Talking Points
- Crude Oil, Copper Sold as Chinese, European PMIs Sink Demand
Outlook
- Gold and Silver Down as Risk Aversion Stokes Haven Flows into
US Dollar
Commodity prices are broadly lower in early European trade as
risk aversion grips financial markets. Sentiment began to sour
overnight after
Chinese manufacturing PMI figures disappointed
, showing factory sector shrank at the fastest pace in four months.
European economic data didn't help matters as the preliminary set
of March manufacturing- and service-sector PMIs printed sharply
below expectations. Growth-sensitive crude oil and copper are down
as demand expectations dropped while anti-fiat gold and silver
prices are under pressure as the selloff stokes safe-haven demand
for the US Dollar.
Looking ahead, S&P 500 stock index futures are trading
sharply lower, hinting the bloodletting will carry into the opening
bell on Wall Street. Bearish momentum may meet a bit of resistance
as US economic data comes into the spotlight. The House Price Index
reading is expected to see home values rise 0.3 percent to the
highest level in five months. Meanwhile, the Leading Indicators
gauge is forecast to post the largest monthly increase since March
2011 at 0.6 percent. Weekly Jobless Claims figures are also on tap
but expectations point to relatively modest changes that are
unlikely to materially impact the four-week trend in initial or
continuing applications for benefits, meaning price action is
likely to yield a muted response.
WTI Crude Oil (NY Close): $10 7 . 27 // +1. 20 // + 1 . 13 %
Prices put in a Bearish Engulfing candlestick below resistance
at 108.32, the 14.6% Fibonacci retracement. It is unclear at this
point whether the move marks a true bearish reversal or merely a
correction to retest
recently broken Falling Wedge top resistance
. A break of the next layer of support at 104.75 marked by the
38.2% Fib would act as confirmation.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1650.43 // -0.35 // -0.02%
Prices continue to carve out a Falling Wedge bullish reversal
chart formation, with a Harami candlestick pattern above support at
1638.84 reinforcing the likelihood of a bounce. Initial resistance
lines up in the 1666.37-1677.05 area, with a break above that
validating the Wedge setup and exposing resistance barriers at the
1700/oz figure as well as 1718.05.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Silver (NY Close): $32. 16 // +0. 01 // + 0 . 04 %
Prices continue to stall having completed a Head and Shoulders
top chart pattern with a break below the formation's neckline at
32.97, the 38.2% Fibonacci retracement level. Initial support
remains at 31.67, the 50% Fib, with a break lower exposing the
61.8% retracement at 30.37. The H&S setup implies a measured
downside objective at 26.84, which closely coincides with the late
December bottom. The 38.2% level has been recast as near-term
resistance.
Daily Chart - Created Using FXCM Marketscope 2.0
COMEX E-Mini Copper (NY Close) : $3. 846 // +0.0 16 // +0. 42
%
Prices are testing below support at 3.808, the 23.6% Fibonacci
retracement, with a break below that exposing the 3.696-3.713 area
anew. For the time being, near-term resistance remains at a falling
trend line resistance connecting major highs since early February,
now at 3.910.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for
Dailyfx.com
To contact Ilya , e-mail ispivak@dailyfx.com . Follow Ilya on
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