Oil up on Iran talk; stockpile build cited by API surprises

Oil prices rose on Tuesday after Reuters reported Iran was sending positive signals that it may support joint OPEC action to prop up the market, before the market pared gains on trade data showing a surprise build in U.S. crude stocks.

Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, refused to join a previous attempt this year by the group and non-OPEC members led by Russia to stabilize production. But sources in OPEC and the oil industry told Reuters that Tehran appeared more willing to support such talks scheduled next month in Algeria.

"Iran is reaching its pre-sanctions production level soon and after that it can cooperate with the others," said a source familiar with Iranian thinking after a visit by Venezuelan Oil Minister Eulogio Del Pino to Tehran as part of a tour to convince OPEC of a production freeze.

Brent crude settled up 80 cents, or 1.6 percent, at $49.96 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 69 cents, or 1.5 percent, to close at $48.10.

Tehran has been boosting its oil output since the lifting of Western sanctions in January. News of its potential support for a production freeze helped halt an abrupt slump in crude prices that began on Monday, after a 20-percent rally in the past two weeks.

Still, Brent and WTIpared gains in post-settlement trade after the American Petroleum Institute (API) reported that U.S. crude inventories rose by 4.5 million barrels last week, a surprising build versus analyst expectations' for a draw of 500,000 barrels. The U.S. government will issue official inventory data on Wednesday. [EIA/S]

Despite rebounding this year, oil still trades at less than half of mid-2014 levels, with the market still worried about a glut that spurred the biggest price rout in a generation.

The selloff has battered the economies of Venezuela, Iraq and Nigeria, which are more anxious to boost crude prices than major OPEC producers such as Saudi Arabia and Iran, which are keen to protect market share.

Many analysts remain skeptical of the effort to freeze production. Goldman Sachs maintained a "weak" $45-$50 price forecast through the 2017 summer.

"The current price level of well over $40 does not provide non-OPEC producers with any kind of motivation to support oil prices by cutting or maintaining current production levels," said Tamas Varga, analyst at London-based energy broker PVM.
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Market edges lower in early trade

 Key benchmark indices edged lower in early trade tracking lackluster trading in Asian stocks. At 9:16 IST, the barometer index, the S&P BSE Sensex was down 35.24 points or 0.13% at 27,950.30. The Nifty 50 index was currently down 9.95 points or 0.12% at 8,619.20.

In overseas stock markets, most Asian stocks edged lower tracking lackluster trading in US overnight. Markets were playing wait-and-see ahead of a key speech from US Federal Reserve chair later this week. In Japan, the Nikkei 225 Average was currently off 0.22%. The Nikkei flash Japan manufacturing purchasing managers' index (PMI) rose to 49.6 in August from July's reading of 49.3. A reading above 50 signals an improvement, while one below 50 points to a contraction in activity. August's flash PMI shows a contraction for the sixth month in a row. In mainland China, the Shanghai Composite was currently up 0.33%. In Hong Kong, the Hang Seng was currently off 0.36%. Chinese business confidence weakened in August after showing signs of stability in recent months, clouding investors' outlook on the world's second largest economy. The MNI Deutsche Borse Group business sentiment indicator declined to 54.3 in August from July's reading of 55.5.

US stocks closed mostly lower yesterday, 22 August 2016, dragged down by energy shares on lower crude oil prices. Federal Reserve chair Janet Yellen's speech at the Kansas City Fed's annual Monetary Policy Symposium in Jackson Hole, Wyoming is scheduled on Friday, 26 August 2016. Minutes from the Federal Open Market Committee's (FOMC) July meeting showed officials were split on whether an increase in interest rate was needed soon.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 540 shares rose and 454 shares declined. A total of 47 shares were unchanged. The BSE Mid-Cap index was currently down 0.08%. The decline in this index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was currently up 0.01%, outperforming the Sensex.

Cement stocks declined. UltraTech Cement (down 0.93%), Ambuja Cements (down 0.67%), and ACC (down 0.55%) edged lower.

Grasim Industries was down 0.33%. Grasim has exposure to cement sector through its holding in UltraTech Cement.

GAIL (India) was up 0.71% at Rs 366.65 after the company and Silicon Valley-based Bloom Energy announced signing a memorandum of understanding (MoU) to deploy revolutionary natural gas-based fuel cell technology to generate electricity. The announcement was made after market hours yesterday, 22 August 2016.

The solid oxide fuel cell (SOFC) technology of Bloom Energy Servers convert fuel into electricity using natural gas as the base fuel to generate reliable and resilient electricity in a highly efficient non-combustible process that reduces emissions of greenhouse gas and harmful air pollutants, with minimal use of water vis-vis the conventional power producing technologies. The Bloom Energy Servers could be installed onsite at any operating premises or building and can be plugged into natural gas pipeline to generate uninterrupted, efficient, noise-less base load power round-the-clock.

GAIL's subsidiary at Bengaluru is already supplying natural gas for energizing a multi-MW Bloom Energy project for a large global technology company at the Technology Park in Bangalore.

The unique tie-up seeks to leverage the strengths of both the organizations. Whilst GAIL brings a portfolio of natural gas to ensure reliable and competitively available natural gas for Bloom Energy projects along its integrated gas supply networks, Bloom Energy's power systems run on advanced solid oxide fuel cell technology that are not just acknowledged as the most efficient producers of electricity based on natural gas but also combines the advantage of requiring a tenth of the space required for generating equivalent power through other modes. The MoU provides an alignment of a shared vision between GAIL and Bloom Energy and opens up an opportunity for Indian consumers to experience bundled and reliable service by the two leading brands for expanding the distributed power generation systems in India.

HPCL lost 1.86% at Rs 1,191.95 after net profit rose 30% to Rs 2098.38 crore on 5.67% decline in total income to Rs 51936.30 crore in Q1 June 2016 over Q1 June 2015. The result was announced after market hours yesterday, 22 August 2016.

Average gross refining margin in Q1 June 2016 was $6.83 per billion barrel (BBL) as against $8.56 per BBL in Q1 June 2015.

Based on the approval received from Government of India, HPCL accounted for budgetary support amounting to Rs 328.41 crore in Q1 June 2016 towards under recovery on sale of PDS kerosene (SKO), compared with Rs 450.61 crore in Q1 June 2015. State-run oil marketing companies bear under-recoveries on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.

In Q1 June 2016, discount from upstream oil company viz., ONGC amounted to Nil in respect of crude oil purchased from ONGC, compared with Rs 218.25 crore accounted in Q1 June 2015.
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PRECIOUS-Gold hits one-week low on U.S. rate hike prospects

Gold fell on Monday to its lowest in over a week as the dollar strengthened after comments from U.S. Federal Reserve officials increased bets on a U.S. rate hike this year.

 FUNDAMENTALS
* Spot gold was down 0.3 percent at $1,337.12 an ounce at 0101 GMT, after touching a low of $1,334.20, a level not seen since Aug. 12.
 * U.S. gold dropped 0.4 percent to $1,341.20 an ounce.
 * The Fed is close to hitting its targets for full employment and 2 percent inflation, the Fed's No. 2 policymaker Stanley Fischer said on Sunday in comments that did not address when the U.S. central bank should next raise interest rates.
 * New York Fed President William Dudley said last week a rate hike would be possible at the Fed's next policy meeting in September, though interest rate futures contracts indicate that market is pricing in about 50/50 odds of an increase in December.
 * Amid conflicting signals from the Fed in recent days, central bankers from around the world will gather from Aug. 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Chair Janet Yellen due to speak the following day.
* Japanese companies overwhelmingly say the government's latest stimulus will do little to boost the economy and the Bank of Japan should not ease further, a Reuters poll showed, a setback for policymakers' efforts to overcome deflation and stagnation.
* The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.3 percent in early trade at 94.796, pulling away from last week's low of 94.077, which was its weakest since June 24.
* Hedge funds and money managers again decreased their bullish positions in COMEX gold and silver contracts in the week to Aug. 16, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.
* Physical gold demand in Asia improved modestly this week as consumers returned to the market ahead of upcoming festivals in India and China when demand is usually high.
 * For the top stories on metals and other news, click or

