Wednesday, 27 July 2016

Updates on Bullions, Base Metals and Energy

Gold prices were little changed in North American trade on Tuesday, holding near a one-month low, as investors moved to the sidelines before the start of the Federal Reserve's two-day monetary policy meeting later in the day. While the Fed is not expected to take action on interest rates at the conclusion of its meeting on Wednesday, market players will scrutinize its policy statement for fresh hints on the timing of interest rate hikes over the next several months. A recent string of better than expected U.S. data reignited speculation that the Fed will raise interest rates before the end of the year. Fed funds futures are currently pricing in a 52% chance of a rate hike by December, compared with less than 10% at the start of this month. Gold is sensitive to moves in U.S. rates, as a rise would lift the opportunity cost of holding non-yielding assets such as bullion. Gold is up almost 25% for the year to date, boosted by concerns over global growth and expectations of monetary stimulus. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge. Prices surged to a more than two-year high of $1,377.50 earlier in July, as concerns surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.

Oil prices added to overnight losses in North American trade on Tuesday, as market players looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 2.5 million barrels in the week ended July 22. Gasoline inventories are expected to increase by 675,000 barrels while stocks of distillates, which include heating oil and diesel, are forecast to rise by 700,000 barrels, according to analysts. According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 14 to 371, the fourth straight weekly rise and the seventh increase in eight weeks. The renewed gain in U.S. drilling activity fueled speculation that domestic production could be on the verge of rebounding in the weeks ahead, underlining worries over a supply glut. Concerns over a rising gasoline inventories further weighed. Despite being in the midst of the peak summer-driving season in the U.S., gasoline stocks are well above the upper limit of the average range, according to the EIA.

Base metals were all in negative territory on Tuesday morning on the LME, with copper and nickel falling to two-week lows ahead of key central bank meetings this week. Markets have turned warier ahead of meetings of the US Federal Reserve and the Bank of Japan this week, National Australia Bank said. The US Fed meeting starts tomorrow – rates are largely expected to stay unchanged but the meeting will be closely watched for more clues for direction, market participants noted. On Friday, the Bank of Japan (BoJ) is expected to roll out fresh stimulus measures but investors are starting to fear it could under-deliver. In data, Japan’s services PPI increased 0.2 percent. Today’s US data includes the S&P.CS composite-20 house price index, flash services PMI, consumer confidence, new home sales and Richmond manufacturing PMI. The dollar index has slipped to 96.88 from a high of 97.57 yesterday while oil prices fell to multi-month lows this morning. Spot Brent crude hit a new two-and-half-month low of $44.5 per barrel, which is weighing on the metals. In the metals, copper fell to its lowest in around two weeks – it was last at $4,882 per tonne, down $7 on Monday’s close. Fewer than 4,000 lots have changed hands on Select so far as summer conditions take their toll on trade interest. Stocks fell a net 7,625 tonnes to 213,725 tonnes. Aluminium edged $1 lower to $1,604. Stocks continued to climb, up 4,975 tonnes to 2,324,125 tonnes, while cancelled warrants fell 9,025 tonnes to 925,500 tonnes. Nickel fell to a two-week low of $10,230 this morning despite news that the Philippines is considering a mineral ore export ban, following the lead of Indonesia, which introduced a similar ban in January 2014. Nickel recently traded at $10,285, down $217, after stocks edged six tonnes higher to 373,614 tonnes. Zinc fell to a one-week low – it was last at $2,225, down $24. Stocks fell 200 tonnes to 436,600 tonnes. Lead is also around its lowest in one week – it recently traded at $1,839, down $4, with stocks down 125 tonnes at 187,225 tonnes.

On Agri side, Government has asked the states to remove all local taxes on essential food items, like pulses and edible oils, among other steps to ensure supplies at affordable prices. “In order to ensure adequate availability of pulses, edible oils and other essential food items at reasonable prices, the Center has urged the States to remove all local taxes on essential food items,” Ministry of Consumer Affairs, Food and Public Distribution said in a statement. According to statement, in a letter written to Chief Secretaries of the states, Consumer Affairs Secretary Hem Pande asked the states to take up the market intervention on a real time basis and to review APMC Acts on priority to delist pulses and other essential food items so that farmers can sell their produce at any place of their choice, minimizing stages of supply chain from farm gate to ultimate consumers.  Sugar prices have gained 1,000 a tonne to 35,000 in July on the back of a supply deficit in the market due to export of 1.6 million tonnes (mt) and an 11 per cent decline in domestic sugar production to 25.2 mt in the sugar season ending September. The Centre has imposed an export duty of 20 per cent to curb exports and improve supply in domestic markets. Sabyasachi Majumdar, Senior Vice-President, ICRA, said prices would remain firm for three-four quarters given that sugar production is likely to decline further to 23-24 mt in SY2017 (October-September) because of a decline in the availability of cane in Maharashtra and Karnataka. Although the monsoon is likely to be better during the current year, he said, its impact on output is likely to be seen only in SY2018. According to the Agriculture Ministry, cane acreage as on July 22 stood at 45.41 lakh hectares (lh), lower than corresponding last year’s 47.40 lh on reduced planting mainly in the key State of Maharashtra. Also other States such as Tamil Nadu, Gujarat and Madhya Pradesh have reported a lower acreage this year. In the international market, unfavourable weather conditions have hit sugar production in recent months across major suppliers, leading to expectations of a fall in output. (Source: HBL)

