Today's oil price

$91.86 per barrel

Daily change of 10/12/12 ( 91.16% )

Oil Quote Updated Oct-13-12 1:30 PM

Oil Prices Set to Fall Through 2017

Oil prices are expected to fall over the next five years as demand slumps and a ramp-up in production helps boost supplies, the International Energy Agency (IEA) said Friday.
The group, which represents the world’s 28 richest countries, said the combination will help “redefine the refining industry and transform global oil trade,” though it noted geopolitical risks will continue to loom over the oil supply chain.
The Paris-based IEA sees global oil product capacity growing to 101 million barrels of oil a day by 2017, above its earlier forecast of 95.7 million barrels.
Global demand is forecast to grow at an annual average of 1.1 million barrels a day over the next five years, compared with the IEA's earlier projection of 1.2 million barrels.
More of the growth in oil supply is expected to come from the Americas, buoyed by new drilling technologies in U.S. and Canadian oil sands. Growing output from reserves like the Bakken and Eagle Ford shales has helped propel U.S. domestic oil production to the highest level since 1995.
Looking to capitalize on the jump in production, oil major BP recently secured a license to ship U.S. crude oil to Canada and Royal Dutch Shell is reportedly applying for U.S. export licenses.
Oil production in Middle Eastern countries like Iraq is expected to continue ramping up despite diminishing appetite in North America, and that could help feed growing regional demand there.
“Iraq stands out as its production capacity is expected to enter a new growth phase, which may continue even beyond the forecast period,” the IEA said.
However, in other areas, such as Libya, security concerns may continue to constrain production growth over the next few years.
While some Western companies like BP (BP) have announced plans to return or ramp up production in Libya since the killing of long-time dictator Moammar Qaddafi a year ago,

the killing of a     U.S. envoy there last month resurrected safety fears.
The IEA, though, said it expects new supply sources to more than offset any decline in rates or outages elsewhere in the world, as well as the tough international sanctions on Iran.
At the same time, the spreading of refining capacity to emerging regions like Asia is expected to help offset decreases in other areas of the world.
Internationally traded crude volumes are projected to decline sharply, but the IEA said product trade is forecast to growth in both volume and scope.
Sweet crude oil was down about 0.50% Friday afternoon to $91.52 and is down about 6.84% from the start of year. It’s still up about 9.3% from 12 months ago.

Today's oil price

$91.36 per barrel

Daily change of 0.11 ( 0.12% )

Oil Quote Updated Oct-10-12 4:00 PM

Hotel REITs: Particularly Sensitive To Economic Concerns

Hotel REITs are a deeply cyclical sector. In economic upswings, profits are great, but in downswings, occupancy, room rates, and RevPar all suffer greatly. This sensitivity is a result of the industry's short "lease" structure. Unlike retail, commercial or residential where leases span years, hotel leases are counted in days and therefore, must be constantly "renewed."

The positive effect of short leases is that hotels are an excellent inflation hedge. Average daily rate (ADR) can easily be adjusted and is highly correlated with inflation. In fact, over the past 20 years, annual nominal ADR growth rate has been around 3.5%, while annual CPI was roughly 3.1% (Source: 2010 Smith Travel Research, Inc., U.S. Bureau of Labor Statistics).

The negative effect is that if the economy goes south, visitors do not renew, and that makes hotel stock prices particularly sensitive to economic concerns. Therefore, when doom and gloom are predicted, hotels have often been an effective way to short the economy. An example of this occurring is the third quarter of 2011.

Leading into the second half of 2011, hotels were poised to continue a strong recovery. June 2011's RevPar at $68.90 was the highest since August 2008, driven by a 3.5% increase in ADR and a 4.2% increase in occupancy from June. This healthy growth was occurring despite an anemic first half year GDP growth of less than 1%.

But concerns about the economy tipped the market into a significant retraction, with the S&P 500 sliding 17.95% between July 1 and October 3, 2011. The bad news in July and August 2011 was wide ranging -- from the debt ceiling crisis, to the U.S. credit rating downgrade, to the increasing likelihood of countries like Italy joining the ranks of Greece and Portugal. Stocks were hit hard, REITs were hit even harder, sliding 21.23%, and hotels were hit almost twice as hard, falling 38.12%.

Hotel REITs are hit extra hard in times of economic concern because of the immediate affects a slow economy can have on this sector. Here's a sample of what REIT professionals were saying in 2011 about the dive:

"What's happened is that during the late summer [of 2011] when we had so much turbulence in the equity markets and in the financial markets in general, primarily because of what was happening in Europe, but also what was happening with the U.S. congress, there was a great deal of concern about where the economy was headed and a lot of that spilled over into lodging because everyone knows how sensitive we are to how the overall economy performs."

