Equity markets are called better on the news out of Germany and on expectations of a better than expected U.S. Housing Starts Report. Yesterday the trend turned down in all three major indices so today’s rally should be treated as short-covering. Volatility could get huge this week because of thin trading conditions and this Friday’s option expiration. The markets could witness volatile two-sided trading before settling on a direction later in the week.
Look for December Gold and December Silver to rebound after a two-day break because of the weaker Dollar. December Copper is also expected to post a gain on renewed speculation of an economic recovery.
September Treasury markets are trading mixed overnight. Yields dropped yesterday as equity markets fell and traders bought Treasuries for protection. A rally today in the equity markets could send yields higher. More signs of a global economic recovery could also put pressure on the Treasury Notes and Bonds.
The September Euro is expected to open higher as better than expected news out of the Euro Zone is renewing speculation of an economic recovery later in the year. The fundamentals remain bearish for the September British Pound so today’s rally is likely to be short-covering. Stronger energy and equity markets should support the September Canadian Dollar. Oversold technical conditions are also helping to boost this market. Stronger demand for higher yielding assets is helping to pressure the September Japanese Yen.
Renewed interest in risky assets and the prospect of a global economic recovery is expected to give September Crude Oil a boost. Gasoline traders are looking for signs the consumer is spending again.
The weaker Dollar should help the Grain and Softs complexes recover some of yesterday’s losses. November Orange Juice traders should continue to monitor the movement of the hurricane as it nears Florida.
