FINANCIALS  
Today Consumer Confidence and July New Home Sales will be released at the same time. Depending on when the report was taken, Consumer Confidence may show a slight increase. Lower gasoline prices since July 15 may have helped boost the confidence of consumers. New Home Sales will be watched closely. Since yesterday’s Existing Home Sales were up, traders will be looking to see if a trend is developing. The FOMC Minutes from the August 5 meeting will be released. Traders will be looking for evidence of a future rate cut.

The news driving the Treasuries is still credit market related. There still seems to be a fear in the market that conditions will worsen before they get better. This is being reflected in credit market spreads. Thin conditions could produce wild swings, but the trend is expected to be up.

EQUITIES
The equities are clearly concerned about the credit market. The fear is that this market may lock up like it did several months ago. Thin trading conditions are adding to the volatility. The markets are nearing last week’s lows. The bears may try to push the market lower to trigger these stops. The only rally that can be anticipated would be short-covering as these markets are truly in control of the bears. The economic news today is not expected to help matters either as all are expected to show the economy continuing to weaken.

CURRENCIES
The Dollar is finishing the month like it started the month - in a strong position. Spreading global economic weakness is hurting the Euro. This trend is expected to continue as the Euro is now in a position to post a new low for the month. The economic conditions in the U.K. are expected to worsen as weak housing is driving this market toward a recession. Continue to look for more selling pressure in the British Pound. The Swiss Franc and the Japanese Yen are looking at downside pressure if the U.S. stock markets continue to weaken. Traders in these two contracts are lightening up on their demand for higher yielding U.S. assets because of instability in the U.S. credit markets. Lower crude oil and commodity prices should continue to support the Dollar versus the Canadian Dollar. Gold and crude are essential elements to the Canadian economy.

ENERGIES
October Crude Oil is looking weak again as the spreading economic slowdown is expected to continue to hurt demand. Crude inventories are expected to continue to build on this news. On the supply side, the situation between Russia and Georgia has quieted, but still a little tense. There are no signs, however, that pipelines in that area are being threatened. The Middle East has been especially quiet. Unless something flares up which threatens supply, look for the lack of demand to continue to pressure the crude oil.

METALS
December Gold is weakening again. Despite credit market issues and another bank failure yesterday, gold has been feeling downside pressure. Inflation is not an issue as commodity prices are dropping. It is going to take a surprise major development in the credit markets to drive this market higher. The longer-term charts are bearish. A strong Dollar is also contributing to the downside pressure on the market.

September Silver is failing to attract any buying interest. The Dollar is getting stronger so the down trend is expected to continue

October Platinum remains weak because of bearish fundamentals. Longer-term, the global economic slowdown is hurting demand for autos and thus platinum for catalytic convertors.

September Copper is beginning to look bearish again because of the stronger Dollar. Longer-term, global economic weakness is causing demand to fall and inventories to rise.

GRAINS
The stronger Dollar may hurt demand in Soybeans, Corn and Wheat. Ideal weather has not done any harm to the Soybean and Corn, but an independent grain firm is still looking for a smaller crop estimate by the USDA in September. This is the only supporting factor at this time. Without demand, however, this market may drift sideways-to-lower. Buying has dried up considerably in the Wheat market. Traders are now refocusing on the size of global production. The large world crop and lower demand is putting pressure on this market.

SOFTS
Cocoa is finding supply support from the International Cocoa Organization’s friendly support. In addition, there are also concerns about the size of the cocoa bean because of disease in the Ivory Coast. The strength of the Dollar will be the deciding factor as to whether this rally continues. The slowing global economies may cut into demand. Look for strength if the Dollar weakens, but do not be surprised by another round of selling as the demand for cocoa products is just not there.

September Coffee has been building a support base and is poised to break out over 1.4225 to turn the main trend higher. A stronger Dollar may put pressure on this market, however. The key issue is whether the slowdown in Brazilian exports will be enough to support a breakout to the upside.
October Sugar is being pressured by a stronger Dollar and weaker crude oil over the short-run. Longer-term, lower global production numbers and higher demand for cane-based ethanol is likely to be supportive.

Demand for December Cotton disappears when the Dollar rallies. This is keeping a lid on prices. The rain in Georgia had a minimal affect on the cotton crop. Lower grain prices are also putting pressure on this market.

September Orange Juice may find support because of developing tropical storms in the Atlantic. Traders are increasing the odds that one of the storms will reach Florida’s Orange Juice orchards and cause damage.

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