India has imported over 7 lakh tonnes of pulses during April-May of this fiscal to meet domestic demand, Parliament was informed on Tuesday. In a written reply to Lok Sabha, Food Minister Ram Vilas Paswan said the country has imported 7,05,477 tonnes of pulses in the first two months of 2016-17 fiscal. India had imported 57.97 lakh tonnes of pulses during the entire 2015-16 fiscal, the data showed. In reply to another query, Paswan said: "The production of pulses varies in the range of 17-19.5 million tonnes while demand for 2016-17 is estimated at 24.61 million tonnes." The deficit in domestic supply is met through imports primarily under private trade, he added. (Source: BS)

Technical Levels


Support at 30600---30450 and Resistance at 31000---31150

Intraday... Break and sustain below 30740 will take to 30660---30620 and then to 30450 mark. More and more downside panic will see only close below 30450 else it could test its resistance level of 31000---31150 again

Further upside rally will see only close above 31150 mark

Trade with levels only


Support at 45800---45500 and Resistance at 47000

Either side break or close with volume will decide further. Till then traders can
trade in a range with strict stop loss and wait for confirmation

Trade with levels only

Crude oil

We are holding short from 3000 level. Clearly indicate to sell below 3000 for the downside target of 2880---2820. It made a low of 2875 and now trading around 2885

Now what to expect???

Support at 2860 and Resistance at 2935

Close below 2860 will take to 2820---2780. Further downside panic will see only close below 2780 mark else it could its resistance level of 2935 again

Trade with levels only


Support at 329 and Resistance at 334---340

Either side break or close with volume will decide further. Till then traders can trade in a range with strict stop loss and wait for confirmation

Today's Data and Event

Britain Prelim GDP q/q - 02: 00 P.M

U.S Core Durable Goods Orders m/m – 06:00 P.M
U.S Durable Goods Orders m/m – 06:00 P.M
U.S Pending Home Sales m/m – 07:30 P.M
U.S Crude Oil Inventories – 08:00 P.M
U.S FOMC Statement – 11:30 P.M
U.S Federal Funds Rate – 11:30 P.M


More will update soon...

Dollar fluctuate ahead of FOMC policy outcome

Dollar fluctuate ahead of FOMC policy outcome

Dollar/rupee traded down yesterday while the dollar index traded little changed Thursday as investors await the release of policy statement by the Fed after its two-day rate setting meeting concludes later today.

Technical, USDINR retraced from the day high 67.8275 and tested 67.6125 before closing at 67.6325 levels. On the EOD chart pair failed to close above 38.2% Fibonacci Retracement of its previous fall.

 Near term resistance is seen at 67.85 and sustain trade above only will expect to test 67.99-68.10; else every rise towards 67.75-67.80 could attract short term selling activities.

Dollar index, which weighs greenback against a basket of six currencies, traded higher during Asian trade Wednesday and traded at 96.33 compared to 96.15 seen on Tuesday as policy makers in Washington prepared to release decisions on interest rates and after release of upbeat economic data.

As members of the FOMC gathered in Washington DC for the start of the two-day meeting, participants received their last chance to review a slew of incoming economic data before Wednesday's vote.

Meanwhile, investors across the globe also await the Bank of Japan's monetary policy meeting decision due on Friday.

EUR-INR August Future

Euro extended gain for the second day as dollar slipped on caution ahead of two-day Federal Reserve policy meeting starting from today.

EURINR retraced from the day high 74.6975 and settled at 74.4775 levels. On the EOD chart prices still trading above the previous swing low which is indicating for momentum upside move in EURINR. 

However, any positive move in dollar index could hold bearishness in the pair. Hence, sell on rise around 74.80-74.90 is recommended for the EURINR. Stop loss above 75.10 Target 74.50-74.20-74.00

GBP-INR August Future

Pound fell to two-week low Tuesday on report Bank of England policy maker Martin Weale favours an immediate stimulus for the UK economy.

GBPINR drop more than 0.15% yesterday and settled at 88.76. Failure trend reversal formation on EOD chart is indicating for bearishness in GBPINR.   

Further, massive resistance is seen at 89.85 and pair would need to trade above this level in order to test 90.50-91.00

Sell around 88.95-89.00 Target 88.45-88.10. Stop loss above 89.15.

Japanese Yen August Future

Japanese Yen extended its upwards move on fears the planned stimulus to the world's third largest economy by the Japanese government may provide little relief to the sluggish growth and inflation.

JPYINR witnessed 1.66% gain and settled at 64.77 levels. A long bullish candle stick formation on EOD chart is indicating for bullishness in JPYINR. 

 Further, immediate support is seen at 64.10 and pair would need to trade below this level in order to test 63.55-63.00

Sell below 64.10 Target 63.65-63.40. Stop loss above 64.25.

§  Major Economic Data & Events Schedule today

Economic Indicators
Possible Impact
German Import Prices m/m

GfK German Consumer Climate
M3 Money Supply y/y

Private Loans y/y
Prelim GDP q/q

Index of Services 3m/3m
CBI Realized Sales
German 30-y Bond Auction


Core Durable Goods Orders m/m

Durable Goods Orders m/m
Pending Home Sales m/m
FOMC Statement

Federal Funds Rate

Impact: High Low Medium

More will Update soon..