Monday, October 7, 2013

Data for the week 05-Oct-13 to 11-Oct-13

Exp.: Expected or Anticipated value calculated from the recent survey conducted.
Prior: Represents the last actual for each indicator. In case there is a revision to the last actual, the prior column reflects the prior figure as revised.
Exp. change today: Exp. - Prior
Avg. change of last 1 year: Average Change in Actual data calculated for last 1 year.
Expected impact on price: This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below:
Very Good Good Neutral Bad Very Bad
Actual: Refers to the actual/latest figures after its release.
Data for the week 05-Oct-13 to 11-Oct-13

Date Time (IST) Country Data Exp. Prior Exp. chg today Avg. chg of last 1 year Exp. Impact on Price
07-12 Oct-2013 00-00 United States Nonfarm Payrolls 180K 169K 11.00 43.00 Neutral
07-12 Oct-2013 06-00 PM United States Unemployment Rate 7.3% 7.3% 0.00% 0.13 Neutral
 
08-14 Oct-2013 00-00 United States World Bank and International Monetary Fund Annual Meeting          
08-Oct-2013 06:30 PM United States IMF Releases World Economic Outlook Chapters          
08-Oct-2013 11-30 AM Germany Current Account n.s.a. €13.0B €14.3B -1.30€ 5.83 Neutral
08-Oct-2013 11-30 AM Germany Trade Balance s.a. €15.0B €16.1B -1.10€ 1.15 Neutral
08-Oct-2013 03-30 PM Germany Factory Orders s.a. (MoM) 1.0% -2.7% 3.70% 3.85 Neutral
08-Oct-2013 06-00 PM United States Trade Balance $-39.5B $-39.1B -0.40$ 3.21 Neutral
 
09-Oct-2013 02-00 PM United Kingdom Industrial Production (MoM) 0.4% 0.0% 0.40% 1.75 Neutral
2013-10-09 06:30 PM United States IMF Releases Global Financial Stability Report Chapter          
09-Oct-2013 08-00 PM United States EIA Crude Oil Stocks change   5.472M   3.45  
2013-10-09 11:30 PM United States Fed Releases Minutes from Sept 17-18 FOMC Meeting          
 
10-15 Oct-2013 00-00 India Imports YoY -0.70%     5.62  
10-15 Oct-2013 00-00 China Money Supply M2 YoY 14.00% 14.70% -0.70% 0.59 Bad
10-15 Oct-2013 00:00 India Exports YoY   13.00%   4.12  
2013-10-10 03-30 PM European Monetary Union ECB's Draghi Speaks in Cambridge, Massachusetts          
10-Oct-2013 04-30 PM United Kingdom BoE Interest Rate Decision 0.5% 0.5% 0.00% 0.00 Neutral
2013-10-10 04-30 PM United Kingdom BOE Monetary Policy Decision          
10-Oct-2013 08-00 PM United States EIA Natural Gas Storage change   101B   33.60  
10-Oct-2013 09-50 PM European Monetary Union ECB President Draghi's Speech          
10-17 Oct-2013 11-30 PM United States Monthly Budget Statement   $-147.9B   131.52  
 
11-Oct-2013 05-30 PM India Industrial Output   -2.6%   4.15  
11-Oct-2013 06-00 PM United States Producer Price Index (MoM) 0.6% 1.4% -0.80% 0.65 Bad
11-Oct-2013 06-00 PM United States Retail Sales (MoM) 0.0% 0.2% -0.20% 0.63 Neutral
11-Oct-2013 07-25 PM United States Reuters/Michigan Consumer Sentiment Index 76 77.5 -1.50 3.26 Neutral

Wednesday, October 2, 2013

Gold-Silver ratio signals a bearish outlook.


One of the indicators used to gauge the direction of gold and silver prices is the gold-silver ratio. This ratio is obtained by dividing the price of gold an ounce by the price of silver an ounce. The value of this ratio gives the amount of silver required to get one ounce of gold. For example if the gold-silver ratio is 10 then it means 10 ounce of silver is required to get one ounce of gold.

INTERPRETING THE RATIO

In general, both gold and silver move in the same direction. The percentage of decline in gold is typically lower than that of silver, and thus the ratio could increase faster due to larger price difference between the two metals. Hence the movement of the gold-silver ratio is inverse to the movement in gold and silver prices. That is, when price of gold and silver decline, this ratio increases and vice versa. When bullion prices decline, the gold-silver ratio increases faster due to heightened volatility in declines causing larger price moves. On the other hand, lower volatility in rallies could lead to lower difference between gold and silver prices, resulting in slower decline in the ratio.
Historical study of the movement of this ratio from a trough to a peak and vice versa since 1973 shows that, 60 per cent of the time, a sharp rise in the ratio is caused by a sharp fall in the price of gold and silver. Similarly, 67 per cent of the time a sharp rise in the gold and silver price has dragged the ratio lower.
The gold-silver ratio bottomed near 31 in April 2011. The ratio is on the up move since then and is currently at 61.35, which is just above its important resistance level at 61. As long as the ratio remains above 61, there is a high probability of a rise to 70-72. It is interesting to note that the movement of the gold-silver ratio from July 2009 till now is almost following the same trajectory of the ratio from December 1996 to June 2003. Hence, the ratio currently tracking the same path, can revisit 80 levels in the coming months..
Now, what does this mean for the gold and silver prices? Gold, after recovering from the low of $1,180 has failed to rise past its resistance at $1,450 and is declining once again. Similarly, silver is coming down now after testing its important resistance at $25. This pull-back keeps the overall outlook bearish for both gold and silver prices. If gold falls to $1,100-1,080 levels and silver falls to $15 levels, then the gold silver ratio will move up to the initial target zone of 70-72.

