Crude oil price continues to trade below 60 in Asian morning today. Near-term outlook remains bearish as investors' risk appetite diminished as there's lack of signs that global recession is ending. Currently trading at 59.4, the current correction may extend further before support level is seen at 55.

We will probably see narrow trading as both macro and industry data are light today. Japan's industrial production was revised down to +5.7% mom in May from initial estimate of +5.9%.

In US session, the Treasury budget is expected to have turned to a deficit of -$65.5B in June from a surplus of $34B the same period last year as driven by -41% decline in corporate receipt and -33% drop in non-withheld income tax receipt. On the other hand, spending increased due to additional spending for the GSEs, TARP, as well as increased unemployment and Medicaid benefits from ARRA. Although some firms have repaid the loans from TARP which should have amounted $69B, we are not sure if the Treasury have included this in June.

Stocks continue to fall in Asia with the MSCI Asia Pacific Index plunging -1.3%. Japan's Nikkei 225 Stock Average slid for the 9th day, by -1.2% so far today, to 9177 as led by the mining sector. Taiwan's Taiex Index also dropped -3.3% and South Korea's Kospi Index lost -2.2%.

Gold price for August delivery moves within a narrow range around 910 today as USD has not shown clear direction yet. The greenback's Friday rally against the euro has stabilized as the market awaits th ECB's announcement later today, news said President Trichet may signal the current main refinancing rate of 1% is the floor of the easing cycle. If that's the case, the euro will rise against the dollar due to interest rate differential. The BOE announced to maintain the existing 125B pound asset purchase program at the meeting last week. According to the latest operation announcement, the BOE has slowed down the pace of weekly buying from the usual 6.5B pound to 4.5B pound, making the program to end by July 29, a week before the next MPC meeting. We are rather confused by BOE's action by moderating the pace of gilt purchase while still allowing 1-week gap. One possibility is that the BOE would like to end the QE measure in July as it sees economy stabilizes. Should the BOE ends the QE policy, it would be positive for the pound and put pressure on USD.

Commitments of Traders
  • Crude Oil: Net speculative long positions plummeted to 15K from 41K in the prior week as price tumbled
  • Natural Gas: Net shorts surged above 160K again, the first time since December 2008
  • Gold: Net longs had little change last week, suggesting sluggish investment demand recently
  • Silver: Another week of modest decline in net speculative long positions. The move was in tandem with gold
  • Platinum: Net long positions rose for the 5th week and broke above 10K for the first time since February 2009