 MARKET REPORT
* Asian shares slipped on Monday and the dollar pulled away from last week's lows on expectations that a signal might emerge on interest rate hikes from the Fed gathering. DATA AHEAD (GMT) 1230 U.S. national activity index July
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ForexPeople introduces ClickFX, South Africa’s first online solution to personal Forex trading

One of South Africa’s largest Forex intermediaries Forex People, has introduced ClickFX to offer South Africans a simple and cost effective way to transfer Forex online. 

Over the last decade the personal foreign exchange allowance has increased from a once-off R350 000 to an annual amount of R10 million. As a result, more and more people are looking at how they can transfer funds offshore to mitigate the continued fluctuation of the Rand. Currently, South Africans generally still deal with banks when it comes to Forex transfers. However, internationally it has become the norm to trade Forex using a specialist online broker.

The Forex market and the local regulatory environment can be quite daunting for an individual. Click FX offers a friendly, intuitive and reliable way to get a great rate when buying or selling Forex. As part of the Forex People family, Click FX benefits from the huge volumes traded every day, ensuring sharp exchange rates, low fixed bank fees, smooth processes and professional, friendly support staff; all via a secure online platform.

“What’s great about ClickFX is that it brings the bargaining-power of several hundred regularly-trading importers and exporters to the man on the street, via a secure online service,” says CEO, Richard Beddow. “Whether someone wants to send a large lump sum, or small regular amounts, the cost effectiveness and simplicity of ClickFX means anyone can send funds offshore as and when they want.”

Established in 2003, ForexPeople is a Johannesburg-based, privately-owned and managed, independent Foreign Exchange intermediary. It is regulated by the South African Reserve Bank, the Financial Services Board and the Financial Intelligence Centre. Recently clients have become more comfortable with technology and are now booking Forex trades using email, SMS, WhatsApp and Skype. ForexPeople identified an inherent need for a quick fix to Forex trading and this is where the idea for ClickFX originated.

ClickFX services individuals sending their allowances out of the country as well as expatriates bringing offshore earnings back in. “ClickFX is a fully-compliant Forex transfer service,” adds Richard Beddow. “It is not a speculative trading platform where people buy and sell Forex for personal gain.”

Using ClickFX is hassle free. Once registered, the system checks your FICA compliancy within 24 hours. You simply transfer the funds to your own Forex account, accept a rate, and trade. Within two days your Forex arrives in your offshore account, which ClickFX can open for you – if you don’t already have one.

You no longer need to be a wealthy individual in order to have an offshore portfolio. ClickFX proves that buying or selling Forex doesn’t have to be complicated or expensive but can be as easy as the click of a button.
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Why this U.S. market rally gives investors good reason to be cautious

Many factors suggest that the U.S. stock market currently is vulnerable to a decline, maybe a big one. The fundamentals are bleak, for starters.

The U.S. economy grew at a dismal 1.2% annual pace in the second quarter, a Commerce Department report released at the end of July showed, and corporate earnings are flat at best. Analysts’ estimates of earnings for the companies in the S&P 500 SPX, -0.08%  have declined in each of the last six quarters, according to FactSet Research.

It’s not as if stocks are cheap and can withstand a slowdown in economic growth or business conditions, either. The S&P 500 at the end of July was trading at about 25 times the earnings that constituent companies recorded in the last four quarters. The figure has almost never been that high, and never for very long when it has been.



