KASB Securities Limited and Economics Research – Commodities Corner

Karachi, May 16, 2013 (PPI-OT): Equities rallied despite disappointing industrial data

US markets remain buoyant as Dow and SandP 500 continued to make higher highs into uncharted waters. DJI gained 60.44 points, up 0.40%, and concluded previous session at record 15,276.

According to KASB Securities Limited the SandP also moved in tandem adding 8.44 points, closing at all time high of 1,659. Moreover, the tech exchange witnessed gains of 9.01 points, (0.26%) closing at 3,472.

Disappointing U.S. industrial data resulted in U.S. Treasury prices rising for the first time during this week; this also impacted dollar which witnessed correction from a 4-1/2 year high against the yen touched in the previous session. Alongside euro trembled to near a six-week low.

Key events/data releases 

Time     Currency  Impact  Event                                  Forecast      Previous 
16 May, 2013 Thursday 
11:45am   EUR     Medium   French Prelim Non-Farm Payrolls q/q     -0.30%       -0.30% 
2:00pm    EUR     Medium   CPI y/y                                  1.20%        1.20% 
2:00pm    EUR     Medium   Core CPI y/y                             1.00%        1.50% 
4:45pm    USD     High     FOMC Member Rosengren Speaks               -           - 
5:30pm    USD     High     Building Permits                         0.94M        0.91M 
5:30pm    USD     High     Core CPI m/m                             0.20%        0.10% 
5:30pm    USD     High     Unemployment Claims                       332K         323K 
5:30pm    USD     High     CPI m/m                                 -0.30%       -0.20% 
7:00pm    USD     High     Philly Fed Manufacturing Index           2.5          1.3 
9:30pm    USD     Medium   FOMC Member Raskin Speaks 
17 May, 2013 Friday 
6:55pm    USD     High     Prelim UoM Consumer Sentiment           77.9         76.4 

Source: www.forexfactory.com/calendar 

Gold Spot

Technical Strategy: Buy on Weakness
Gold prices gave a 61.8% retracement of the rise from US$1,321.00-US$1,487.00 which suggests that it could give a bounce from this level. Moreover, short term indicators on the hourly and 4-hourly chart are oversold which also suggests a bounce till US$1,405.00-US$1,410.00. However, a drop below US$1,383.00 could unveil a move towards US$1,360.00. That said, it is recommended to buy in between US$1,390.00-US$1,395.00 with risk defined below US$1,383.00.

Silver Spot

Technical Strategy: Buy on Weakness
Silver prices have formed a double bottom at US$22.50 area which suggests that it could bounce from this level. Moreover, short term indicators on the hourly and 4 hourly chart are oversold which also suggests a bounce till US$23.30-US$23.50. However, a drop below US$22.50 could unveil a move towards US$21.60. That said, it is recommended to buy on weakness with risk defined below US$22.50.

WTI Spot (Crude Oil)

Technical Strategy: Sell on Strength
WTI dropped sharply yesterday but held its important support level of US$92.40 and gave a bounce till US$94.40 which is its declining trend line resistance. Looking at the current formation and resistance at US$94.40, it could attempt to retest its previous low of US$92.11. That said, it is recommended to sell in between US$93.80-US$94.00 targeting US$92.40 with risk defined above US$94.80.