Monday, September 30, 2013

Data for the week 28-Sep-13 to 04-Oct-13

Exp.: Expected or Anticipated value calculated from the recent survey conducted.
Prior: Represents the last actual for each indicator. In case there is a revision to the last actual, the prior column reflects the prior figure as revised.
Exp. change today: Exp. - Prior
Avg. change of last 1 year: Average Change in Actual data calculated for last 1 year.
Expected impact on price: This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below:
Very Good Good Neutral Bad Very Bad
Actual: Refers to the actual/latest figures after its release.
Data for the week 28-Sep-13 to 04-Oct-13
Date Time (IST) Country Data Exp. Prior Exp. chg today Avg. chg of last 1 year Exp. Impact on Price
30-Sep-2013 07-15 AM China HSBC Manufacturing PMI 51.2 50.1 1.10 0.89 Good
30-Sep-2013 05-00 PM India Trade Deficit - RBI   -45.6B   3.67  
 
01-Oct-2013 06-30 AM China NBS Manufacturing PMI 51.5 51.0 0.50 0.77 Neutral
01-Oct-2013 01-18 PM France Markit Manufacturing PMI 49.5 49.7 -0.20 1.53 Neutral
01-Oct-2013 01-23 PM Germany Markit Manufacturing PMI 51.3 51.8 -0.50 1.37 Neutral
01-Oct-2013 01-25 PM Germany Unemployment Change -5K 7K -12.00 10.36 Good
01-Oct-2013 02-00 PM United Kingdom UK - BOE Financial Policy Committee Publishes Stress Test Paper          
01-Oct-2013 02-30 PM European Monetary Union Unemployment Rate 12.1% 12.1% 0.00% 0.12 Neutral
01-Oct-2013 07-30 PM United States ISM Manufacturing PMI 55.8 55.7 0.10 1.35 Neutral
 
02-Oct-2013 05-15 PM European Monetary Union ECB Interest Rate Decision 0.5% 0.5% 0.00% 0.06 Neutral
02-Oct-2013 06-00 PM European Monetary Union ECB Monetary policy statement and press conference          
02-Oct-2013 08-00 PM United States EIA Crude Oil Stocks change   2.635M   3.45  
 
03-Oct-2013 06-30 AM United States Fed's Bernanke Speech          
03-Oct-2013 01-18 PM France Markit Services PMI 50.7 48.9 1.80 1.90 Neutral
03-Oct-2013 07-30 PM United States Factory Orders (MoM) 0.7% -2.4% 3.10% 3.36 Neutral
03-Oct-2013 08-00 PM United States EIA Natural Gas Storage change   87B   33.60  
 
04-Oct-2013 06-00 PM United States Nonfarm Payrolls 179K 169K 10.00 43.00 Neutral
04-Oct-2013 06-00 PM United States Unemployment Rate 7.3% 7.3% 0.00% 0.13 Neutral


Wednesday, September 25, 2013

Global Comex, Indian Mcx Gold Prices: The Arbitrage Opportunity

In dollar terms, and minus strong external stimuli, the Indian and global gold prices should be aligned - because the Indian price is set by the global price. However, when there are strong external factors, the Indian price in dollars can be different from the global price. That difference opens up the possibility of arbitrage. 

The chart below shows global and Indian gold prices (in dollar terms) from January 2012 on-wards  Indian prices in dollars have been higher in some periods - thanks mainly to duties on gold imposed by the government. For those with trading acumen, these differences on a daily basis are arbitrage opportunities in a global market.


