added selling bets to secure equities positions in the market. Today Gold prices dipped in early Asia ahead of upcoming Federal Reserve meeting due tomorrow as well as volatility in China's stock markets as China is the second-largest consumer of gold. COMEX gold for December delivery fell 0.27% to $1,093.90 a troy ounce and silver for September delivery dropped 0.48% to $14.535 a troy ounce. In the last week, gold nosedived to five years low expectation of rate hike form Fed in earlier meets. CFTC also cut down the net long positions for gold in last week. Today precious metals are likely to trade under pressure again a just one day before Fed meeting.

Energy: Last night, WTI crude oil futures dropped to a fresh four-month low yesterday, as lingering concerns over robust domestic oil production continued to drive down prices. Meanwhile China weaknesses dragged down the prices to fall $47 barrel and Brent to fall around $52 per barrel last night. Iran and six world powers reached a long-awaited nuclear deal earlier in the month that would end sanctions on Tehran in exchange for curbs on the country's disputed nuclear program. Iran reportedly hoards 30 million barrels of oil in its reserves ready for export. Now the market will track Fed meeting instead of fundamental factors more. As per the earlier forecast, sluggish demand and supply glut will put more downside pressure to the prices to fall Rs.3050 levels in near term.US gas future trading firm on reduction in the stocks thus buying on dips in gas can be done until prices sustaining above 177 levels.

Trend Watch

MCX        Resistance      Support   Comments

Gold         25100       24550       Failure to break out above 25100 will see prices retrace back to 24500 levels.

Silver       34500       33600       Sideways movement expected. Break out only above 34500.

Crude oil          3125         3010         Negative until prices stay below 3125. Can slide lower towards 3010 levels.

Copper    340  332  Likely to test major support around 332 levels.

Nickel      720  690  Sell on rise. Counter should move lower towards 690 levels.

Zinc          125  122  Sustenance below 125 will see prices weaken towards 122 levels.

Lead        110.10      107  Failure to break above 110m will see prices weaken towards 107.

Natural Gas    182.50      175  Sustenance above 182.50 will see prices rally towards 185.

USDINR  64.45        64     Buy on dips. Pair can move higher towards 64.45 levels.

Courtesy : Emkay Commotrade