As for technical indicators, trading volume has shriveled in recent months, a sign of a lack of conviction among traders and investors; a relatively paltry number of stocks are trading at 12-month highs, suggesting a lack of leadership. In a healthy market, one or a few sectors receive substantial investor interest and carry the broad averages up until new leadership takes over. Plus, momentum is flagging, meaning that the market becomes less overbought with each new high.

But two widely followed measures are running in jarring contrast with the others. The advance-decline line — the running total, day after day, of the difference between the number of stocks gaining and losing ground in each trading session — has hit new all-time highs and continues to appear remarkably strong.

Also, investment banks have reported unusually bearish sentiment toward stocks among fund managers and other professional investors, a condition that tends to precede rallies because it suggests that they are out of the market and that there is comparatively little selling left for them to do.

There is evidence to indicate that these normally reliable measures may be sending misleading signals this time around, because of what fund managers are doing and how they’re doing it. The most recent edition of Bank of America Merrill Lynch’s monthly survey of global fund managers, released in mid-July, found that managers had made a big move into U.S. stocks in the previous month, far more than any other change they made to their portfolios.

More managers say they are overweight in U.S. stocks than at any point since early in 2015. However disdainful they may claim to be about stocks, they are putting their money exactly opposite of where their mouths are.

Read: Just like 1999? 3 reasons this U.S. stock market is different

In a separate BofA report, the strategist Savita Subramanian confirmed the reluctant stock ownership of asset managers. While acknowledging the expressions of bearish sentiment, she noted that the “beta” of large-company stock funds, meaning the extent of exposure to the market, is the highest it has been at least since 2008.

A beta of 1.0 means that a portfolio perfectly tracks whatever measure of the market is being used as a benchmark, the S&P 500 in this case. The latest reading of about 1.05 indicates that managers are gaining exposure to the market and using a bit of borrowed money to try to goose returns rather than doing it through stock picking. If they have been buying the market broadly and indiscriminately, it would explain the strong advance-decline line amid a technically weak backdrop overall.
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NZD/USD Forex Signal

NZD/USD Signal Update

Yesterday’s signals were not triggered as there was no bearish price action at 0.7239.
Today’s NZD/USD Signals
Risk 0.50%
Trades may only be taken from 8am New York time until 5pm Tokyo time, over the next 24 hours.

Long Trade 1

Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.7150.Place the stop loss 1 pip below the local swing low.Move the stop loss to break even once the trade is 20 pips in profit.Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.

 Short Trade 1

Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.7306.Place the stop loss 1 pip above the local swing high.Move the stop loss to break even once the trade is 20 pips in profit.Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.

NZD/USD Analysis

The RBNZ cut its Base Rate from 2.25% to 2.00% as expected. This is still the highest rate of any major global currency that is commonly traded in the Forex market. What was most notable about the accompanying statement was that it was less dovish than expected, and this had the result of pushing this pair up strongly to the key resistance level at 0.7306, from where it has been falling sharply.
The chart shows a fairly simple situation of a clean downwards movement with support at 0.7105 and resistance more or less at 0.7300.
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Forex Market: USD/CAD trading outlook for August 10th 2016

Yesterday’s trade (in GMT terms) saw USD/CAD within the range of 1.3109-1.3191. The pair closed at 1.3120, edging down 0.26% compared to Monday’s close. It has been the 145th drop in the past 312 trading days and also a second consecutive one. The daily high has been an exact test of the high from August 8th. The major pair has trimmed its advance to 0.71% so far during the current month, following a 0.80% gain in July.

At 7:57 GMT today USD/CAD was edging down 0.32% on the day to trade at 1.3078. The pair touched a daily high at 1.3126 during early Asian trade, undershooting the daily R1 level, and a daily low at 1.3052 during the early phase of the Asian trading session as well.

