Archive for January, 2014

GOLD

Gold edged lower overnight to open at 1227.00/1228.00. Shortly after open, it briefly touched a high of 1228.00/1229.00 before declining quickly to a low of 1218.75/1219.75 as global equities edged higher and the Dollar strengthened following robust employment data from the U.S. that showed a better-than-expected increase in private sector jobs. Choppy trades for the remainder of the session led the metal to close higher at 1225.50/1226.50.
Gold tried lower today but held above our December high pivot of 1218. The close at 1225 keeps us in the bullish up cycle that started off 1882 on December 31. We like the idea of a test above 1252 while 1218 remains firm.

Gold ended with losses weighed down by upbeat U.S. private-sector jobs data
Minutes of Fed’s meeting, showed many members wanted to proceed with caution in trimming the central bank’s $85 billion monthly asset purchases.
SPDR gold trust holding dropped by 1.50 tonnes i.e. -0.19% to 793.12 tonnes from 794.62 tonnes. More Updates
Technical Levels
  S1 S2 R1 R2
GOLD 1218 1210 1232 1239
Commodity Contract S2 S1 R1 R2
 
SILVER
Silver dropped overnight to open at 19.61/19.66, which was the high of the day. It then followed gold to a low of 19.30/19.35 before recovering to close at 19.51/19.56.
Silver is weak today closing at 19.51. The rejection of Silver near 20.38 has taken the shine off the metal. Major support is not seen until 18.91. 
The Gold-Silver ratio spiked higher again today with the ratio moving above recent high of 62.87. The topside appears the risk in the ratio with key resistance not seen until 64.10 the December 4 high.
Silver dropped after data showed that U.S. non-farm private employment rose at the strongest pace in two years last month.
US non-farm private employment rose by a seasonally adjusted 238,000 in December, easily surpassing expectations for an increase of 200,000
Two top Fed officials said they expected the bank to reduce stimulus at a steady pace. More Updates
Technical Levels
  S1 S2 R1 R2
SILVER 19.32 19.01 19.83 20.12
Commodity Contract S2 S1 R1 R2
 
COPPER
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.360 a pound during European morning trade, little changed on the day. Comex copper prices traded in a range between USD3.355 a pound and USD3.372 a pound.
The March contract ended Tuesday’s session unchanged at USD3.359 a pound. Copper prices were likely to find support at USD3.330 a pound, the low from January 6 and resistance at USD3.387 a pound, the high from January 3.
Investors were turning their attention to the minutes of the Fed’s December meeting, due for release later Wednesday, for indications on the possible timing of further reductions in the central bank’s stimulus program.
Copper futures swung between small gains and losses in rangebound trade on Wednesday, as investors remained cautious ahead of the minutes of the Federal Reserve’s December meeting and the upcoming U.S. jobs report.
Copper ended with losses weighed down by a strong dollar and concerns about economic recovery in China.
Euro zone unemployment was unchanged at a record high for the eighth month in a row in November, but retail sales made the biggest monthly jump in 12 years.
US ADP employment in December grew more than expected, hitting a 13-month high and lifted market optimism toward US December non-farm employment data. More Updates
Technical Levels
  S1 S2 R1 R2
COPPER 3.3260 3.3095 3.3680 3.3935
Commodity Contract S2 S1 R1 R2
 
