[Base Metal]Metals and Currencies Daily Market Watch July 31, 2015 - Emkay Commotrade

By Paul Ploumis 31 Jul 2015 Last updated at 03:28:01 GMT

Macro Headlines

•The U.S. economy accelerated modestly at 2.3% in 2Q after a slow start to 2015, but growth this year is still less than last year's tepid first half and is well below the overall pace of the recovery

•U.S. jobless claims inclined by 12K to 267K in the last week but still near cycle lows

•The U.K. GFK index of consumer confidence fell to 4 more-than-expected of 7 in last month

•The Reserve Bank of India will likely leave its main interest rate unchanged in it reviews its monetary policy, economist surveyed

Currencies

•USDINR: The Indian rupee dropped against US dollar tracking other Asian peers, as the Federal Reserve’s positive view on rate hike in this year supported the dollar sentiments. Dollar index rebounded above 97.50 after US GDP data. The rupee ended at 64.04 to a dollar today, compared with 63.91 at the previous close. It traded in a band of 63.91-64.05. USDINR likely to remain firm above Rs.64.40 levels, buying on dips is suggested with stop loss below 63.80.

•EURINR: The Euro fell considerably as strong GDP growth in the U.S. over the second quarter bolstered the case of hawks on the Federal Reserve for an imminent interest rate hike before the end of the calendar year. EURINR is expected to trade in the range of 70-70.50 levels today.

Commodities

• Base Metals: Base metals weakened sharply in the last trading on the release of FOMC meeting indicated rate hike actions in the earlier meets in this year which boosted dollar on higher side. Metals recovered on Chinese government regulations to support growth. Later on buyout US GDP data added further selling pressure in the prices. Copper futures closed lower by 0.45% on the London Metal Exchange yesterday as the dollar strengthened against a range of major currencies ahead of the release of U.S. economic data. Metals stabilized on dollar strength after Fed meeting as given rate hike indications. The US Midwest aluminum premium has ticked down slightly, with suppliers expressing concern about the impact of Chinese overproduction on aluminum prices and premiums. The base metals prices on the London Metal Exchange (LME) closed lower, as U.S. economic growth supported views the Federal Reserve would lift rates by year-end. There will be some relief rally in the prices after sharp selloff but overall weaknesses still remains as there is no fundamental trigger and oversupply worries lingering in the market.

Global Economic Events

Event       Country Time (IST)        Estimates

Germany Retail Sales (MoM)  Euro Zone         11.30 am 0.3%

CPI (MoM)        Euro Zone         02.30 pm 0.2%

Chicago PMI    US   7.15 pm   50.7

U. of Michigan confidence       US    07.30 pm 94.2

Precious Metals: Gold headed for its largest monthly decline in two years as the Federal Reserve moved closer to boosting U.S. interest rates for the first time since 2006.While Fed policy makers refrained from signaling the timing of a rate increase after their two-day meeting, they described job gains as “solid” amid an improving economy. The market expects a move as early as September. Bullion is set for a 6.5 percent plunge this month, the most since June 2013, after dropping to the lowest level since 2010 last week Gold has traded down to $1088 levels and Silver for immediate delivery was little changed at $14.8235 an ounce. Metals are likely to trade under pressure on upbeat of US economic data due in the coming weeks like nonfarm payrolls and manufacturing side. Gold is expected to fall further towards 24200 until rebound above 25400 levels in near term. Silver major support is at Rs.32800.

Energy: On stronger greenback last night bought additional weakness in the Crude futures which posted relief rally resuming its push back to $49 a barrel after US socks report. Oil is heading for the biggest monthly loss since December after tumbling into a bear market as leading members of OPEC pump record volumes while a plunge in Chinese stocks fanned concerns the country’s fuel demand may falter. Royal Dutch Shell Plc said it’s preparing for a “prolonged downturn” by cutting thousands of jobs. Prices have lost more than 20 percent from their closing peak this year on June 10. West Texas Intermediate for September delivery was at $48.77 a barrel. Brent for September settlement was 30 cents higher at $53.68 a barrel on the London. Crude soared nearly 3% for the session before paring some of the gains in US and Brent crude for September delivery wavered between $52.52 and $54.30 a barrel before settling at $53.36, up 0.06 or 0.11%. As per the earlier forecast crude was taking good support of 3090 levels, on break below this prices may fall further to 3000 levels but any bound above 3080 likely to post new high above 3100 levels. US EIA stocks remained bullish for the gas prices but still unable to surpass the level of 185 as expected earlier thus prices may again fall back to the level of 178-180, where 177 would be major support to be considered.

LME Warehouse Updates (in ton)

Metals     Total

Inventories       Cancelled

Warrants

(CW)         Change in

Stocks       Change in

CW   CW % of

Total

Inventory Remarks

Aluminum         3443850  1439150  -9750        50     41.79%     Cancelled warrants in Rotterdam reached to record

Copper     346125     23675       +1075       3175         6.84%       Stockpiles rise 3.3% to highest since July

Nickel       460998     154140     +3108       -234 33.44%     Stocks reached to record higher levels

Lead          220100     53725       -475 100  24.41%     Stockpiles Climb 29%, Most Since September 2004

Zinc  436800     57000       +3108       -234 33.44%     Inventories dropped to 7 years low

Trend Watch

MCX        Resistance      Support   Comments

Gold         25050       24550       Above 24850 prices can test 24950/25000.

Silver       34500       33300       A reversal is likely only above 34500. Until then sideways.

Crude oil          3225         3080         Dips towards 3120—3100 should be used to buy.

Copper    343.50      334.50      Failure to move above 342.50—343 will see prices test support around 334.

Nickel      720  694  Can slide towards 694/690 levels. Negative until prices stay below 720.

Zinc          126.25      123.50      Rebound only above 126 until then prices will move lower.

Lead        110.30      108  Negative until prices stay below 110.30. Can retrace towards 108 levels.

Natural Gas    185  175  A break below 175 will see prices slide lower towards 170 levels.

USDINR 64.60        64.20        Can test 64.50/64.60 levels. Positive until 64.20 holds as support.

Courtesy : Emkay Commotrade