Today in Commodities: Follow the Yen

|
 |  Includes: AGF, BAL, CAFE, CORN, GAZ, GLD, NIB, OIL, SLV, SOYB, UDN, UUP
by: Matthew Bradbard

The movement in the Yen has been spectacular of late and one can get a good gauge of risk sentiment by watching its movement, i.e. carry trade. Aggressive clients have been advised to get short May Crude oil with stops above yesterday’s highs looking for a trade back to the 20 day MA; in May at $104.25. Natural gas closed down for the third consecutive session but we still want lower trade to get clients long closer to $4. As of this post the indices are flat… we are mildly bearish but would have tight stops in place and be willing to abandon put options on a new high settlement.

The Aussie closed lower for the second consecutive day as an interim top was likely reached yesterday…trade accordingly. Our target is a trade closer to par into next week in June futures. Live cattle was lower by nearly 1% and lean hogs by 0.50% today. We expect a trade lower as aggressive traders can get short and more conservative traders can look for long entries from lower levels…stay tuned. Gold and silver broke out to fresh highs. Our bearish probes in recent weeks have clearly been wrong but we cannot justify getting long at these levels so we suggest the sidelines and will be a spectator in metals with clients for now. We continue to like long exposure in cocoa and would use the current level as a buy point in July futures and options. If in a profit in coffee or cotton shorts book it and look to re-sell from higher levels. We advised clients to step to the sidelines in agriculture and will be looking to get long from lower levels across the board on the next break in corn, wheat and soybeans. At a minimum if not willing to exit we would lighten the load. Treasuries were lower today but we still like longs on both ends of the curve though clients are currently slightly under water on their positions.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.