Meanwhile, crude oil futures marked their 92nd drop out of the past 167 trading days on August 9th. Oil for September delivery went down as low as $42.47 per barrel and closed at $42.77, edging down 0.58% compared to Monday’s close. As of 8:12 GMT today the commodity was retreating 1.36% to trade at $42.19, after going down as low as $42.12 per barrel earlier. Crude oil prices and CAD valuation tend to be strongly positively correlated.

On Wednesday USD/CAD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals
United States
Job Openings
The number of job openings in the United States probably rose to 5.574 million in June, according to the median forecast by experts, from 5.500 million during the preceding month. In May, the number of positions waiting to be filled dropped in wholesale trade (-104 000), other services (-98 000) and real estate and rental and leasing (-53 000).

This indicator refers to all job positions that are open, but not filled on the last business day of the month. Job openings are part of the Job Openings and Labor Turnover Survey (JOLTS), which gathers data from about 16 400 non-farm establishments including retailers and manufacturers, as well as federal, state, and local government entities in the 50 states and the District of Columbia. The survey assesses the unmet demand for labor in the labor market. A higher-than-projected level of job openings will usually have a limited bullish effect on the US Dollar. The Bureau of Labor Statistics is to release the official report at 14:00 GMT.

Monthly Budget Statement
The United States probably recorded a government budget deficit of USD 113 billion in July, according to market expectations, after a budget surplus of USD 6 billion during the previous month. The latter has been an 88% decrease compared to the figure reported in June 2015.

In June total receipts fell 3.8% to USD 330 billion. individual income taxes contributed the most (USD 134 billion), followed by social security and other payroll taxes (USD 111 billion), corporate income taxes (USD 61 billion), other taxes and duties (USD 23 billion).

Total outlays increased 10.6% to USD 323 billion during June. Interest on debt contributed to USD 27 billion, Medicare – USD 46 billion, defense – USD 49 billion, social security – USD 81 billion, other outlays – USD 121 billion, according to the report by the US Treasury.

The current fiscal year-to-date budget gap amounted to USD 401 billion, or a 26.9% increase compared to the same period a year earlier.

A larger-than-projected budget deficit in July would have a moderate bearish effect on the US dollar. The Financial Management Service is to publish the official figure at 18:00 GMT.

Bond Yield Spread
The yield on Canada’s 2-year government bonds went as high as 0.515% on August 9th, after which it closed at 0.508% to lose 0.002 percentage point compared to August 8th.

Meanwhile, the yield on US 2-year government bonds climbed as high as 0.738% on August 9th, after which it fell to 0.706% at the close to lose 2 basis points (0.02 percentage point) compared to August 8th.

The spread between 2-year US and 2-year Canadian bond yields, which reflects the flow of funds in a short term, narrowed to 0.198% on August 9th from 0.216% on August 8th. The August 9th yield spread has been the lowest one since August 4th, when the difference was 0.109%.

Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for USD/CAD are presented as follows:

R1 – 1.3128
R2 – 1.3135
R3 (Range Resistance – Sell) – 1.3143
R4 (Long Breakout) – 1.3165
R5 (Breakout Target 1) – 1.3191
R6 (Breakout Target 2) – 1.3202

S1 – 1.3112
S2 – 1.3105
S3 (Range Support – Buy) – 1.3097
S4 (Short Breakout) – 1.3075
S5 (Breakout Target 1) – 1.3049
S6 (Breakout Target 2) – 1.3038

By using the traditional method of calculation, the weekly levels of importance for USD/CAD are presented as follows:

Central Pivot Point – 1.3123
R1 – 1.3250
R2 – 1.3329
R3 – 1.3456
R4 – 1.3583

S1 – 1.3044
S2 – 1.2917
S3 – 1.2838
S4 – 1.2759

In monthly terms, for USD/CAD we have the following pivots:

Central Pivot Point – 1.3038
R1 – 1.3244
R2 – 1.3460
R3 – 1.3666
R4 – 1.3872

S1 – 1.2822
S2 – 1.2616
S3 – 1.2400
S4 – 1.2184
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