GENERAL MARKET CONDITIONS

Base metals made quite a reversal as they edged higher. A labour strike at one of Peru’s copper mines along with a technical break out resulted in gains for copper. Copper has been the key driver for base metals and looks set for more gains. Nickel has disappointed and it seems traders are exiting nickel and buying other base metals. LME Nickel (3 months) has to float over $25000 for a week to attract short term investors.

The US dollar is starting to pare its last week’s gains as more and more investors remain convinced that the Fed may cut interest rates once a year. For me in the short term to medium term the US dollar will be more influenced by the performance of eurozone and UK economies. Eurozone’s inflation, current account deficit of member countries along with growth will be the key factors for the direction of the Euro in the medium term. In our view in the short term the euro may gain but we are bearish on euro-US dollar from November 2008 and into 2009. Buying far dated euro-US dollar put options should be an excellent investment opportunity.

The rest of 2008 and the first quarter of 2009 should be a topsy- turvy time for the currency markets. Unless the interest rate factor stabilises the high degree of volatility will continue. Crosses like euro/yen and euro/gbp will have a greater say than direct US dollar prices. Volatility in currency markets will benefit precious metals and commodities.

For the man on the street its only investment which is driving prices of food. Nature is driving food prices more than investment demand. Floods in south China, Australia wheat drought, floods in US Midwest and Iowa have all destroyed standing crops. These will reduce global output while demand keeps on rising.

COPPER -- JULY FUTURE -- INTRA DAY PIVOT: $363.0

$371 price target achieved. As long as copper holds $369 it will target $386 and $394.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $131.60

As long as $130.65 holds crude oil will target $140.40 and $145.20

MCXARUN
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