- Ed Walter, President and CEO of Host Hotels and Resorts

"There's been a huge disconnect between Wall Street and Main Street when it comes to hotel REITs,"

- Ken Cruse, President of Sunstone Hotel Investors

Commenting on how he did not think the drop in hotel stock prices had much to with hotel fundamentals, "It was just overall global markets, the impact of the European recession, and there was a broader pullback in the market," [Jay Shah] says. "I think hotels and real estate stocks took it may be worse than others because they are financials and highly volatile."

- Jay Shah, CEO of Hersha Hospitality Trust

The hotel's sector sensitivity to economic news has, in turn, made hotels more volatile. In the first half of 2012, the highs are higher, and lows are lower:

Hotels could not recover in 2011 after the extra severe slide in July and August:

This volatility has contributed to Hotel REITs either being a big leader or big loser over the past six years:

While the hotel sector has led the nosedive in dividends over the past four years:

Outlook

Fundamentals for hotels look great. Through August 2012 RevPAR is projected to grow by 7.2% for the year. The lack of near-term supply should help the industry continue to raise rates, with ADR predicted to grow by 4.6%, while hotel demand is surpassing its pre-recession peak. Construction of new hotels has historically grown at an average of approximately 2% per year, but growth has been less than 1% over each of the past two years, and that rate is expected to continue.

But as we saw in the third quarter of 2011, rosy fundamentals will only support hotel stocks to a point, so I may shift my "hold" to a "sell" in this sector within the next 60 days if we begin to see new cracks in the economy or the beginning of a market correction. I believe we are entering a particularly high risk three- to four-month period. Some of my concerns are: (1) a S&P 500 negative third quarter earnings season after 11 consecutive quarters of gains; (2) an unemployment surge after the recent, possibly too good to be true, drop to 7.8% -- the largest move since 1983; (3) an unresolved fiscal cliff; (4) a return of European debt crisis headlines; and (5) a post-election market slide. These are concerns that all market participants must be cognizant of -- and deserved or not -- that often have an amplified effect on hotel REIT stocks.

Preferred Alternative

An alternative to owning hotel REITs outright is to purchase preferreds. Preferreds have historically yielded between 6.3 and 9%, but most rates have recently dropped to a 5.6 to 6.5% range as investors' appetites for REITs grow.

There are solid hotel REITs with preferreds that have significantly higher yields. I like Chesapeake Lodging Trust's new preferred (CHSP-PA), with a coupon rate of 7.75%. CHSP is profitable with a healthy cash flow -- the most important factor to consider when purchasing preferreds. The trust's holdings consist of 14 upper-upscale hotels (a sector less prone to market swings). Additionally, the trust has a promising outlook, and has recently experienced significant insider buying.

Fed chose mortgage bonds to bolster housing gains

The Federal Reserve structured its latest stimulus program around the purchase of mortgage bonds after members agreed that helping a nascent housing recovery was a good way to lift the broader economy.
Minutes of the Fed's Sept. 12-13 meeting released Thursday also show that most members now agree that tying a future increase in short-term interest rates to economic measures, such as a specific unemployment rate, could be effective. But members agreed to hold off on the change to work out the details.
After the meeting the Fed said it would keep buying mortgage bonds until the job market showed substantial improvement. The Fed also extended its plan to keep its benchmark short-term interest rate near zero until mid-2015 and left open the possibility of taking other steps.
The Fed has already purchased more than $2 trillion in bonds since the 2008 financial crisis. The latest program seeks to spend $40 billion a month to buy mortgage bonds without an end date set.
Many participants agreed at the meeting that more bond purchases would provide support to the economy by putting downward pressure on longer-term interest rates. That encourages more borrowing and spending, which drives growth.
According to the minutes, Fed members compared the effectiveness of buying Treasury bonds to that of mortgage-backed securities.
"Some participants suggested that, all else being equal, (mortgage bond) purchases could be preferable because they would more directly support the housing sector, which remains weak but has shown some signs of improvement of late," according to the minutes.
A few members expressed skepticism that additional bond purchases would help. And they raised concerns that more bond buying could increase the risk of higher inflation at a later time.
Mortgage rates have been below 4 percent all year. While home sales are rising, they remain well below healthy levels.
On Monday, Chairman Ben Bernanke defended the aggressive policies during a speech to the Economic Club of Indiana. The Fed needs to drive down long-term borrowing rates because the economy isn't growing fast enough to reduce high unemployment, Bernanke said.
He also sought to reassure investors about the Fed's timetable for keeping its short-term rate ultra-low. The plan doesn't mean the Fed expects the economy to be weak through 2015, he said, noting that policymakers plan to keep rates low well after the economy strengthens.

