Metals and Currencies Daily Market Watch August 24, 2015 - Emkay Commotrade

By  Paul Ploumis 24 Aug 2015  Last updated at 05:51:30 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

• Global manufacturing PMI activity have contracted from China to US in the last month, adding concern of weak demand growth

• Persistent sell-off in equities across the globe pressurized Rupee to fell near Rs.66 levels, lowest since Sept, 2013.

•Oil prices fall below $40 at fresh 6-1/2-year lows on China and oversupply

• Today no major economic releases from global front are pending but Federal Reserve Bank of Atlanta President Dennis Lockhart speech due tonight would remain into focus. 

Currencies

• USDINR: Indian rupee The rupee is opened reaching to fresh lows against the dollar in today's session, as fears of a global economic slowdown may continue to spill into Indian markets and weigh on the rupee amid strong risk aversion. The rupee is expected to trade in the 66.0000-66.8000 per dollar range, and take intraday cues from local share indices. The dollar index continued to strengthen against most Asian units, even as the safe-haven greenback fell sharply against a basket of major currencies. The dollar index was trading at 94.50 as against its previous close of 95.01. Persistent sell off in equities lead more sell off in the prices. USDINR expected to trade in the range of

• EURINR: The euro rebounded very sharply above $1.1250 levels on upbeat of European PMI manufacturing data. EURINR traded up by more than 1.5% to above 74 levels. As expected earlier. As per the earlier forecast, EURINR in spot market expected to continue above Rs.76 levels in near term.

Commodities

• Base Metals: Base metals today dropped very sharply on LME today more than 2% on China slowdown and weak sentiments pertained in global markets. Along with US equities, oil prices coming down on despite dollar stability. Poor manufacturing data out of China on Friday re-ignited worries about the future pace of demand from the top base metal consumer. WBMS reported that Zinc would be in surplus of 257000 in January to June period LME three months copper prices trading below $5000/tonnes on LME while other counters like Lead and zinc also pressurized more than 2%. USDINR strength may limit the losses on MCX today in terms of parity price. Copper major support at 327-325 while Nickel at 640, aluminum unlikely to fall below 98.50 while Zinc and lead may show some short lived gains but overall weakness still remains. Today there is no major data to be release on global front. China aggressive monetary stimulus only can lend support to the prices in coming days.

Precious Metals: Gold reached to $1160 levels on safe heaven bid amid sell off in global equities and stable dollar may give buying opportunity for gold investors to start buying at lower levels. Earlier Bullions prices rose to a near five week-high in Asia trade, as Fed have reduced the hop of earlier rate hikes in US looking to current economic grounds n the economy. The minutes of a Federal Reserve meeting adopted a cautious tone on the possible timing of a rise in U.S. interest rates. Overall Fed comment as expected earlier remained dovish for dollar and costive for gold. Gold also benefited from China monetary stimulus today. Federal Reserve Bank of Atlanta President Dennis Lockhart is to speak; his comments will be closely watched tonight. Spot gold rose trading up 0.15% to $1161.30 a troy ounce and silver rose 0.16% to $15.35 troy ounce. Gold upside limit at 27500 while silver at 36200 today, dollar strength against INR may support the counter though COMEX prices trading flattish mode.

Energy: Crude oil prices hit more than six years low in WTI and Brent futures. WTI reached below $40 after long consolidations. Sharp selloff has witnessed as due to China slowdown after weak PMI manufacturing added more weakness and its stock market slid today more than 7%. The downbeat tone for stocks around the globe started in China, where shares spent most of the session in negative territory before a late-day turnaround. Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production. On the New York Mercantile Exchange, crude oil for delivery in October plunged 2.18% to $39.57 a barrel as investors ignored a weaker dollar and focused on oversupply as well as dimmer prospects for the Federal Reserve to raise interest rates in September while Brent trading lower near to $45 barrels. On moderate weather conditions and build up in EIA stocks report gas expected to trade under pressure below Rs.177-175 levels. Crude selling on higher side initiated earlier likely to be continued for the target of 2580-2600 levels.

LME Warehouse Updates (in ton)

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

Aluminum    -9375    3320725    0    1305275    39.31    CW ratio started improving    

Copper    200    353825    6225    42625    12.05    Canceled warrants jump 36% to highest since July 14    

Nickel    -900    454992    7284    157620    34.64    Stocks have fallen very sharply from highest levels in
record    

Lead    -1975    194725    12200    49125    25.23    Cancelled warrants 26% in the last week    

Zinc    600    505450    0    77175    15.27    Stockpiles in Antwerp double to highest since Feb 14    

Courtesy : Emkay Commotrade