CRUDE
On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in February traded at USD92.55 a barrel during Asian morning trade, up 0.23%. On Wednesday New York-traded oil futures held range bound between USD92.48 a barrel and USD92.64 a barrel.
The February contract settled down at USD92.61 a barrel on Wednesday. Nymex oil futures were likely to find support at USD92.57 a barrel, the low from Dec. 2, and resistance at USD94.58 a barrel, Monday’s high.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.68 million barrels in the week ended Jan. 3, beating expectations for a decline of 849,000 barrels. Total U.S. crude oil inventories stood at 357.9 million barrels as of last week.
The report also showed that total motor gasoline inventories increased by 6.24 million barrels, significantly higher than expectations for a gain of 2.28 million barrels. 
Crude oil dropped after official data revealed gasoline and distillates stockpiles rose, while falling crude inventories cushioned losses somewhat.
The U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 2.68 million barrels
While Libyan officials say production could recover to nearly 600,000 barrels per day (bpd) this week. More Updates
Technical Levels
  S1 S2 R1 R2
CRUDE 91.60 90.97 93.52 94.81
Commodity Contract S2 S1 R1 R2
Global Economic Data
TIME DATA PRV EXP IMPACT
7.00P.M Unemployment Claims 339K 337K STRONG
11.31P.M 30-y Bond Auction 3.9 2.4 LOW
Unemployment Claims
Source Department of Labor (latest release)
Measures The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect Actual < Forecast = Good for currency;
Frequency CRUDE Released weekly, 5 days after the week ends;
Next Release Jan 16, 2014
FF Notes This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders
Care
Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy;
Also Called Jobless Claims, Initial Claims;
30-y Bond Auction
Source Treasury Direct (latest release)
Measures Highest yield on 10-year bonds the government sold at auction, and the bid-to-cover ratio of the auction;
Usual Effect No consistent effect – there are both risk and growth implications;
Frequency Conducted monthly;
Next Release Feb 13, 2014
FF Notes Auction results are reported in an ‘X.XX|X.X’ format – the first number is the highest interest rate of the bonds sold, and the second number is the bid-to-cover ratio (number of bids made per bid accepted);
Why Traders
Care
Yields are set by bond market investors, and therefore they can be used to decipher investors’ outlook on future interest rates. The bid-to-cover ratio represents bond market liquidity and demand, which can be used to gauge investor confidence;
Also Called Treasury Auction, Note Auction;
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ImageThe week of the new year saw the dollar and the yen make a comeback against the euro and the pound. And now, the real action returns: FOMC Meeting Minutes as well as important employment data culminating in the most important NFP event on Friday are joined by rate decisions in the euro-zone and in the UK, among other events. These are the main market movers on our list for the second week of 2014. Here is our outlook for the major events to influence forex trading.

Last week US first weekly jobless claims report in 2014 posted a 339,000 increase in the number of new claims for unemployment benefits. The figure was broadly in line with market consensus and was down 2,000 claims from the prior week. Further good news arrived with US consumer confidence, rising to 78.1 in December after posting 72 points in the previous month.  Manufacturing growth was also satisfactory sustaining its growth trend reaching 57.0, following  56.4 in the previous month. All in all US economy continues to expand, a good omen for 2014. EUR/USD lost long term uptrend support, and cable reached out above 1.66 but fell sharply, as data was good, but not as high as expected.