Dollar and precious metals at a glance

Key currency exchange rates Monday, compared with late Friday in New York:
Dollar vs: Exchange Rate Pvs Day
Yen 78.34 78.69
Euro $1.2967 $1.3025
Pound $1.6036 $1.6140
Swiss franc 0.9330 0.9300
Canadian dollar 0.9766 0.9790
Mexican peso 12.8115 12.7968
Metal Price (troy oz.) Pvs Day
NY Merc Gold $1773.50 $1778.60
NY HSBC Bank US $1775.00 $1775.00
NY Merc Silver $33.982 $35.516

Today's oil price

$89.46 per barrel

Daily change of 0.42 ( 0.47% )

Oil Quote Updated Oct-08-12 12:00 AM

Gold and Silver Prices – Daily Outlook for October 5

The prices gold and silver rose again for the second consecutive day. The rally was plausibly fueled by the recent appreciation of the Euro against the USD. The ECB left its interest rate unchanged at 0.75%. Mario Draghi stated (again) that ECB is ready to start its bond purchase program that will help Spain. This news may have contributed to the recent recovery of the Euro. U.S jobless claims rose by 4k to reach 367k. Currently, the prices of gold and silver are falling. On today’s agenda include: U.S. Non-Farm Payroll ((Update: 114k jobs added in September) and Canada’s Employment Report.

Here is a short outlook for precious metals for Friday, October 5th:

Precious Metals –October Update

On Thursday, Gold rose again by 0.94% to $1,796.5; Silver also increased by 1.18% to $35.1. During the week, gold rose by 1.27%; silver, by 1.52%.

As seen below, the chart presents the changes of normalized prices of precious metals in the last several weeks (normalized to 100 as of September 13th). During the past several weeks the prices of gold and silver have moved with an unclear trend.

The ratio between the two precious metals slipped on Thursday to 51.18. During October, the ratio nearly didn’t change as gold performed much like silver.

Minutes of FOMC Meeting

The minutes of the FOMC meeting, which was held back in September 13-14 came out yesterday. The report showed the FOMC is considering continuing with its current monetary expansion plan even if the U.S economy will recover:

“To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

On Today’s Agenda

U.S. Non-Farm Payroll Report: in the recent report for August 2012, the labor market expanded by a lower than expected rate: the number of non-farm payroll employment rose by 96k; the U.S unemployment rate slipped to 8.1%; this report may affect not only the U.S dollar, but also commodities prices (see here my last review on the U.S employment report). The table below shows the relation among the prices of gold, silver and USD/YEN with the labor report. In the last report the prices of silver and gold hiked. My guess is that if the upcoming report will be positive and rise above the 120k mark, it is likely to pull up precious metals rates.

Canada’s Employment Report: In the recent employment report for August 2012, unemployment remained at 7.3%; the employment rose by 34k during the month. The upcoming report might affect the Canadian dollar and consequently the prices of bullion;

Currencies / Bullion Market – October Update

The Euro/ USD hiked on Thursday by 0.87% to 1.3017. During the month, the Euro/USD rose by 1.23%. Further, other currencies including Aussie dollar and Canadian dollar also appreciated yesterday against the USD by 0.24% and 0.73%, respectively. The correlation between gold and Euro and other “risk currencies” remains mid-strong and positive: during September/October, the linear correlation between the gold and EURO/USD was 0.66 (daily percent changes). If these currencies and the Euro will continue to rise against the USD, then they are likely to pull up gold and silver. Currently, the Euro/USD is trading up.

Current Gold and Silver Rates as of October 5th

Gold (November 2012 delivery) is traded at $1,794.9 per t oz. a $1.6 or 0.09% decrease as of 03:15*.

Silver (November 2012 delivery) is at $35.065 per t oz – a $0.036 or 0.1% decrease as of 03:15*.

(* GMT)

Daily Outlook for October 5th

The prices of precious metals rose on the second consecutive day. The recent minute of the FOMC meeting may have contributed to the rally of precious metals. The rise in the Euro and other “risk currencies” may have also helped pull up precious metals. The ongoing speculation around Spain’s next move could affect not only the Euro, but also bullion rates.  Today’s publication of the U.S. jobs report could positively affect the USD, stocks and commodities if the report will show growth in jobs of above 120k. Finally, if the Euro and Canadian dollar will rise, then they could also rally precious metals.  

