December 11, 2009
One of the major news services Thursday morning had a headline about the Canadian dollar strength. The early headlines routinely attributed strong equities and crude as the cause for the higher Loonie. This seems to be the standard explanation for the ups and downs in the Cad. One story fits all market moves. Well not quite. Currently NYMEX crude is trading at 70.60, while the Brent is 71.45, neither pillars of strength this week. Equities have recovered from the early week sell off, but the averages are still less than last week’s levels. Later, crude was deleted from the headline as a factor for the strength of the Cad.
There was some unusual trade in the Cad yesterday, but it is more involved that the traditional canned explanation. At the Chicago futures market yesterday the open interest increased 17,486 contracts. Since the open interest is now up to 120,704 contracts, this represents a 14.5% increase in the total OI in one day. With such a big increase in the trade, it is very peculiar that the futures market did not have a bigger move. The Cad did gain a little on the dollar yesterday, and technically the market should move in the direction in did on the day the trade was initiated. Perhaps the trade was an adjunct to some activity in the cash market such as price fixing the currency rate on export trades, but the reality is we simply don’t know what happened.
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December 10, 2009
Matthew Bradbard submits:
Very little action in Crude today with prices closing slightly lower for the seventh consecutive day. As we suggested yesterday, we advised clients to buy March $5 call spreads expecting a trade back to $75 in the next 2/3 weeks. Natural gas exploded today with a surprise draw on the weekly AGA inventory report. On 2 occasions just this week prices moved in excess of 9% in 1 day. If you do not like volatility then look elsewhere. We will not be looking at natural gas until 2010.
The only excitement we see in the softs complex was a breakout in sugar. Prices in March were higher by 5% today and finally closed above the trend line. Clients are positioned long via futures and options. Equities remained sideways; we suggest playing the breakout and currently have no bias. Say it is not so a positive day in metals. Yes indeed gold gained $10 and silver 20 cents. Clients currently own light longs in silver, we would be convinced to start scaling into longs in gold if $1100 was not penetrated in the next few sessions.
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Jason Kelly submits:
