The dollar falls against most foreign currencies, positive for the market

06.09 Filed Wednesday 3:30 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

July Crude 73.85 73.44

July Heat 199.90 201.93

July Gas (Blended) 202.65 204.35

The oil market rallied for a second consecutive day in response to the

release of the inventory report from The US Department of Energy.

Another positive for the market was that the dollar fell against most

foreign currencies. Crude rallied by as much as 4% by mid morning,

Wednesday. Crude stocks fell by 1.8 million barrels to 361 million

barrels for the latest reporting week. The trade was looking for a

decline of 900,000 barrels. Yesterday, the American Petroleum Institute

report stated that crude stocks had fallen by as much as 4.54 million

barrels. This was the greatest weekly drop in stocks since last

December. Another positive for the market was news that Chinese

exports were greater than expected which gave traders the idea that the

Euro debt crisis was not significant enough to derail the Chinese

economic engine. Gasoline inventories were lower by 8,000 barrels to

219 million barrels. The trade had been looking for a decline of 500,000

barrels. Money flow in crude oil will turn positive with a close above

72.50 on Wednesday. Money flow in Heating Oil will turn positive with

a close above 196.50 on Wednesday. Money flow in gasoline will turn

positive on a close above 200.00 on Wednesday. Unfortunately, the BP

oil spill continues as does the drilling moratorium on 33 rigs in Gulf. In

the big picture, the problems in the Euro zone continue. The exact bank

exposure to the sovereign debt of Greece, Italy, Spain and Portugal

remains ill defined. It may be worse than originally feared and could

lead to a credit freeze for the entire region and a severe economic

contraction which would quickly take $5.00 per barrel off the price of

oil.

Support Resistance

July Crude 70.00 75.00

July Heat 193.50 205.00

July Gas 195.30 207.00

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METALS

Last Last Week

August Gold 1234.70 1223.40

July Silver 18.16 18.345

July Platinum 1526.50 1557.80

Gold prices fell on Wednesday to test support as the dollar fell against

the EC and stocks advanced, at least for the moment. Gold traded a new

recent high on Tuesday at $1254.50 an ounce. The metal has rallied as

traders sought protection against a further deterioration in the Euro

zone debt crisis. The EC saw some buying ahead of the interest rate

announcement by the ECB on Thursday. Gold was also sold off on

unwinding of oil/gold spreads. Every time gold makes a new life of

contract high, there’s a high probability of a quick selloff as late buyers

get flushed out of the market. The dollar should maintain its strength

over the next few months as the exact exposure of Euro based banks to

the currency crisis remains vague. Gold continues to project higher

while silver and copper should continue to languish by comparison.

Continue to expect more movement of EC and British Pound into gold

over the coming weeks. Money flow in gold is positive. Money flow in

silver remains negative as long as it closes below 18.33 on Wednesday.

Money flow in Platinum remains negative.

Support Resistance

August Gold 1225.00 1264.50

July Silver 17.945 18.755

July Plat 1503.00 1545.00

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SOFTS

Last Last Week

July Coffee 134.60 135.30

July Sugar 15.12 13.99

Sugar advanced to its best price in two weeks as the idea circulated the

market that Brazilian supplies may be tighter than first thought. India

is thought to begin this coming crop year with a stockpile of 3 million

tons which may not be much of a cushion according to trade sources.

As for coffee, Vietnam is planning to maintain its current export levels.

Vietnam is the world’s second largest exporter of Robusta coffee. Brazil

is the number 1 exporter of robusta. Currency devaluation should

improve export ability.

Support Resistance

July Coffee 130.00 135.00

July Sugar 14.50 16.50

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Last Last Week

July Soybeans 9.430 9.324

July Corn 3.380 3.484

July Wheat 4.286 4.424

Money flow in soybeans remains negative. Traders believe that soybean

prices may be pressured over the near term as Brazil raised its

production outlook. Brazilian farmers are expected to now harvest 68.7

million metric tons of soybeans, up from an earlier estimate of 67.9

million tons. Last year, Brazilian farmers produced just 57.2 million

tons.

Money flow in corn remains negative. If crude can maintain its recent

strength, prices for corn may gain some traction on bio fuel

considerations. The dollar remains strong however which is an export

negative. The Euro zone currency crisis remains far from resolved let

alone contained and this could result in a credit crisis and a sharp

economic contraction.

Money flow in wheat remains negative. Prices fell recently to a three

year low as the harvest progresses in key growing areas. Three percent

of the crop is in. Farmers say the wheat crop looks to be in fabulous

shape. Wheat is about 30% lower in price over the past year.

Support Resistance

July Soybeans 9.20 9.43

July Corn 3.32 3.42

July Wheat 4.20 4.38

Chuck Kespert from NY/NY