U.S Employment Added by 114k Jobs in September | Gold and Silver Are Falling

The U.S. employment rose by a lower rate than many had anticipated during August: according to the latest U.S. employment report, which was published today, October 5th by the Bureau of Labor Statistics the number of non-farm employees grew by 114,000. The main sectors that expanded during September were in health care and in transportation and warehousing. The rate of unemployment declined to 7.8%. Gold and Silver prices are falling along with other commodities rates.

The chart below shows the revised figures of the number of non-farm employees added to the labor market during recent years (up to September 2012). The change in non-farm payroll was revised up for July from +141k to +181k; For August it was revised from +96k to +142k. The revised up figures for July and August suggest the employment situation in the U.S has improved in recent months, so the situation might not be so dire as many stated in the past.

As I have calculated in the past, the number of non-farm payroll employment needed to be added to the U.S labor market on an average monthly scale to keep up with the growth of the U.S. civilian work force is at least 107k (see red line in the chart below). This means that the recent gain in employment in the past several months were higher than this number. Further, this also means that the number of jobs added in September just barley surpassed this figure.

The rate of U.S. unemployment declined in September to 7.8%. The rate of unemployment is at its lowest level in recent years. The current unemployment rate is 2 percent points lower than its rate in November 2010. This positive news for the decline in rate of unemployment was something that could help the President Obama in his future debates before the November elections.

Furthermore, the number of unemployed persons (12.1 million) declined by nearly 456,000 during September compared to the previous month.

Following this news currently, the Euro to US dollar exchange rate is slightly rising along with the GBP/USD; crude oil price is falling while the U.S stock market indexes are rising; gold price is falling.

Now let’s breakdown how this news might affect the direction of commodities prices, including the prices of gold and crude oil:



Gold Market

As I have already showed in the recent gold and silver prices monthly report, historically, as the non-farm payrolls expand by at least the population growth rate (roughly 107k), gold price tended to decline; this correlation was mostly due to the effect this news has had on the speculation of further stimulus by the Fed. On the other hand, the relation of the precious metals market with other markets including commodities and stocks may also play a role in this relation. I.e. as the prices of commodities (oil) and stocks rise, gold and silver also tend to increase. The rise in the Euro/USD is also contributing to the recovery of bullion rates.

The table below presents the correlation between the news of the U.S. non-farm payroll employment developments and the daily changes in gold and silver prices on the day of the U.S. labor report publication. The table shows the negative relation between the U.S employment and daily changes of precious metals.

Crude Oil Market

The recent rise in the non-farm employment is slightly lower than some had anticipated but is still above the 100k mark which is a positive sign for the recovery of the U.S. economy from the perspective of the U.S’s work force. These numbers might be a seasonal effect but if they will continue it could help with the recovery of the markets as it signals an expected rise in U.S. demand for crude oil, and consequently may continue to pressure up crude oil prices during today’s trading

Weekly Review and Open Book Roundup

Investors’ worries over Spain once again controlled the week’s sentiment, with a continual ebb and flow depending on the news outcome. While Spain’s government is still holding out on an official request for financial aid from the E.U., ECB and IMF – collectively, the “Troika” – they have made inroads toward that day, with the presentation on Thursday of the 2013 budget and accompanying reforms. Markets viewed the budget in a positive light, and policy leaders praised the Rajoy government’s efforts for new necessary reforms as above and beyond the minimum requirements.

Spanish citizens were less enthused, however, and showed their displeasure with protests on the streets of Madrid. Spain’s key region, Catalonia, expressed their discontent to an even higher degree by announcing upcoming elections during which a secession vote will take place. Members of the Spanish government strongly voiced their opposition to Catalonia’s impending referendum and declared it unconstitutional. The region’s president Artur Mas’ has said that he would push for a referendum irrespective of its constitutionality.

Over the weekend, stress test results for Spain’s banks were released and while they were within the expected and acceptable limits, the government has said that they would not ask for the full amount. According to the results, some €59.3 billion is necessary for Spain’s banks to ride out the economic downtrend. As part of the bailout, the Troika had agreed to fund as much as €100 billion to the ailing banking sector, but the Spanish government has said that they will ask for only €40.0 billion.

