Japanese Candlestick Guide

Base metal demand to remain 'reasonably strong', says JP Morgan

In the research report published Friday, leading investment bank JP Morgan forecasts that the base metal demand from China should remain ‘reasonably strong’ in 2014, although down from 2013. The demand growth will be boosted by recovery in developed markets, says the research report.

JP Morgan estimates the global copper usage growth to decline to 5% in 2014 as compared with the 10% in 2013. Also, the global aluminum usage growth is expected to decline to 8.2% from 11.5%. According to the report, the global manufacturing sector may continue to grow with strong momentum. However, the Chinese base metal demand will remain lower when compared with 2013.

With regards to copper, the huge mine supply growth has lead to high stocks of copper concentrates in 2013. The conversion of these stocks to refined copper is the key. There are probably high chances that China may witness production ramp-up following the New-Year holidays.

Meantime, the copper inventory levels continued to wane in Europe. The copper stocks in LME-registered warehouses fell 2,225 mt on Friday to touch 308,025 mt. 

Also, Port Strike in Chile has considerably reduced the shipments, thereby keeping the premiums at reasonably higher levels.

DJ-UBS Commodity Index Is In Breakout Mode. Dollar Index To Struggle.

Let's take a look at the dollar/commodity correlation. It's no secret that the U.S. dollar index has an inverse correlation to the commodity markets. Figure 1 below shows that well. This reveals a monthly chart of the DJ-UBS Commodity index (in black) with an overlay of the U.S. dollar index (in red).

Despite widespread expectations, really for months now, that the U.S. dollar would rally strongly, the U.S. dollar index has been stymied be resistance at the 81.50 area. Meanwhile, the DJ-UBS commodity index has formed a double bottom reversal pattern (seen on the weekly chart) in Figure 2 below. The index is testing the breakout point right now and this will be an important zone to watch.

Bottom line? The U.S. dollar has struggled. Commodities, as an asset class, are trying to rally off a weekly double bottom, and gold has been one of the top five commodity performers of January. If the U.S. dollar index remains stymied by resistance in the 81.50 area and that weekly double bottom on the commodity index chart confirms—that would be bullish news for gold and commodities.

Dow Jones Index 1929 And 2014 Graph. Will History Repeat Itself ?

Another Natural Gas Margin Hike: Third Time In Two Weeks

Interim budget surprise: Gold import curbs may be relaxed

If the current political indicators are anything to go by, the interim budget to be presented on February 17 may spring some surprises.

Normally, no significant tax proposals or economic policy decisions are announced in the interim budget, but this time round, expectations are that gold import curbs may see some relaxation and additional sums allocated for certain social sector welfare programmes.

This, however, will not be against the convention, as there is no constitutional restriction on the Government. Besides, various measures such as hiking the import duty to 10 per cent or the 80:20 schemes are executive decisions and no Parliamentary approval is required. Expectations on a possible announcement on gold gathered momentum after National Advisory Council Chairperson Sonia Gandhi asked the Centre to look into the matter.

Current account

This was followed with the Finance Minister P Chidambaram expressing confidence that by the end of the fiscal year the Government will be able to revisit some of the restrictions on gold imports. Since the current account deficit is expected to be below $45 billion, almost half of $88 billion recorded in 2012-13, this may help the Government to ease some of the curbs. Bullion and jewellery traders are also pressing for some relaxation as the restrictions, imposed since August last year, are also leading to a rise in smuggling. The budget could also see additional allocation for some social sector welfare programmes. This is possible as the Finance Minister is likely to report a fiscal deficit of anywhere between 4.6 and 4.7 per cent of GDP (Gross Domestic Product), lower than the budget estimate of 4.8 per cent. This reduction will provide some room for the Minister to increase the allocation.

Expenditure concerns

The interim budget is presented when Government of the day is unable to present an annual financial statement for the coming fiscal year (April 1-March 31) either due to General Election or some other compelling reasons. Usually, this is just a statement of the Government’s achievements, revised estimate for the current year and budget estimate for the next fiscal . The new Government can revise the next year estimate in the full budget. Technically speaking, the interim budget must be approved by Parliament, for expenditure after March 31, since the previous full budget has already provided for expenditure till March 31 and the full budget will be presented only after a new Government is formed.

That is why the interim budget is also called Vote-on-Account. The Parliamentary approval is for expenditure for the next four months. The last interim budget, presented in 2009 by then Finance Minister Pranab Mukherjee, did not see any new tax announcements.

However, the 2004 interim budgetby then Finance Minister Jaswant Singh did mention the Government’s commitment to extending fiscal benefits for many new schemes .

Weekly Economic Data for the week 01-Feb-14 to 07-Feb-14

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 01-Feb-14 to 07-Feb-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
01-02 Feb-2014	-	United States	Janet Yellen Replaces Bernanke as Fed Chairman
01-Feb-2014	06-30 AM	China	NBS Manufacturing PMI	50.5	51	-0.50	0.77	Neutral
03-Feb-2014	02-30 PM	European Monetary Union	Markit Manufacturing PMI	53.9	53.9	0.00	0.97	Neutral
03-Feb-2014	08-30 PM	United States	ISM Manufacturing PMI	56	57	-1.00	1.35	Neutral
04-Feb-2014	09-00 AM	Australia	RBA Cash Rate Target	2.5%	2.5%	0.00%	0.05	Neutral
04-Feb-2014	03-30 PM	European Monetary Union	Producer Price Index (MoM)	0.1%	-0.1%	0.20%	0.45	Neutral
04-Feb-2014	03-30 PM	European Monetary Union	Producer Price Index (YoY)	-1.0%	-1.2%	0.20%	0.45	Neutral
04-Feb-2014	08-30 PM	United States	U.S. CBO Releases Budget and Economic Outlook
05-Feb-2014	09-00 PM	United States	EIA Crude Oil Stocks change		6.421M		3.45
06-Feb-2014	05-30 PM	United Kingdom	BoE Interest Rate Decision	0.5%	0.5%	0.00%	0.00	Neutral
06-Feb-2014	06-15 PM	European Monetary Union	ECB Interest Rate Decision	0.25%	0.25%	0.00%	0.07	Neutral
06-Feb-2014	07-00 PM	United States	Trade Balance	$-35.9B	$-34.3B	-1.60$	3.21	Neutral
06-Feb-2014	07-00 PM	European Monetary Union	ECB'S Draghi Holds Press Conference After Rate Decision
06-Feb-2014	09-00 PM	United States	EIA Natural Gas Storage change		-230		33.60
07-Feb-2014	06-00 PM	Australia	RBA Statement on Monetary Policy
07-Feb-2014	03-00 PM	United Kingdom	Industrial Production (MoM)	0.7%	0.0%	0.70%	1.75	Neutral
07-Feb-2014	04-30 PM	Germany	Industrial Production s.a. (MoM)	0.30%	1.90%	-1.60%	2.36	Neutral
07-Feb-2014	07-00 PM	United States	Nonfarm Payrolls	180K	74K	106.00	43.00	Very Good
07-Feb-2014	07-00 PM	United States	Unemployment Rate	6.70%	6.70%	0.00%	0.13	Neutral