  • US ISM Non-Manufacturing PMI: Monday, 15:00. The U.S. services sector index fell to 53.9 in November from 55.4 in October indicating cautious spending by consumers. This lukewarm expansion rate was lower than the 55.4 reading forecast by analysts. The employment gauge fell to 52.5 from October’s 56.2 to hit its lowest since May, while business activity growth slowed to 55.5 last month from 59.7 in October. Growth in the service sector was steady in 2013 with an average of 55 over the past 12 months. A rise to 54.6 is expected this time.
  • Fed Chairman Nomination Vote: Monday, 10:30., The US Senate will vote to approve the nomination of Janet Yellen as Federal Reserve Chairperson for a term, Feb 2014 – Jan 2018. The event is expected to go smoothly. Any delays could weigh on the dollar.
  • US Trade Balance: Tuesday, 13:30. The U.S. trade deficit narrowed to $40.6 billion in October from September’s gap of $43 billion due to an all-time high in energy products export. Exports rose 1.8% to a record $192.7 billion. Imports climbed 0.4% to $233.3 billion, the highest since March 2012. Oil imports rose 1.5%. U.S. petroleum exports edged up 9.3% in the first 10 months of 2013 compared with the same period in 2012, while petroleum imports plunged 11.1%. Economists believe exports will keep growing, reflecting modest recoveries in Europe, Japan and China. Trade deficit is expected to contract further to 40.2 billion.
  • US ADP Non-Farm Payrolls: Wednesday, 13:15. The U.S. private sector employment market added 215,000 jobs in November, exceeding forecasts of a 172,000 increase. Hiring picked up since October after a sharp upward revision reaching an 184,000 job-gain. This event is usually overshadowed by the major non-farm payrolls report from the U.S. Labor Department but the upward trend increases optimism among economists. A smaller gain of 199,000 is expected now.
  • US FOMC Meeting Minutes: Wednesday, 19:00. The Fed releases the minutes of the meeting in which QE tapering was decided upon. It will be very interesting to read into the sentiment of policymakers in this big decision, and to see whether we get hints for future moves. While the general path is known, end of QE by the end of the year, the pace is certainly not, and the decision if to taper or not to taper in January remains open.
  • UK rate decision: Thursday, 12:00. No change is expected from the BOE. At the moment, the UK enjoys a perfect combination of low inflation and strong growth, including in jobs. If growth remains strong, we can expect an update to forward guidance in one of the quarterly inflation reports, perhaps in May.
  • Eurozone rate decision: Thursday, 12:45, press conference begins at 13:30. The ECB is unlikely to change its policy in January, but could certainly hint about looser policy in the next meeting. There are a few encouraging signs in the old continent, but financial conditions remain tight, and deflation is a threat, especially with a strong value of the currency. Draghi tends to zig-zag between an optimistic message to a pessimistic one. After sending a calm one in December, we can expect him to weigh on the euro this time, especially if the negative deposit rate option receives a bigger hint than usual..
  • US Unemployment Claims: Thursday, 13:30. US first weekly jobless claims report in 2014 posted a 339,000 increase in the number of new claims for unemployment benefits. The number of claims was 2,000 lower than the reading posted in the prior week. The data in recent weeks was highly turbulent due to the holiday season volatility. This week’s reading returns to a more stable state. Nevertheless, nearly 4.5 million people received some form of unemployment benefits in the week ending Dec. 14, the latest data available. That’s 180,000 more than the previous week. An addition of 334,000 jobs is expected now.
  • Canadian employment data: Friday, 13:30. The Canadian job market created 21,600 jobs in November, posting the third consecutive rise. The rise topped predictions for a 12,300 rise.  Meanwhile, the unemployment rate remained at a nearly five-year low of 6.9%. The Bank of Canada is more concerned about low inflation than the situation in the job market. The positive job market figures are welcome news for them. Since November 2012, the economy added 179,100 jobs, an increase of 1.0 percent. The Canadian job market is expected to add 13,300 jobs and unemployment rate is expected to remain unchanged at 6.9%.
  • US Non-Farm Payrolls and Unemployment rate: Friday, 13:30. Non-farm payrolls posted a 203,000 job gain in November, following a revised 200,000 increase in October. The increase was well above market prediction of a 180,000 job addition pushing jobless rate to a five-year low of 7.0% from 7.3% in October. Analysts believe further improvement in the labor market will occur in 2014 aided by stronger GDP growth. The pick-up in hiring suggests companies are more confident in future demand and labor conditions are improving amidst this upward trend. The US economy is expected to add 194,000 jobs with the same unemployment rate. Visit here to more !

SILVER
Silver edged lower overnight to open at 19.41/19.46. It declined to a low of 18.72/18.77 and then spiked to a high of 19.82/19.87 on thinly traded volumes before concluding the session at 19.36/19.41.
Silver had a rough day trading to fresh 6 month lows toward 18.75 before bouncing to close at 19.39. Silver has fallen 36% YOY and still looks like risk is toward our 2013 low of 18.26. The ability to hold this level will be key moving forward as a break opens the 2010 low of 14.68. 
The gold-silver ratio is closing at 61.93. We would expect the 60.00 to 64.00 range to hold for the near future.
Silver yesterday settled flat at 43876 as major exchanges where closed yesterday on New Year holiday
The Conference Board reported earlier that its index of U.S. consumer confidence improved to 78.1 in December from 72.0 in November
The Fed has rolled out multiple rounds of bond purchase since the 2008 financial crisis.
 Technical Levels