Later today, Moody’s credit ratings agency is expected to announce their decision on Spanish debt, with a majority of analysts expecting a downgrade to below investment grade level. Spain’s borrowing costs have consistently been at high levels, though the stress test results helped to bring yields on 5-year debt down to 4.93%, but analysts don’t expect too much support in the near term unless and until the Spanish government officially seeks assistance which would trigger the ECB asset-purchase program.

The Social Trading Community at eToro

This week we look at OpenBook trader skanand9673 from India, a relatively new trader who is already included on the 3-month rankings board in position #27. As of this writing, the guru has 590 followers and 245 copiers. The high risk trader has a max drawdown of 9.8%, average exposure of 68.9% and profitable weeks ratio of 76.9% while realized equity is over 300% for the period and at 121.8% for the last month. With the exception of a brief and unprofitable foray into the EUR/USD pair early on in the trader’s history, the trader is now by and large a commodities trader, with 37.9% of the portfolio allocated to gold and 62.1% allocated to silver. The trader’s gold allocation has gained 6.7% while silver has earned 3.6%. Over the past three months, the trader has executed 222 trades, going long 98.5% of the time, no doubt taking into consideration the likely rise in commodity prices given the expected flood of liquidity from the world’s major central banks.

 
OpenBook trader aniindra7116 from Singapore is another high-risk commodities trader; like the previous guru, the trader is listed on the 3-month rankings board in position #42 with a max drawdown of 10.2%, average exposure of 14.9% and profitable weeks ratio of 76.9%. The trader’s realized equity was 6% for last week, 91.4% for last month more than 300% over the 3 and 6-month periods; out to 12-months the trader’s realized equity was reported at a still respectable 86.1%. The trader has had a 100% allocation in gold over the last quarter, which gained 26.6%; of the 107 trades executed, 83.2% were buys with an average hold time of 1½ days. As of this writing, the trader has 310 followers and 97 copiers, and is another good choice for those traders looking to diversify their own portfolios with established and successful commodities traders.

No Changes from Central Banks but Bank of Spain Surprises

Yesterday was the day that financial markets heard from several of the world’s major banks, with policy and interest rate decisions from the Bank of England and the European Central Bank, and early today the Bank of Japan weighed in as well. As forecasters had anticipated, all of the central banks stood pat, generally in wait-and-see mode to assess previous easing efforts, but not discounting the possibility of more easing ahead. Of the central banks, only the ECB was able to offer markets anything of value, saying that they were prepared to buy up Spanish debt as and when Spain’s government made an official request.


But it was a statement made by Spain’s central bank which was most notable but seemed to have slipped past investors’ focus. Yesterday, the governor of the Bank of Spain, Luis Maria Linde, dismissed the Spanish government’s budget which was presented late last week as too optimistic and not in line with independent forecasts. According to him, Spain’s economy is set to contract by 1.5% next year, not the 0.5% projection that the Spanish government has forecast. Linde believes that the government must consider still more measures so that deficit targets can be met, even beyond those proposals made by the Mariano Rajoy government.

Markets had priced in those decisions well ahead of the actual announcement and there was little movement in equities though the Euro edged higher. The EUR/USD is currently trading at 1.3006, and sentiment on OpenBook is bearish with 59% of traders selling against 41% buying. OpenBook guru NMarijus leads the trend with several open short positions; the guru has had several short positions hitting their respective TPs over the course of the past several days, with the most recent earning a 6% return. The guru has a large allocation in the EUR/USD pair, ranging between 96% and 100% over the past six months. As of now, the guru, who has 22,577 followers and 1,539 copiers, has realized equity over the last quarter was 5.5%, over the last six months 105.7% and for the last 12-months was 47.4%

Google Too Rich for your Blood? Not with Fractional Shares

One reason that investors tend to like mutual funds is because it allows them to buy a share of a stock that they’d like to own without having to fork over the whole amount at once. Let’s face it, the most popular and bluest of the blue chips are not cheap; take the two top tech stocks Apple and Google, for example, which is trading at $668 and $767, respectively. By the time an investor gets the money together to buy a share, well, if they’re lucky the price hasn’t gone up too much. But mutual funds also often have shares of stock that an investor might not be so interested in; here’s where fractional shares come in.


In the past, a corporation might be compelled to issue fractional shares as a result of a stock split or a dividend reimbursement and for the most part it was only an existing shareholder who could obtain the fractional shares. Now, fractional shares are being offered for trade by some online brokers, including eToro.

