The September U.S. dollar index closed Friday at 8194.5, up 14.3 points on Friday tied to the slightly better than expected jobs data. The dollar has suffered losses during the week against other currencies especially against the Japanese Yen. For the week the dollar lost 3% against the Yen. However for the year the dollar is still up 12% and for the 12 months up 22% against the Japanese currency. The Yen closed Friday at .010257, down 34 points. Other currencies posting losses on Friday were the Euro 29 points to $1.3225, the Swiss Franc 79 points to $1.0688, the British pound 58 points to $1.5541, and the Australian dollar 103 points to .9441. The Canadian dollar managed a gain of 65 points to close at 97.84c. While our expectation for the U.S. economy to stagnate and revert to the previous recessionary trend, it is still better situated than the Eurozone which we expect will suffer further debt crisis situations among its members. Stay with the dollar
July crude oil closed at $96.11 per barrel on Friday, up $1.35 or 1.4% and for the week gained 4% as traders were optimistic after the slight improvement in the U.S. jobs data. The expectation that the U.S. Federal Reserve would continue its easing program after the uptick in the unemployment rate from 7.5% to 7.6% was viewed as positive for crude oil. A larger than expected drop in U.S. crude supplies coupled with Middle East tensions also provided the impetus for shortcovering in energy products. We do not feel price gains can be sustained but would not add to short positions or puts in crude for now.
July copper closed at $3.2690 per pound, down 5c or 1.5% tied to the ongoing global glut and concern that buying by China, one of the largest users of industrial metals would continue weak prompted further long liquidation. The recent mining disaster at an Indonesian mine reduced production for a time but stockpiles of copper at the LME were up by 0.4% and orders for copper declined at warehouses. We have suggested the short side of copper for some time and while it is always prudent to take some profits, we see no change in the supply/demand picture for now.
August gold closed at $1,378.20 per ounce, down another $37.60 or 2.7% on Friday after trading as low as $1,338 recently. Fridays selling was stop losses touched off as prices declined below $1,400 once again and traders decided to sell in front of the weekend. With our expectation that the equity market rally on Friday may be overdone, we could see sharp price gains coming into the new week for precious metals. Our overall feeling however, is to "stay out of the way" of this particular "train". July silver closed at $21.52 per ounce, down $1.1870 or 5.3% and set the stage for a correction to the $1.23-1.25 area. Our preference for some time as been silver over gold and we see no reason to change although our preferred stance is the sidelines for now. July platinum closed at $1,502.60 per ounce, down $26.70 or 1.8% but up 2.8% from the prior week as auto sales improved and platinum and palladium are used in catalytic converters necessary in autos. September palladium closed at $757.05 per ounce, down %5.25 or 0.7% performing "better" than platinum. Our old spread recommendation of long palladium short platinum may come into play once again. Otherwise retail clients should avoid precious metals altogether and leave the trading to the professionals.