Economic Buzz: Australian Manufacturing Sector Contracts For Nearly Two Years

The Australian manufacturing sector continues to suffer, despite getting help from weak currency and lower interest rates. The Australian Industry Group's Performance of Manufacturing Index (PMI) was 42.0 in July, down 7.6 points from June. The below-50 reading shows activity in the sector is falling. Manufacturing hasn't posted a monthly rise since June 2011.

Manufacturers are telling us that, while the fall in the Australian dollar and the May interest rate cut have been extremely welcome, they have not yet been enough to turn around a very challenging business environment. The weakness in the currency has fuelled higher prices for imported inputs without any real corresponding improvement in stronger exports.

The Reserve Bank Of Australia (RBA) noted last month that survey-based measures of business conditions improved in May, but were still a little below long-run average levels. Over the past few months, measures of sentiment had improved for some industries, including construction and business services, and declined slightly for other industries, most notably mining and manufacturing.

While the volume of resources exports had risen further, and was expected to continue to grow with the addition of new capacity for bulk commodities, the decline in commodity prices over the past year or so had weighed on the resources sector. RBA noted that while mining investment remained at a high level, planning and development work related to future projects had declined significantly since the previous year.

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Commodities Buzz: Global Dairy Giant Upgrades Milk Price Forecasts

The largest biggest dairy processors in the world, Fonterra raised its forecast for its milk price paid to farmers amid thin supplies. New Zealand-based Fonterra, raised by NZ$0.50 to NZ$7.50 per kilogramme of milk solids its forecast for its milk price in 2013-14, taking it NZ$0.10 from the record high set three years before. Fonterra has forecast a dividend of NZ$0.32 on top, taking the total forecast payout to its members to NZ$7.82 per kilogramme of milk solids, a jump of 28% year on year.

However, supply constraints in Europe, a major exporter, and China, the top dairy importing country during the northern hemisphere spring has contributed to an increase in dairy prices of 3% over the past two months.

Dairy supplies have been run down by strong export demand during a 2012-13 season of poor production, which fell by 3.0% in Australia and by 1.6% in New Zealand. However, going ahead in the second half of the year, milk production will be picking up in New Zealand and the EU, and that is likely to bring a global price decline in most dairy products as early as November or December.

Source by Commodity Insights

Technical Comment For The Day: Crude Oil

Crude Oil rally is likely to take it close to Rs 6330 per barrel. Crude oil tested a low of Rs 6224 per barrel and settled at Rs 6285 per barrel. The short term supports for Crude are active at Rs 6210 and 6174 per barrel. The initial targets of Crude oil are at Rs 6330 and 6350 per barrel. Increase in Open interest and volumes are a sign that a rally towards the upper cap is possible.

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Economic Buzz: U.S Consumer Confidence Falls Slightly In July

The U.S Conference Board Consumer Confidence Index, which had improved in June, pulled back slightly in July. The Index now stands at 80.3 (1985=100), down from 82.1 in June. The Present Situation Index increased to 73.6 from 68.7. The Expectations Index decreased to 84.7 from 91.1 last month.

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Gold Bounces Back In Asia

Gold........

Gold futures bounced back in the Asia electronic session today as investors prepared for a statement on monetary policy from the U.S. Federal Reserve, as well as the preliminary estimate of second-quarter growth for the world’s largest economy.

The U.S. currency, as tracked by the ICE dollar index, is coming off a third straight weekly loss, dragged lower by expectations that the Fed will reiterate its stance on keeping interest rates low for the foreseeable future.

The ICE dollar index, a gauge of the greenback’s movement against six other major currencies, rose to 81.856, up from 81.815 late Tuesday in North America. The euro bought $1.3260, slightly less than $1.3265 on Tuesday.

Gold for December delivery is trading up $6.6 at $ 1331.4 per ounce on the Comex division of the New York Mercantile Exchange. Yesterday, it fell $4.80, or 0.4%, to settle at $1,324.80 an ounce after Monday’s gain of $7.70, or 0.6%.

The consumer confidence index fell slightly in July to 80.3 from an upwardly revised 82.1 in June, the Conference Board said Tuesday.

Traders expect the FOMC to emphasize an accommodative monetary policy. Though many economists see the Fed as likely to decrease the amount of bond buying at its September meeting, there’s also speculation that tapering will begin near the end of the year or later. The Fed currently buys $85 billion a month in Treasury and mortgage-backed securities.

Before the central bank’s announcement at 2 p.m. Eastern time, the U.S. Commerce Department will release second-quarter gross domestic product numbers. Meanwhile, the European Central Bank and the Bank of England are due to each release statements on monetary policy Thursday.

MCX October gold futures may open today’s session near Rs 28350-400 levels with resistance near Rs 28550 levels.

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Technical Comment For Day: Gold

Gold................

Gold breached the ascending triangle pattern for August contract. With few days left in August expiry contract to expire, the interest is quickly shifting towards October contract. In October contract, resistance of Rs 27777 per 10 grams was broken as Gold closed at Rs 27872 per 10 grams. The next resistance is at Rs 28300 and 28400 levels. Looking at the open interest generation in this contract it seems that upside targets will be achieved in the contract. The rise of 1.33% yesterday was with very heavy volumes of 11782 kgs, not seen for this contract since initiation.

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Technical Comment For Day: Copper

Even after a minor recovery in Copper

, the prices are still not out of woods. The prices of November expiry contract settled at Rs 418.6 per kg, up 0.54%. The metal is expected to remain under Rs 420 per kg, considering the stiff resistance at Rs 418-419 per kg. Medium term resistance is at Rs 430 per kg. The extreme bottom for the prices are at Rs 403 per kg, while an intermediate supports are active at Rs 409 per kg. The volumes were pretty lower 3066 kg on Monday. The pressure from bears are expected to remain active in today's trades.

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