Metals and Currencies Daily Market Watch August 14, 2015 - Emkay Commotrade

By Paul Ploumis 14 Aug 2015  Last updated at 03:40:37 GMT

Gold futures slightly retreated for a 10th day in the longest run of losses since 1996 as Goldman Sachs Group Inc. predicted further declines and investors sold more through funds.The metal dropped 6.1 percent as it fell every day since July 9 in New York.

Macro Headlines

•Jobless claims in U.S. holding just above a four-decade low at 274K in last week from 269K in the previous

•US retail sales rose more than expected in July, boosting optimism of higher interest rates from Fed remain ns dollar supportive and U.S. business inventories rose 0.8% more than expected in June

•Chinese central bank officials defended their handling of this week's downward plunge in the yuan

•Focus will be on European second quarter GDP figures where economists expect quarterly GDP growth of 0.4%, unchanged from the first quarter 

Currencies

 • USDINR: The Following extension of two year low weakened above 65 levels yesterday. It opened flat today tracking Asian currencies, which were under pressure following strong US retail sales data. dollar firmed The People's Bank of China said, Thursday, that a strong economic environment, a sustained trade surplus and deep foreign exchange reserves provided strong support for the country's exchange rate, indicating that was no reason for the yuan to drop any further. USDINR expected to move higher towards 66 only if prices likely to surpass the level of 65.50 in coming days.

• EURINR: The euro eased against USD to $1.10 levels after stronger US retail sales data released last night. EUR gained sharply in last five days consistently against INR pair to 72.80 levels on optimism of Greece and its creditors came closer to an agreement on a third bailout, spurring a rally in the nation’s bonds. EURINR expected to go above 73 levels, buying on dips can be done.

Commodities

 • Base Metals: Base metals Base metals recovered as sentiments wagered China's efforts to prop up its flagging economy could support the country's demand for raw materials. Metals prices had plunged to six-year lows after China devalued its yuan on Tuesday, sparking fears that the world's top consumer growth deteriorating faster than expected. Off late Thursday, metal trading mixed in between gains and losses as various developments like US jobs data, China yuan stability and dollar stabiltilty emerged into picture. Though there would be some rebound in prices in coming days on risk on mode but prices on higher side remains difficult until any other fundamental trigger comes into focus. Fears of slowing growth in China have been the main culprit behind the bear market in commodities over the last couple years. Some major data like Shanghai warehouse inventories and Euro zone GDP remains crucial for the counters but it will bring just trading move.

Event     Country     Time (IST)     Estimates    

Final CPI (MoM)    Euro Zone    02.30 pm    0.2%    

Flash GDP (QoQ)    Euro Zone    02.30pm    0.4%    

Industrial Production    US    06.45 pm    0.3%    

U. of Michigan Confidence    US    07:30 pm    93.5    

Precious Metals: Gold declined ending its longest run of gains in almost three months, as China eased concern about a devaluation of its currency. Silver and palladium dropped. Secondly the dollar climbed for the first time in seven days against the euro after China’s central bank sought to temper concern that it wouldn’t sufficiently support the yuan. US data remained mixed for the metals yesterday. China’s gold demand improved last month with some large-sized orders, Roland Wang, managing director of World Gold Council in China said. Dollar stability on delaying rate hikes speculations and rising festive demand in Asian markets may support the premium. Gold is expected to trade in range of $1090-$1130 in coming days, Silver surpassed the level of $15 thus upside cap becomes $15.50.

Energy: Crude in the initial trading rose for a in New York, extending its rebound from a six-year low after U.S. crude inventories fell and investor concern over China’s currency devaluation eased. Futures added as much as 1% as Crude inventories slid by 1.68 million barrels last week to 453.6 million and production also fell, according to a report from the Energy Information Administration. A measure of oil-price fluctuations rose to the highest level in almost four months on Wednesday after China devalued its currency a second day. Prices have swung between gains and losses this week on mixed demand signals from China, while remaining almost 30 percent below their June peak amid a global glut. Off late prices again started hitting on oversupply concerns. WTI closed down to $42.24 barrel while Brent lost to $49.15 barrel. Natural gas futures extended losses on Thursday, after data showed that U.S. natural gas supplies rose more than expected last week. Gas futures in September dropped 2.88%, to trade at $2.847 per million British thermal units. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended August 7 rose by 65 billion cubic feet, above expectations for an increase of 55 billion and following a build of 32 billion cubic feet in the preceding week. Gas immediate support at 177 below which prices will fall further. As expected earlier, Crude may rebound until 2850-80 levels but selling on higher side still to be done.

LME Warehouse Updates (in ton)

Metals    Total
Inventories    Cancelled
Warrants
(CW)    Change in
Stocks    Change in
CW    CW % of
Total
Inventory    Remarks    

Aluminum    -8175    3362425    0    1358450    40.4    CW ratio started improving    

Copper    75    350075    -250    14700    4.2    Stocks falls more than 1.4%    

Nickel    -60    454350    786    148806    32.75    Stocks hit record high levels    

Lead    -1275    203975    1350    48425    23.74    Cancelled warrant climbed 27% of total stocks    

Zinc    200    460525    0    69825    15.16    Stockpiles in Antwerp double to highest since Feb 14

   

Trend Watch

MCX     Resistance     Support     Comments    

Gold     26325    25700    Prices can rally further towards 26325/26400 levels. Dips will find support at 25700.    

Silver     36850    35500    Dips will find support around 35400—35000 levels. Can move higher towards 36800.    

Crude oil     2879    2680    Prices can dip further towards 2700/2680 levels. Immediate resistance at 2810.    

Copper     344.10    335    Positive until prices stay above 335 levels.    

Nickel    705    670    Failure to break below 680 will see prices rebound towards 700/705.    

Zinc     121.55    117.80    Positive until prices stay above 118 levels.    

Lead     114.55    112.20    Further rally only above 114.55. Until then prices can retrace lower.    

Courtesy : Emkay Commotrade