The base metal complex headed for a weekly decline after the US economic data reports showed US economy is not as strong as anticipated earlier. Market traded low in the Asian hours, while some pull back was seen in the afternoon hours after a successful Spanish bond auction eased concerns over the Spain's public finances and banking system.

The European equities rebound after lower opening, while Euro also rose to a three-week high versus the dollar. However, the gains were short-lived due to the off-putting economic data in the evening—suggesting higher number of jobless claims in the US and unexpected fall in the Philadelphia Fed index to 8 from prior of 21 and expected of 22 levels

Dollar index was pressurized to maintain low against the basket majors, as the Yen and Euro gained due to inherent economic fundamentals. Index waded in range 85.523-86.526, to settle nears days low at 85.688, losing -0.46%

Talking about the US data releases, the U.S. current account deficit increased to $109.0 billion, or 3.0% of GDP in the first quarter of 2010, up from $100.9 billion in the fourth quarter of 2009, or 2.8% of GDP. The Initial Jobless Claims for the week ending June-12 are expected rose by 12,000 to 472,000 versus fall of 6,000, while the continuing claims for week ending June-5 are rising by 109,000 against the expected rise of 38,000

OUTLOOK

The European Union leaders have come on to consensus to disclose the banks performance on the stress tests—a move to show the investors that the economies financial system has the potential to withstand financial turmoil

Day ahead, market does not see any significant data releases from the US or Euro-zone. Only Germany is due to release its Producers Price Index for May month, expecting a fall to 0.10% after a rise to 0.80% in the penultimate month

The Asian markets have opened mixed to positive after the Wall Street ended flat, the previous day. Day ahead, optimism in Japanese economy and Euro gaining versus the Greenback could pull up equities in the later hours, turning supportive for the commodities markets as well

The dollar index, a performance track against the majors, open at 85.638 off the intraday high at 85.706 now low by 0.08%, is due to slight strength in the overseas majors. The Japanese Yen rose for the fifth consecutive day against the greenback as the Japanese Prime Minister bring in reforms to cut the debt –the largest in the world as the failure of it might challenge country’s sovereignty. Moreover, the Euro could also grab some gains as the well-covered sell off of Spanish bonds might boost investors confidence that the Debt crisis may soon to ease

We from KCTL expect MCX metals complex to open on a flat customary note as the electronic session at LME do not give an indicative direction. The appreciation of rupee on the domestic front is disturbing the parity vis-à-vis the international counterparts. The selling pressure might continue in the market for the third day as well, after metals had shown rally in prior seven days. The weekend session in the international markets might remain sluggish as investors would abstain to keep long --indecisive of the trend next week and similar sentiments could be reflected in the Indian markets as well. Overall, the trend for the day remains unclear and prices would be directed based on equities and currencies moves.

Courtesy: Karvy Commtrade Ltd.

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