MCX - WEEKLY NEWS LETTERS
GLOBAL UPDATE
US Dollar Index made a weekly low of 96.86 and closed at 94.03 on Friday.
The American currency declined by more than 1 percent in the last week owing to a number of factors. ADP report showed addition of 173K jobs to private payrolls. However, the NFP report showed additions of only 38K jobs. This major decline in NFP was due to an expected slowdown in hiring at big chain stores and the temporary impact of the Verizon strike.Moreover, official statement made by Japan’s PM with respect delay in sales tax hike led to strength in Japanese Yen against the DX. All the above factors acted as a negative factor for the American currency
OPEC failed to agree a clear oil-output strategy on Thursday as Iran insisted on steeply raising its own production, though Tehran's arch-rival Saudi Arabia promised not to flood the market and sought to mend fences within the organisation. Tensions between the Sunni-led kingdom and the Shi'ite Islamic Republic had blighted several previous OPEC meetings, including in December 2015 when the group fell short of agreeing a formal output target for the first time in years.
The European Central Bank left interest rates unchanged as expected on Thursday, holding them at record lows as it prints money to lift the economy and raise inflation. The bank added that it will start buying corporate bonds on June 8.the ECB kept its rate on bank overnight deposits, now seen as its primary interest rate tool, at –0.40 per cent
The U.S. economy created the fewest number of jobs in more than 5-1/2-years in May as manufacturing and construction employment fell sharply, which could make it harder for the Federal Reserve to raise interest rates. New orders for U.S. factory goods recorded their biggest increase in six months in April, boosted by demand for transportation equipment, while business spending on capital goods was not as weak as initially thought

✍ BULLION
Gold surged more than 2 percent and was on track for its biggest one day jump in seven weeks on Friday after U.S. payrolls data fell well short of forecasts, boosting expectations that the Federal Reserve will stand pat on interest rates. The non-farm payrolls number released last week showed that the growth in the labor market is not as firm as it is expected. The European Central Bank said it made only marginal upward adjustments to its inflation projections, while investors remained cautious ahead of U.S. labor data. The bank kept interest rates unchanged and ECB President Mario Draghi said inflation would likely remain very low or negative in the next few months. Gold has taken a beating after the latest Fed meeting minutes released in May, and comments from key central bank officials, including Fed Chair Janet Yellen, boosted expectations of an imminent rate rise. U.S. private employers increased hiring in May and new applications for jobless benefits fell last week, further boosting the economic outlook for the second quarter. Another report on Thursday showed planned layoffs by U.S.-based employers fell 53 percent to a five-month low last month. The Perth Mint's sales of gold products fell to the lowest in four years, while silver sales dropped to a nine-month low as consumers awaited a further fall in prices on expectations of an earlier-than-expected U.S. Federal Reserve interest rate hike.



✍ ENERGY
Oil prices tumbled more than 1 percent on Friday, extending losses after weekly industry data showed U.S. drillers added rigs for only the second time this year.The latest draw down in U.S. crude stockpiles offset OPEC's failure to set a ceiling for its output. Saudi's new Energy Minister Khalid al-Falih promised the kingdom would not flood the market with extra oil. His remarks suggested a softening of Riyadh's previous stance, when it rigorously pumped to defend its share of a crude market oversupplied by around 1.5-2.0 million barrels per day. Iran maintained its right to steeply raise crude exports to pre-sanction levels, although Oil Minister Bijan Zanganeh said he didn't think others in OPEC would ramp up supply. Prices briefly slipped further after settlement when an industry group said its weekly data showed a surprise build in U.S. crude inventories and Iran's oil minister called for OPEC to adopt the radical idea of production quotas for individual member countries instead of for the group as a whole.
After surging Natural Gas nearly 23 percent over the past four days, including last week's front-month roll from the lower June to the higher July contract, gas futures for July delivery on the New York Mercantile Exchange fell 0.7 cents to settle at $2.398 per million British thermal units. Despite recent gains, analysts said prices were likely to remain relatively low this year after a warm winter left stockpiles at record highs. To avoid filling storage caverns to capacity, producers are likely to cut output and power generators to burn more gas instead of coal, they noted. In early estimates, analysts forecast utilities added just 73 billion cubic feet of gas into storage during the week ending June 3 as power generators used record gas for this time of year, taking advantage of the low fuel costs to meet higher-than-normal levels of air conditioning demand.

✍ BASE METAL
Metals were boosted by data showing the U.S. economy created the fewest number of jobs in more than than 5-1/2 years in May, pointing to labour market weakness that could make it difficult for the Federal Reserve to raise interest rates. Aluminium traded higher as report written by the People's Bank of China monetary policy analysis team cited the central bank will keep policy slightly loose to support the economy, which still faces downward pressure. base metals traded higher except Aluminium in line with international trends.However, non event at various meetings through the week without any additional stimulus announcements hurt metals. European Central Bank maintained status quo and predicted consumer price growth would remain below target through 2018. Further, Prime Minister Shinzo Abe held back a widely expected fiscal stimulus package. Also, OPEC refrained from changing its oil output policy on Thursday after members failed to agree on a new production ceiling. Zinc prices surged to $2004/tonne, the highest in 10 months as Netlong positions in LME futures are close to an 11-month high seen in May. Besides, ILZSG estimated that total zinc inventory, including exchange-registered tonnage, metal held by China's State Reserves Bureau (SRB) and "commercial stocks" held by producers, consumers and merchants, has declined from a peak of 2.2 million tonnes in January 2013 to 1.5 million tonnes as of the end of March 2016.

✍ NCDEX - WEEKLY NEWS LETTERS

Conditions are favorable for onset of the southwest monsoon over Kerala over the next two to three days, according to the Indian Meteorological Department (IMD). Making the announcement in its mid-Sunday press release, the IMD pointed out that rain/thundershowers have occurred at many places over West Bengal, Sikkim, coastal Andhra Pradesh and at a few places in Chhattisgarh, Assam, Meghalaya and Kerala. It has been raining in Kerala for the past few days and the weather officials are analysing the data recorded at the 14 weather stations located at the Lakshadweep, Kerala and in Mangalore in Karnataka.

The farm sector growth will be good in 2016-17 with the country expected to receive normal monsoon rains this year after two consecutive drought years. Said agriculture production fell slightly by 0.25% in 2014-15 due to weak monsoon and the fact that agriculture growth in the previous year was very good at 4.25%. The agriculture ministry has set a target of producing 270.1 million tonnes of food grain in 2016-17 beginning June, which is 7% higher than the previous year's crop. As per the third advance estimate release in May, food grain production was estimated at 252.23 million tonnes for 2015-16. The agriculture minister said the new government has taken up effective initiatives to fight the challenges prevailing in agricultural sector. The government has chalked out a plan to reduce the input cost in the agriculture sector and sector and to provide farmers better return for their produce.

Forecasting good news for the country’s economy and farmers, the India Meteorological Department (IMD) has reiterated its initial prediction of ‘above normal’ rainfall in this year’s South-West monsoon season. “The conditions are congenial for the onset of monsoon in the next four-five days and the rainfall quantity will pick up in the second half of June,” IMD Director-General LS Rathore said at a press conference, while releasing an update for the long-range monsoon forecast (June-September) on Thursday. The icing on the cake is the IMD ruling out a deficient monsoon. “There is a zero per cent probability that the rainfall will be deficient,” Rathore said. A deficient monsoon, which means less than 90 per cent of the long-period average (LPA) rainfall, could cause severe distress to farmers, crop loss and drought. This year’s projected plentiful rainfall will bring to an end to two consecutive years of drought. Last year, the country suffered a rainfall deficit of 14 per cent, while in the previous year, the shortfall was 12 per cent.


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