[Base Metal]Metals and Currencies Daily Market Watch August 03, 2015 - Emkay Commotrade

By Paul Ploumis 03 Aug 2015 Last updated at 02:56:50 GMT

Macro Headlines

•The Caixin China manufacturing PMI contracted to two years low at 47.8 in July, lower than the preliminary reading of 48.2

•U.S. Michigan consumer sentiment fell unexpectedly at 93.1 from 93.3 in last month

•U.S. labor costs rose at the slowest pace in at least three decades in the spring, a sign of persistently sluggish wage growth

•Retail sales in Germany fell unexpectedly at -2.3% from 0.1% last month

•The U.S.’s Chicago PMI rose to 54.7 more-than-expected last month

•Factory indexes for Japan to India and the U.S. will be released and Greek markets are set to resume following a five-week suspension.

Currencies

•USDINR: On Friday, The Indian rupee dropped above Rs.64 against US dollar tracking dollar rally against major pairs on Federal Reserve’s positive view on rate hike in this year. Today INR appreciated by 0.35% as on FII inflow in domestic market putting more pressure on dollar selling side. There would be some technical correction in USDINR pair below 64 but overall bias remains positive for the target of 64.50-64.80 levels on anticipation of rate hikes.

•EURINR: The Euro fell considerably against USD below $1.0960 on the Federal Reserve for an imminent interest rate hike before the end of the calendar year. As per the expectations earlier, EURINR is likely to trade in the range of 70-70.50 levels today.

Commodities

•Base Metals: All Base metals reached to support zone on dollar gains on Friday on buoyant US economic numbers adding more pressure on anticipation of rate hikes from Fed in the coming meets. Secondly, weak US earnings results, oversupply worries and China slowdown also weighed down the prices to fall sharply as China is the world's largest consumer of copper accounting for about 40% of total global demand and major consumer of other industrial metals China manufacturing activity contracted to 5 years low in the last month. Metals may find some support as oversold prices likely to correct somewhere but overall bias still remains weak until there would be some fundamental triggers comes into the picture or China steps up some monetary easing measures to support growth. This week US NFP data remain into focus.

Global Economic Events

Event       Country Time (IST)        Estimates

Final Manufacturing PMI          China        07.15 am 47.8

Final manufacturing PMI Euro Zone         01.25 pm 51.5

Manufacturing PMI UK    02.00 pm 51.6

ISM manufacturing PMI  US    07.30 pm 53.6

Precious Metals: As per the estimates though gold rebounded off late on Friday to $1100 levels but overall it fell more than 15% in July on weak sentiments pertaining in the global market. Upbeat of US data are adding more hope of Fed to go for imminent liftoff in coming meets which makes gold less attractive metal among all the commodities. Traders turned net short on the metal last week for the first time in history of CFTC fund positioning data since 2007, as bearish bets against the market edged out bets on rising prices. Gold on COMEX rebounded to $1095.10, up 0.59% and silver rose 0.33% to $14.74 troy ounce. Gold is expected to fall again towards 24800 in October month until rebound above 25400 levels in near term.

Energy: On Crude oil prices fell to new multi-month low as data showed U.S. producers put more drilling rigs to work despite a lingering world-wide glut. Money managers have retreated to their weakest bullish stance on oil in nearly five years, adding twice as many bearish bets as bullish bets in the last week. The U.S. benchmark settled down $1.40, or 2.9%, to $47.12 a barrel on the New York Mercantile Exchange and Brent, the global benchmark, fell $1.10, or 2.1%, to $52.26 a barrel on ICE Futures Europe, the lowest settlement since Jan. 29. China manufacturing data added fuel into sell off on weekend. Crude current month contract likely to come down below 3000-2980 levels as prices are well staying below 3080 levels on MCX. US Natural gas futures fell to a three-week low in last week, as forecasts for mild weather across the U.S. in the weeks ahead dampened demand expectations for the fuel. Gas breached below Rs.177 levels thud further reduction of Rs.171 is possible in current month. Major support on NYMEX is at $2.5 levels.

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       24650       Failure to break above 25250 will see prices slide lower towards 24700 again.

Silver       34500       33300       Further upside only on a close above 34500, else prices will slide lower to 33600.

Crude oil          3130         3000         Prices can retest 3010 levels. A daily close below 3000 will be negative for prices.

Copper    342  332  Not sustaining at higher levels. Prices should slide towards 332.

Nickel      700  725  Negative view until prices stay below 725. A break below 700 will be negative.

Zinc          124.25      122  Should move lower and test 122/121.50 areas.

Lead        110.30      108  Prices are likely to move lower towards 108 levels.

Natural Gas    179.50      170.50      Prices can move lower towards 170.50. Sell on rise.

USDINR 64.62        64.25        Buy on dips. Can move higher and test 64.60/64.65 levels.

Courtesy : Emkay Commotrade