The September U.S. Dollar Index basket of currencies closed at 8082.5, down 13.7 points tied to the weaker than expected University of Michigan/Thomson Reuters index of 82.7 against expectation of 84.5. The dollar lost 3.4% against the Japanese yen for the week as the yen recovered from its weakness over prior sessions. The Bank of Japan’s massive stimulus program provided some recovery for the dollar but the yen still managed a gain of 53 points to close at 0.10601. Other currencies posted gains with the euro 4 points to $1.3356, the Swiss franc 2 points to $1.0861, the British pound 10 points to $1.5697, and the Canadian dollar 11 points to .9809. The Australian dollar closed at .9528c down 13 points. We have been in favor of the dollar and continue to feel that relative to its trading partners, the U.S. will fare better. Stay with the dollar
July crude oil closed at $97.85 per barrel, up $1.16 tied to Middle East tensions with the U.S. As far as crude prices, we may see further price gains tied to geopolitical events but our overall view remains unchanged that supplies are adequate, and demand is declining. Stay with the puts but do not add for now.
July copper finally staged an "anemic" correction of 1.3c per pound on Friday closing at $3.1980. Copper remains under pressure from adequate supplies at warehouses and the recent decline in demand by China. We have been bearish on copper for some time and have suggested taking some profits off the table from short positions. Hold put positions for now.
August gold closed at $1,387.60, up $9.80 for a gain of 0.92% and a weekly gain of a mere 0.3%. The short-covering in front of the weekend after recent heaving long liquidation from the December 2012 $1,700 level was feeble and not a sign of "recovery." The "collapse" mid-April from $1,570 to $1,390 in two sessions appeared to be a "washout" of weak longs but indicative of a bear market. We have been on the sidelines in metals for some time and while some "bargain hunting" can be expected, any rally should provide for an opportunity to move, with us, to the sidelines. July silver closed at $22.00 per ounce, up 41.70c following the gold bounce and remains our favorite if investors must have a precious metal in their portfolio. Otherwise I see no reason to expect a major recovery for metals at this time. July platinum closed at $1,450, down $2.10 while September palladium gained 95c to close at $732.00. Our long time preference of palladium over platinum remains unchanged.