Currencies: The March U.S. dollar index(NYBOT:DXH14) closed at 80.725 down 27.7 points but rose against the Japanese yen. The U.S. economic data had no effect on the Federal Reserve to remove its monetary stimulus and our assessment of the data would not provide any impetus to change policy for now. The lower yields for Treasuries indicated by the price rally detracts from dollar investment and prompted the weakness in the U.S. currency. For the week the euro managed a 1.1% gain against the dollar closing Friday at $1.3638, up 51 points. The Australian dollar gained 2.4% against the dollar closing at 89.38 on Friday. Other gains were produced by the Swiss Franc 43 points to 1.1148, the British Pound 96 points to 1.6413, and the Canadian dollar 22 points to 90.50. For now we are on the sidelines but with a continued bullish bias towards the dollar since U.S. rates cannot decline much further and any increase in yields could produce renewed dollar attraction.
Energies: March crude oil(NYMEX:CLH14) closed at $99.88 per barrel on Friday up $2.04 or 2.1% and for the week gained 2.5%. The tightness in supplies of heating oil thanks to the extreme cold weather in 2/3rds of the country and in Europe increased demand for crude as well as natural gas, which also rallied sharply in recent weeks. On Friday, however, Natural gas closed down 1.47¢ to $4.784 per Million BTUs. We continue to favor the sidelines with a bearish bias towards crude. The rally in crude could also be attributed to the sharp two day rally in equities. Stay out for now.
Precious Metals: April gold(COMEX:GCJ14) closed at $1,262.90 per ounce, up $5.70 against the weak dollar but was up 2% for the week. The dismal jobs report prompted a selloff in the dollar and gold which had earlier been up over $14.00 prior to the report. We continue on the sidelines for gold. March silver closed at $20.02 per ounce, up 9.2¢ and for the week gained 4.3%. We continue to favor silver over gold on a percentage basis for anyone that must have a precious metal in their portfolio. Otherwise stay out of metals for now. April platinum closed at $1,3832, up $8.30 or 0.6% and was up 0.3% for the week while March palladium closed at $709.15 per ounce, down $1.20 or 0.2% but for the week gained 0.8%. We continue to favor palladium over platinum but for now suggest the sidelines.
Grains and Oilseeds: March corn(CBOT:CH14) closed at $4.445 per bushel, up 1.5¢ on continued short covering from its recent lows around $4.05 per bushel. Good demand for feed and ethanol both proved positive for corn. We now like corn and would buy on any dip from here but with stop protection. March wheat closed at $5.775 per bushel, down 3.25¢ and remains near contract lows. We prefer the sidelines until a fresh fundamentals provide us with a reason for a second look at wheat. March soybeans closed at $13.31 ¾ per bushel, up 6c on short covering and new buying. Good weather in Argentina and Brazil provided the recent weakness and now look for continued price gains. Reductions in carryouts and improved exports a positive for beans. Hold long positions and raise trailing stops.
Livestock: April cattle(CME:LC) closed at $1.40425 per pound, up 1.35c on Friday as the severe drought in the West as well as freezing weather in the Midwest threatens cattle and prompted recent strength. We could see further gains for cattle prices but consumer reluctance to pay higher beef prices at the supermarket, could curtail some demand. We prefer the sidelines at these levels. April hogs closed at 94.725c per pound, up 52.5 points on follow through from the cattle pit strength as an alternative meat source for consumers unwilling to pay the higher prices for beef. We prefer the sidelines here as well.
Coffee, Cocoa and Sugar: March coffee(NYBOT:KCH14) closed at $1.3565, down 10 ticks on pre-weekend profit taking after the recent strength. Lack of rain in the growing areas and lower Brazilian certified stocks prompted recent strength for coffee. We could see further price gains but resistance around $1.40 could halt the progress. Use stop protection for any buying. March cocoa closed at $2,907 per ton, up $21 but better than expected arrivals from the Ivory Coast and purchases by Ghana provided the strength for cocoa. We continue to prefer the sidelines. March sugar closed at 15.69c per pound, down 16 ticks and remains near lows. Light short covering tied to hot weather but expected rains could improve prospects and prompt new selling. We prefer the sidelines in sugar.
Cotton: March cotton closed at 87.45¢ per pound, up 1.14¢ on short covering in anticipation of Mondays supply/demand report by the USDA. We prefer the sidelines for now.