Metals and Currencies Daily Market Watch Sept 10, 2015 - Emkay Commotrade

By  Paul Ploumis 10 Sep 2015  Last updated at 05:50:28 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

• China deflation fears grow as producer prices sink to 5.9% most in six years while CPI rose to 2% at one year’s high
• U.S. job openings hit record high as labor market tightens
• UK manufacturing production fell to -0.8% from 0.2% in July due to weak exports while trade deficit expanded at -$11.1B from -$9.5B
• Gold trading cautions ahead of FOMC meet due next week
• Saudi Arabia August oil output dips slightly: industry source
• Bank of England monetary meet to be in focus, likely to raise rates in Q1 2016, GBP falls
• Cabinet approves gold monetization scheme and gold bonds in India

Currencies

 • USDINR: The Indian rupee stabilized near Rs.66.50 levels slightly improving from the yesterday’s close of 66.54. Dollar index trading up 0.40% at 95.98 levels on lack of any trigger from expectation of FOMC meet. Extension of earlier gains in the local share indices supported the rise in the Indian currency. There will be some risk aversion rally in USDINR pair towards 66.80-67 levels but overall outlook will be clear only after FOMC meet.

 • EURINR: The euro tumbled against INR today from more than 4 weeks high made on upbeat of European data. Euro zone growth rate expectedly increased to 0.4% in last quarter which remained supportive for the prices. EURINR expected to trade in the range of 74.80-75.20 levels ahead of BOE monetary meet.

Commodities

 • Base Metals: London metal futures especially Copper and Nickel extended strong gains from the prior session to hit the highest level in more than seven weeks as indications of steady demand from China and news of global production cuts boosted prices. Copper scaled a seven-week high yesterday on expectations of tighter supplies majorly from Glencore mines. In a day, Glencore changed everyone's estimates about the copper market. There will be some relief rally in the metal for coming days but overall price pressure is still being exerted on copper by weak economic and demand growth in China. Today there will major data like US jobs and housing but major focus will be on US economic indicators which may influence the decision of Fed rate due to release tomorrow. China rise in inflation may limit the additional gains as restricting for more monetary stimulus but reduction in PPI may reverse situation. One can buy Copper, Aluminum and Nickel on lower side today as trading up more than 1-2% on LME. Lead and zinc likely to trade in stabilized manner.

Global Economic Events

 Precious Metals: Gold prices gained in Asia with regional data sets noted, particularly a rise in consumer prices in China. In China consumer prices rose 0.5%, higher than the 0.4% gain seen in August and producer prices fell 5.9%, ore than the expected drop of 5.5% year-on-year. Overnight prices have reduced as U.S. job openings surged to a record high in July, the latest signal of an increasingly tight labor market that could push the Federal Reserve closer to raising interest rates. COMEX gold for December delivery rose 0.33% to $1,105.60 a troy ounce. Dollar gains on upbeat of US economic data will keep metal under pressure to trade. Gold expected to trade in the range of 26000-26500 with huge volatility ahead of Fed rate decision due in next week. Gold will take support at 26000; bounce above 26180 could add rally to towards 26300-500 levels Silver immediate support is at 34800 while upside cap is at 35600 levels. Today US jobs data will be eyed.

 Energy: Crude futures fell considerably yesterday amid a broadly stronger dollar, ahead of the American Petroleum Institute's weekly report on U.S. crude stockpiles nationwide. The American Petroleum Institute said crude stocks last week jumped 2.1 million barrels, far above the 300,000 barrels build expected, with refined product estimates not immediately available. On Thursday, the U.S. Department of Energy will release more closely-watched figures on the same data. Prices were trading firm above 3000 levels in the initial trading but later on API release prices fell sharply. Toady prices are likely to trade under pressure below 3000 levels ahead of EIA stocks data. Immediate support is at 2900-2880. Gas expected to trade in range of Rs175-185 levels on moderate weather conditions in US. Ahead of EIA stocks released buying can be done on lower side until prices go below Rs.171 levels. Buying in gas on lower side can be done for small profits. EIA natural gas storage report expected to show reduction in weekly inventory levels.

LME Warehouse Updates (in ton)

Trend Watch

Courtesy : Emkay Commotrade