Why buy a fractional share? Why not? Analysts point out that one of the boons of fractional share purchases is that an investor can buy higher quality stocks which offer greater potential for profits. It allows an investor to buy a fraction of a single share, and the purchases are made in terms of dollars, not shares. That’s the way it’s done here at eToro, of course, with shares in several of the top corporations available, including Apple and Google, but also Microsoft, Facebook, Zynga, Yahoo and Amazon. The ability to invest in dollar terms and not shares means that an investor can put any amount they choose and it will be applied toward a full or fractional share of stock.

There is a key difference between an existing stockholder’s fractional share of stock and one that is obtained through a broker like eToro. For example, when you invest in a stock through eToro, you buy a CFD or Contract for Difference which reflects the ownership of that particular stock. eToro then is a counterpart to your CFD; you, as the investor, do no have the same rights that an actual shareholder would have as you don’t actually own the stock, only the CFD.

September Unemployment Rate Surprises while NFP Does Not

Earlier, the U.S. Bureau of Labor Statistics announced that September’s non-farms payroll figures rose by only 114,000, generally in line with the consensus forecast. Of note, the previously reported data of 96,000 new jobs in August was revised upward to 142,000

The unemployment rate unexpectedly fell to 7.8% from 8.1%, while the forecasts called for a rise to 8.2%. Analysts had doubted that today’s data would sufficiently be able to notch the rate anywhere but higher; the rate has been continuously above 8% since February 2009.

Earlier in the week, ADP had reported that 162,000 new private sector jobs had been added last month, much better than the expected 143,000 but significantly fewer than even August’s revised figures of 189,000 (from 201,000). As markets have too often seen, the ADP numbers have failed to coincide with the NFP data on quite a few occasions and market players have thus been ultra wary of making large moves ahead of the data.

One research analyst in New York remarked that the labor situation isn’t going anywhere fast and that the meager gains were barely sufficient to absorb new workers, and not nearly enough for the masses who are still hoping to return to the workforce.

Wall Street had closed yesterday higher, with all of the major indices gaining; the DJ30  gained 80.75 points, the SPX500 gained 10.41 points and the NASDAQ gained 14.23 points. Today’s data is already positively impacting Wall Street futures.

Today's oil price

$89.26 per barrel

Daily change of 2.45 ( 2.67% )

Oil Quote Updated Oct-05-12 12:30 AM

EUR / USD intraday: supported the upward trend line.

Pivot (level of cancellation): 1.2955

Our preference : Long positions above 1.2955 with targets at 1.303 and 1.3075. Alternative scenario : Below 1.2955 look for further downside with 1.2925 and 1.2875 as targets. Comment : the break above 1.2955 is a positive signal opened the way to 1.303.

GBP / USD intraday: Siding conflict to climb above 1.6125.

Pivot (level of cancellation): 1.6125

Our preference : Long positions above 1.6125 with targets at 1.6215 and 1.6245. Alternative scenario : Below 1.6125 look for further downside with 1.61 and 1.6065 as targets. Comment : the RSI Alnspahely the rise of a new stage calls.

USD / JPY intraday: Siding conflict to climb above 78.3.

Pivot (level of cancellation): 78.30

Our preference : Long positions above 78.3 with targets at 78.7 and 78.85. Alternative scenario : Below 78.3 look for further downside with 78.05 and 77.95 as targets. Comment : the RSI momentum sagging missing.

EUR / JPY intraday: supported the upward trend line.

Pivot (level cancellation): 101.75

Our preference : Long positions above 101.75 with targets at 102.55 and 102.85. Alternative scenario : Below 101.75 look for further downside with 101.2 and 100.95 as targets. suspension technician : technical indicators in daily trading mixed and calls caution.

GBP / JPY intraday: warned.

Pivot (level cancellation): 126.60

Our preference : Long positions above 126.6 with targets at 127.55 and 127.85. Alternative scenario : Below 126.6 look for further downside with 126.4 and 126.05 as targets. suspension technician : technical indicators in daily trading mixed and calls caution.

AUD / USD intraday: Siding conflict to climb above 1.023.

Pivot (level of cancellation): 1.0230

Our preference : Long positions above 1.023 with targets at 1.029 and 1.032. Alternative scenario : Below 1.023 look for further downside with 1.02 and 1.018 as targets. Comment : the RSI is supported bullish trend line .

Cac 40 Oct 12 in intraday: targeted 3445.

Pivot (level of cancellation): 3387.

Our preference : Long positions above 3387 with targets at 3445 and 3476. Alternative scenario : under the 3387 look for further downside with 3339 and 3300 Vkohdav. Comment : the RSI is mixed to bats ascent.

