The euro weakened broadly Tuesday, as fears over Greece's protracted debt negotiations and sober U.S. U.S. housing, manufacturing and confidence data revealed weakness in the economy, sparking safe‐haven demand for the dollar and curbing appetite for stocks and high‐yielding currencies.
In the wake of the data and with no news on Greece, the euro weakened to a new 4‐1/2 month low against the Swiss franc.
Metals are expected to take support today after China's PMI for January rises to 50.5 from 50.3 in December. We would expect that commodity markets would take this positively.
The number for January is also better than market expectations of 49.6 and suggests Chinese manufacturing expanded in January albeit at a pretty modest pace.
Bullion desk faced certain weight loss for the second time in last four sessions as investors continued booking profits at higher prices of early start of the day backed by failed EU summit. Gold tripped from seven week high failed to cross $1750 whereas Silver touched $34 but traced back.
Considering the current profit booking at the Bullion desk as well as ongoing EU problem, it is advisable not to take huge positions on either side unless certain decisive steps occur.
But having stop loss is necessary.
Base metals prices yesterday witnessed heavy selling pressure taking negative cues from US economic data. Euro fell against the dollar as weaker than expected US consumer confidence data weighed on sentiments, pushing copper prices down by more than one percent to $8,300/t on LME.
Other metals also witnessed sharp correction with Lead down by 2% to $2,200/t, Zinc dropped to $2,100/t while nickel was down by more than 2 percent to $20,800/t.
Today, We may see some more profit booking thus prices are expected to trade sideways to weak with LME Copper has strong support at $8,200/t and Rs.415 on MCX.
Crude oil futures traded lower fell below $99 on deteriorated economic outlook on weak US and EU economic data pressured by Greece debt concerns. We expect oil prices to trade sideways to down on EU debt concerns and expectation of bearish weekly inventory data.
However the geopolitical tensions on Iran oil embargo speculating Iran may restrict oil export to EU countries may limit down side in the oil prices.
Courtesy: Edelweiss Comtrade Limited Research
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