MCX, Comex Gold, The arbitrage opportunity Import Duty, Indian Rupee Currency Movement

Monday, September 23, 2013

MCX Copper Crude Oil Natural Gas Zinc

The MCX Copper contract was broadly ranged between the support at Rs 450 and resistance at Rs 470 in the past week. There is a double top pattern on the daily candle chart and the resistance at Rs 470 which has held well last week is the neckline of this pattern. Having said this, failure to rise above Rs 470 could keep the contract under pressure and can take it down to Rs 450 initially. An eventual break below Rs 450 can then drag the contract further lower to Rs 430 which is the target level of the double top pattern. On the other hand, an immediate decisive break above the resistance at Rs 470 will take the contract higher to Rs 500-510.
Crude Oil (Rs 6,637)
The MCX Crude Oil contract has come down sharply over the last few weeks from the high of Rs 7,784 recorded on August 28. However, the contract is nearing its significant trend line supports at Rs 6,400 and Rs 6,300 which can be tested in the coming week. An immediate fall below Rs 6,300 might not be very easy. As such the downside could be limited to Rs 6,300 and there are good chances for the contract to rebound from the Rs 6,400-6,300 support zone in the coming weeks which can take it back to Rs 7,000 levels.
If the contract falls below Rs 6,300, then the current downtrend can continue and the contract can target Rs 5,850 on the downside.
Natural Gas (Rs 231.4)
The MCX Natural Gas contract has been moving in a good uptrend channel over the last one year. Within this channel, the contract is currently sloping down from the resistance near Rs 260. Immediate resistance at Rs 240 which has held well last week. As such this short-term downtrend can continue and the contract can fall to Rs 210-200 in the coming weeks. A strong break above Rs 240 is required to avoid this fall. But seeing the price action over the last two weeks an immediate break above Rs 240 does not look likely. However, from Rs 210-200, the contract can begin a fresh leg of up move targeting Rs 260-270 on the upside.
Zinc (Rs 115.3)
The MCX Zinc contract has come off sharply from the high of Rs 136.9 over the last few weeks. Immediate support is at Rs 114 which needs to hold to avoid further fall. A bounce from the support at Rs 114 can take the contract higher to Rs 120 in the coming week. Zinc has important resistance at Rs 120 and a failure to rise further beyond this resistance would continue to keep the contract under pressure. On the other hand, if the contract falls below Rs 114 immediately, then the current downtrend would continue targeting the next significant support at Rs 110 .

FMC may allow late trading in agri commodities.

Commodity markets regulator Forward Markets Commission (FMC), may allow late evening trading in agri commodities to increase market participation.

“We are discussing with exchanges and other trade participants as to how we can start late-evening trading in agriculture commodities as some spot markets remain open till 8 p.m.,” FMC Chairman Ramesh Abhishek said.
At present, late evening trading is allowed in metals and energy products till 8 p.m., where prices follow global markets.

Commodity exchanges have been demanding longer trading hours in sugar and soybean as against the present 10 a.m to 5 p.m slot.

Commodities prices to take a hit when US tapering begins.



Prices of commodities could head south as soon as the US Federal Reserve begins to cut its $85 billion-a-month stimulus programme as hedge funds and money managers will cash out, a global seminar on edible oils was told on Saturday. “Currently, interest rates are near zero and at the bottom. But once the tapering happens and the interestrates go up, money managers and hedge funds will switch over to other gainful investments such as bonds,” said James Fry, Chairman, LMC International, London.
“It is a bad decision on the part of the US Fed not to taper its stimulus plan. Sooner or later, it has to begin and it will suck out the liquidity in the commodities market,” said Dorab Mistry, Director of Godrej International.
“Returns have to be higher than the rate of inflation. Therefore, bonds will tend to give higher returns. All those people who have found value in commodities will switch over,” Fry said on the sidelines of Globoil India 2013.

BIO-FUEL USE

Earlier, in his address at the business session, Fry said that currently, crude palm oil was being supported in South-East Asia, particularly Indonesia, through use as bio-fuel. “The use of palm oil as bio-fuel is helping it to rule at a small premium over Brent crude in Europe, though in Asia, it is at a discount to the latter,” he said.
Indonesia has announced plans to produce 3 million tonnes of bio-diesel next year and in 2015. This could provide support to prices of palm oil and other vegetable oils.
However, things could change if Brent crude oil prices drop.
“There are a few pointers to why crude oil prices will come under pressure.
The US is adding a million barrels to its supplies every year and shale gas is emerging as a real threat,” the expert said.

SHALE CONVERSION

Currently, the cost of producing shale gas equivalent to a barrel of crude works out to $20 in the US and $50 in Europe.
“There are plants coming up to convert shale gas into required fuel,” said Fry, adding that interest in using bio-fuel in the US and the EU is waning.
With palm oil heading for peak production season, its stocks could rise to 2.2 million tonnes by November-end and it would not reach last year’s level of 2.6 million tonnes.
Crude palm oil could rule between MYR 2,250 ($710) and MYR 2,500 ($790) a tonne towards the year-end, while rapeseed, sunflower and soya bean oils could drop to lower than $1,000.
Meanwhile, during a price outlook session at the meet, soya bean production in the country was estimated between 110 lakh tonnes and 140 lakh tonnes.
While some experts put it at the lower end, others such as Atul Chaturvedi, CEO, Adani Wilmar, pegged it at the higher end.
Soya bean oil prices could drop by Rs 20-40 for 10 kg, while soyameal prices could also fall to levels of Rs 31,000 before the year-end.

“Once the tapering happens and interest rates go up, money managers and hedge funds will switch over to other gainful investments such as bonds,” said James Fry, Chairman, LMC International, London.