Dax Dec 12 in intraday: warned.

Pivot (level cancellation): 7265.

Our preference : Long positions above 7265 with targets at 7375 and 7480. Alternative scenario : Below 7265 look for further downside with 7210 and 7130 Vkohdav. suspension technician : RSI mixed and calls for t .

Gold Silver and Oil Rose Again on Monday– Recap October 1st

Many commodities trade up on the first day of the week: WTI oil increased again while Brent oil declined yesterday; gold and silver changed direction and rose on Monday; natural gas Henry Hub future (October delivery) and spot price continued their rally and hiked on Monday; the Euro changed direction and appreciated against the USD on Monday. Several other currency pairs including the Canadian dollar also rose again the USD.

Here is a summary of the daily developments of precious metals and energy commodities for October 1st, 2012:

Forex and Bullion Markets:

On Monday, gold increased by 0.53% to $1,783.3; Silver also rose by 1.08% to reach $34.95. During last month, gold increased by 5.11%; silver, by 9.97%.

On Monday, the Euro/USD also increased by 0.24% to 1.289; further, the U.S Dollar also depreciated against several other currencies including Canadian dollar by 0.12%.

Energy Commodities:

WTI oil price rose again yesterday by 0.31 % to $92.48 per barrel;

Brent oil on the other hand decreased by 0.99% to $112.14 per barrel;

Following these changes, the difference between Brent and WTI slipped to $19.66/bbl. During last month, WTI declined by 4.44%; Brent oil, by 1.9%.

Finally, the Henry Hub future (October delivery) hiked again by 4.82% to $3.48/mmbtu; the Henry Hub spot also rose to $3.19/mmbtu; the gap between the spot reached to $0.29, i.e. contango.

A Summary for October 1st:

The table below includes: closing prices, daily percent changes, and daily changes:

Gold and Silver Prices – Daily Outlook for October 2

The prices gold and silver started off the week on positive note as both precious metals increased along with other commodities and stock prices.  The unexpected rise in the U.S manufacturing PMI index to reach 51.5% may have contributed to the positive market sentiment. Further, Bernanke’s speech in which he promised to keep short term rates low even if the economy will strengthen may have also contributed to the rise of bullion rates. Currently, the prices of gold and silver are falling. Other items on today’s agenda include: Reserve Bank of Australia Cash Rate Statement (Update: RBA announced it decided to cut the cash rate again by 0.25pp to 3.25% to its lowest level since 2009 – this news is pulling down the Aussie dollar), Great Britain 10 Year Bond Auction and Australian Trade Balance.

Here is a short outlook for precious metals for Tuesday, October 2nd:

Precious Metals –October Update

On Monday, Gold rose by 0.53% to $1,783.3; Silver also increased by 1.08% to $34.95. During last week, gold decreased by 0.23%; silver, by 0.18%.

As seen below, the chart shows the changes of normalized prices of precious metals in the last couple of weeks (normalized to 100 as of August 31st). During recent weeks, following the launch of QE3 by the Fed, the prices of gold and silver moved with an unclear trend.

St. Deviation of Gold and Silver
The rise in the volatility in the bullion markets during September, compared to August, is also reflected in the
rise in the standard deviations of gold and silver (daily percent changes) that were slightly higher than the standard deviations in August.

The ratio between the two precious metals decreased on Monday to 51.02. During September, the ratio fell by 4.42% as gold under-performed silver.

Bernanke’s Speech

Bernanke gave a speech yesterday titled “Five Questions about the Federal Reserve and Monetary Policy”. In this speech Bernanke laid down his and the Fed’s monetary policy and referred, among other, to the recent steps the Fed has taken, the additional options the Fed has to take in the future, his take on the effect the Fed’s steps have on the inflation. It’s worth mentioning that he also stated that the Fed will keep the rates low even if the economy were to recover:

 “…we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn’t mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens”.

Chairman of the Fed voiced again his concern over the “fiscal cliff” – in which the Congress will reduce spending and raise taxes – that should come into play at the beginning of year. I think this problem is another factor that could motivate the Fed to expand its monetary policy even further in the months to follow.