  SUPPORT 1 SUPPORT 2 RESISTANCE 1 RESISTANCE 2
SILVER 19.32 19.03 20.41 20.99

Commodity Contract  S2 S1 R1 R2

 GOLD
Gold moved lower overnight to open at 1196.50/1197.50. It declined to a low of 1182.00/1183.00 while global equities traded near 6-year highs as investors moved away from safe-haven assets on expectations of a strong economic recovery in 2014 and rising benchmark bond yields combined with rising consumer confidence in the U.S. The metal then rose to a session high of 1214.00/1215.00 on low year-end volumes as the Euro appreciated against the Dollar. Thereafter, it traded within range for the rest of the afternoon to finally close at 1203.00/1204.00.
Gold is closing today largely unchanged from yesterday despite having a large range. The metal took a run at the 2013 lows today but fell $2 short at 1182. The failure trade resulted in a $30 bounce to 1213. It has been a bad year for Gold falling -28% YOY. This is the first down year after 12 consecutive years of gains. From a price perspective, the down side in the metal remains vulnerable with $1,087 the 50% of our 12 year range the next massive support.
Gold settled flat at 28418 as all major exchanges in all regions where closed for the New Year.
Gold tumbled in 2013, with Fed’s plan to step away from ultra-loose monetary policy undermining the investor rationale for holding bullion.
Investors had largely shrugged off industry data revealing that the Chicago purchasing managers’ index fell to a seasonally adjusted 59.1.
 Technical Levels
  SUPPORT 1 SUPPORT 2 RESISTANCE 1 RESISTANCE 2
GOLD 1192 1181 1231 1249
Commodity Contract S2 S1 R1 R2
 
COPPER
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.384 a pound during European morning trade, up 0.05%. Comex copper prices traded in a range between USD3.376 a pound and USD3.391 a pound.
Copper prices were likely to find support at USD3.368 a pound, the low from December 26 and resistance at USD3.431 a pound, the high from December 24. The March contract settled 0.07% lower on Monday to end at USD3.382 a pound.
Market players looked ahead to U.S. data on consumer confidence and manufacturing activity in the Chicago region later in the day, to gauge if the U.S. economy will be strong enough to allow the Fed to continue withdrawing support through 2014.
Copper futures were little changed on the final trading day of the year on Tuesday, with volumes expected to remain light as many investors already closed books before the end of the year.
Copper settled flat as trading was light as there was no major news and most investors were celebrating the New Year.
Growth in China’s factories slowed slightly in December as export orders and output weakened, official data showed
Dallas Fed service sector index rose to 12.5 in December, but December Chicago PMI was 59.1, falling more sharply than market expectations.
 Technical Levels
  SUPPORT 1 SUPPORT 2 RESISTANCE 1 RESISTANCE 2
COPPER 3.3726 3.3488 3.4141 3.4318
Commodity Contract S2 S1 R1 R2
 
CRUDE
On the New York Mercantile Exchange, crude oil futures for February delivery rose by 0.31% while trading at USD 98.73 a barrel.
It earlier traded at a session high USD 98.77 a barrel. Crude oil was likely to find support at USD 99.06 and resistance at USD100.75.
Expectations for Libyan oil exports to resume to near normal levels sent prices falling Tuesday due to the added supply they’d bring to the global market.
Libyan oil operations faced glitches recently due to protesters disrupting production at various oilfields.
Expectations for increased exports from South Sudan also nudged prices lower.
Trading volumes were thin as many investors already closed books before the end of the year, reducing liquidity in the market and increasing volatility, which helped exaggerate market moves.
Crude oil futures were higher during the Asian session on Thursday to start the New Year with exports from Libya a continued focus along with strife in South Sudan.
Crude oil nudged higher recovering some losses despite signs the Chinese economy lost some steam late last year.
Bumpy progress on resuming oil production in war-disrupted regions of Africa and the Middle East has been a recent factor in trading.
Crude oil inventories will release on Friday at 9.30pm as US market was closed on Wednesday. Expected inventory is -2.3M.
 Technical Levels
  SUPPORT 1 SUPPORT 2 RESISTANCE 1 RESISTANCE 2
CRUDE 97.91 96.67 99.89 100.39

Commodity Contract S2 S1 R1 R2
Global Economic Data

TIME DATA PRV EXP IMPACT
7.00P.M Unemployment Claims 338K 334K STRONG
7.00P.M ISM Manufacturing PMI 57.3 56.8 STRONG
Unemployment Claims
Source Department of Labor (latest release)
Measures The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect Actual < Forecast = Good for currency;
Frequency Released weekly, 5 days after the week ends;
Next Release Jan 9, 2014
FF Notes This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders
Care
Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy;
Also Called Jobless Claims, Initial Claims;
ISM Manufacturing PMI
Source Institute for Supply Management (latest release)
Measures Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry;
Usual Effect Actual > Forecast = Good for currency;
Frequency Released monthly, on the first business day after the month ends;
Next Release Feb 3, 2014
FF Notes Above 50.0 indicates industry expansion, below indicates contraction;
Why Traders
Care
It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy;
Derived Via Survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;
Also Called Manufacturing ISM Report On Business;
Acro Expand The Institute for Supply Management (ISM), Purchasing Managers’ Index (PMI);