Markets digest shutdown consequences, Greece bailout

Currencies:

The U.S. Dollar Index (NYBOT:DXZ13) closed Friday at 80.225, up 37.9 on short-coverings after recent weakness tied to the U.S. government shutdown. The dollar gain Friday was attributable to the re-emergence of the "reality" of the financial crisis of Greece as well as ongoing concerns over Spain and Italy. Should Greece be forced to withdraw from the euro, the ramifications within the Eurozone could be dramatic because the Greece debt is spread around. Without a definite determination of how the U.S. Government debate will be resolved, we refrain from any suggestions for now.

Energies:

November crude oil (NYMEX:CLX13) closed Friday at $103.61 per barrel, up 30c as concern over the ongoing U.S. government shutdown could curb demand on a temporary basis. On Thursday the Institute of Supply Management reported non-manufacturing purchasing manager’s index fell to a three-month low of 54.4 in September from 58.6 in August. Analysts’ expectations were for a decline to 57.4. Any decline in this index could mean a slowing in an important economic sector and reduce demand for energy. We remain bearish for crude but with the ongoing geopolitical concerns relating to Egypt, Syria and Iran, anything could happen. We are on the sidelines.

Copper:

December copper closed at $3.30 per pound, up 3c or 1% but for the week lost 0.9%. Copper is tied to the U.S. construction industry and moves in conjunction with equity markets. With the current U.S. government shutdown government loans and financing in question as well as construction spending. We maintain our bearish bias toward copper until fresh fundamentals emerge from major producers.

Precious Metals:

December gold (COMEX:GCZ13) closed Friday at $1,311.00, down $6.60 and for the week lost 2%. Gold in a wide trading range fostered by the U.S. government shutdown and concern over the debt ceiling debate. We remain on the sidelines in gold. December silver closed at $21.74 per ounce, down 4.6c and for the week lost 0.4%. January platinum closed at $1,388 per ounce up $14.70 but for the week lost 2.2%. December palladium closed at $701.75, up $1.75 but for the week lost 4.1% nearly twice that of platinum. We are on the sidelines in metals for now.

Grains and Oilseeds:

December corn (CBOT:CZ13) closed at $4.43 ¼ per bushel, up 4c on short-covering after recent weakness tied to the increase in expected U.S. stockpiles of corn. We prefer the sidelines. December wheat (CBOT:WZ13) closed at $6.86 ½ per bushel, down 2 3/4c but up from recent lows around $6.37 per bushel. Rains in the Ukraine and Russia are posing a problem, which could impact plantings and production increasing demand from the U.S. We like wheat for continued strength but use stop protection from here. November soybeans (NYBOT:SX13) closed at $12.96 per bushel, up 7 3/4c tied to rains hindering harvesting in the U.S., the world’s biggest producer. We like soybeans once again but use stop protection.

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