Metals and Currencies Daily Market Watch Sept 02, 2015 - Emkay Commotrade

By  Paul Ploumis 02 Sep 2015  Last updated at  03:05:58 GMT

Macro Headlines

• Australian GDP data showed the economy growing by an annualized 2% in 2Q, less than the 2.2% expected.

• Oil slumped 10% as API reported another massive inventory build

• U.S. ISM manufacturing PMI falls to 2-year low at 51.1 in August

• Euro Zone PMI manufacturing activity expanded at slowest pace at 52.3 in August , UK missed the estimates of

• Euro zone jobless rate fell to 10.9%, lowest since early 2012 in July

• UK PMI manufacturing PMI falls to 51.5 in August, lowest level in more than two years, from estimates of 52

• US jobs report this week may shed light on timing of first rate hike from Federal Reserve

Currencies

USDINR: The Indian rupee slightly improved to a one week high against USD as the dollar sold by exporters and banks. The rupee closed at 66.22 to a dollar today, from 66.48 at the previous close. The dollar index fell 0.23% as China’s latest data fuelled concerns of a global slowdown, prompting investors to push back hopes of the Fed’s first rate increase in almost a decade. FII investors outflow of funds from domestic equities putting pressure on rupee to fall against USD. USDINR expected to give some corrections towards 66.20-66 levels tracking domestic shares after Indian government decides to not pursue MAT cases against FII. Immediate support around 65.80.

EURINR: The euro trading firm against INR above 75 levels on higher than expected retail sales data and inflation data. EURUSD trading $1.1207 levels. EURINR expected to trade firm till 75.50, upside limit becomes 75.80-76 levels.

Commodities

Base Metals: In Base metals complex, copper prices fell to a four-session low last night as traders shed holdings of the industrial metal after data showed manufacturing lost some steam in Europe and the U.S., while factory activity in China contracted. The most actively traded contract, for December delivery, fell 3.60 cents, or 1.5%, to settle at $2.3015 a pound on the Comex division of the New York Mercantile Exchange. This was the lowest close since Aug. 26, when prices closed at a six-year low of $2.2350 a pound. Nickel traded down 3% while other metals also dropped more than 1.-1.5% on china concerns. Today there will be some upside corrections after selling on China manufacturing PMI but it will be short lived rally based on speculative trades. INR appreciation against USD likely to limit gains on MCX.

Precious Metals: Yesterday Gold prices advanced to their highest level in more than a week on Tuesday after losses across global stocks and a pullback in the dollar burnished the metal's allure as a haven. On Comex, The most actively traded contract, for December delivery, rose 0.6%, to $1,139.80 a troy ounce Exchange. This was the highest close since Aug. 24, when prices settled at $1153.60 an ounce. Gold buying has done as it’s reacting as safe heaven metals in crisis environment. Today prices fell in initial trading on dollar strength ahead of US jobs report. Gold is expected to trade in range of $1120-$1150 levels today ahead of US ADP jobs data due to release today, overall buying on dips still to be done until prices reaches below $1100-$1080 levels.

Energy: Following surge of more than 8% on EIA and OPEC comment earlier trading, Oil futures last night slashed 8-10% after a report showed U.S. crude stocks rose last week. Crude inventories rose by 7.6 million barrels in the week to Aug. 28 to 456.9 million, compared with analysts' expectations for an increase of 32,000 barrels. Crude stocks at the Cushing, Oklahoma, and delivery hub fell by 318,000 barrels, data from industry group the American Petroleum Institute showed on Tuesday. Secondly China weak PMI data also added fuel into sell off. Massive amount of inventory build up as API reported wiped out rally of 10% made in last two days. On speculative moves, crude prices are fluctuating with huge volatility on both the sides. There will be still risk on rally towards Rs.3150 in coming days but weaknesses. EIA stocks report due to release today remains crucial for the next move till that prices are likely to fluctuate in between the range of 2880-3050 levels. Gas expected to trade in range of Rs174-181 levels on moderate weather conditions in US.

Courtesy : Emkay Commotrade

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