On Today’s Agenda

Reserve Bank of Australia – Cash Rate Statement: the overnight money market rate of Australia’s Reserve Bank remained unchanged at 3.5% – the lowest level since the end of 2009. If the RBA will decide to lower the rate again, this news may affect the Australian dollar that is strongly correlated with gold and silver prices;

Great Britain 10 Year Bond Auction: the British government will issue a bond auction; in the recent bond auction, which was held at the second week of September, the average rate reached 1.83%;



Australian Trade Balance: The upcoming report will refer to August. In the previous report, the seasonally adjusted balance of goods and services expanded its deficit to $556 million in July. The export of non-monetary gold fell by $420 million (25%); if the gold exports will continue to fall in August, it might suggest a decrease in demand for non-monetary gold (see here last report);

Currencies / Bullion Market – October Update

The Euro/ USD rose on Monday by 0.24% to 1.289. During last month, the Euro/USD rose by 2.23%. Alternatively, several other currencies including Aussie dollar appreciated yesterday against the USD by 0.16%. The correlation between gold and Euro remains mid-strong and positive: during September, the linear correlation between the gold and EURO/USD was 0.62 (daily percent changes); the relation between gold and USD/CAD is -0.75. This week the bullish market sentiment towards the Euro and other risk currencies is likely to pull up gold and silver. Currently, the Euro/USD is trading up.

Current Gold and Silver Rates as of October 2nd

Gold (November 2012 delivery) is traded at $1,780.7 per t oz. a $2.6 or 0.15% decrease as of 07:19*.

Silver (November 2012 delivery) is at $34.87 per t oz – a $0.082 or 0.23% decrease as of 07:19*.

(* GMT)

Daily Outlook for October 2nd

The prices of precious metals started off the week on a positive note, perhaps over the recent speech of Bernanke and the positive news of the growth in manufacturing PMI that pulled up commodities and stock prices.. Today’s publications of the RBA rate decision and Australian trade balance could affect the Aussie dollar, which is strongly linked with bullion rates. In Europe, Spain is still facing problems: The recent budget proposal helped rally the Euro but there are still perils Spain is facing. The country might need to bailout its commercial banks after German ministers stated that the bailout fund will only by applicable for new banking problems. Finally, if the Euro and Aussie dollar will continue to rally it could also pull up the prices of bullion.  

Today's oil price

$92.37 per barrel

Daily change of 0.11 ( 0.12% )

Oil Quote Updated Oct-02-12 10:30 AM

Forex Pros technical analyzes (on Monday, October 1, 2012 17:00:01 EDT)

Below you will find insights and technical analyzes of the major stock indexes, commodities and currency pairs based on the performance of the market at the end of the session daily in the United States. This information is a comprehensive summary is derived from the simple moving averages and exponential along with key technical indicators displayed for specific periods of time.

Symbol	Type	5 minutes	10 minutes	15 minutes	Per hour	Daily
EUR / USD  1.2888	Moving Averages:	Neutral	Sale	Buy	Sale	Buy
	Indicators:	BUY	Buy	Neutral	Neutral	BUY
	Summary:	Sale	Neutral	Neutral	Neutral	Neutral
GBP / USD  1.6131	Moving Averages:	BUY	BUY	BUY	BUY	Neutral
	Indicators:	Sale	Buy	Buy	BUY	BUY
	Summary:	BUY	Neutral	Neutral	BUY	Sale
AUD / USD  1.0365	Moving Averages:	Sale	BUY	BUY	BUY	Sale
	Indicators:	BUY	BUY	BUY	Sale	BUY
	Summary:	BUY	BUY	BUY	BUY	BUY
Dow Jones 30  13515.11	Moving Averages:	Neutral	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	Sale	Neutral	Buy
	Summary:	Sale	BUY	Sale	Neutral	Neutral
Gold  1777.35	Moving Averages:	BUY	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	BUY	Buy	Neutral
	Summary:	BUY	BUY	BUY	Buy	Neutral
Silver  34.700	Moving Averages:	BUY	Sale	Sale	Buy	Neutral
	Indicators:	BUY	BUY	BUY	Buy	Neutral
	Summary:	BUY	BUY	BUY	Buy	Neutral
Crude Oil  92.30	Moving Averages:	Buy	Buy	Buy	Buy	Sale
	Indicators:	Buy	Sale	BUY	Buy	BUY
	Summary:	Buy	Neutral	Neutral	Buy	BUY
General Index  6882.12	Moving Averages:	Neutral	Buy	Sale	Sale	Sale
	Indicators:	Buy	Neutral	Buy	Neutral	BUY
	Summary:	Neutral	Neutral	Neutral	Neutral	BUY
EGX 30 Index  5,652.18	Moving Averages:	BUY	BUY	BUY	BUY	Neutral
	Indicators:	Sale	Sale	BUY	BUY	BUY
	Summary:	BUY	BUY	BUY	BUY	Sale