Commodity prices look for minutes from December's Federal
Reserve meeting to set a precedent for interpreting Friday's US
employment report.
Talking Points
- Commodities Correct Lower as Markets Digest "Fiscal Cliff"
Deal Rally
- December's FOMC Minutes to Set Precedent for Reading US Data
Flow
Commodities are edging lower in early European trade as markets
digest yesterday's runaway rally in the wake of a
last-minute deal to avert the US "fiscal cliff"
. Minutes from December's FOMC meeting headline the economic
calendar. The sit-down saw Ben Bernanke and company expanding asset
purchases to $85 billion but also linking the path of interest
rates to inflation expectations and the unemployment, establishing
the clearest stimulus exit strategy yet. With that in mind, traders
will be keen to scour the release for clues about the possibility
of a sooner-than-expected withdrawal of accommodation.
I t is unclear whether investors would treat such an outcome
supportive for risk appetite (and thereby for commodities) in that
it wo uld imply a stronger US economy. An alternative reading may
imply a risk-negative response to the removal of Fed support for
the recovery . In fact, a divergence may materialize whereby
precious metals fall on ebbing inflation bets while crude oil and
copper rise on copper on improved growth hopes. Whatever the case
may be, price action following the release will be interesting to
monitor in that it will help set a precedent for interpreting
Friday's jobs report and forthcoming US data in general.
WTI Crude Oil (NY Close): $9 3 . 12 // +1. 30 // +1. 4 2%
Prices pushed aggressively higher, taking out resistance marked
by a rising channel top set from early November challenge the 100%
Fibonacci expansion at 93.25. A break above that aims for the
123.6% level at 94.51. Near-term support is in the 91.23-92.01
area, marked by the 61.8% and 76.4% Fibs respectively. A drop below
this broadly exposes the 90.00 figure.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1686.90 // +13.12 // +0.78%
Prices broke above resistance at 1680.80, the 38.2% Fibonacci
retracement, exposing the 50% level at 1694.82. The 1680.80 level
has been recast as near-term support, with a reversal back below
that aiming for the 23.6% retracement at 1663.46.
Daily Chart - Created Using FXCM Marketscope 2.0
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Spot Silver (NY Close): $31.03 // +0.70 // +2.29%
Prices pushed higher to challenge the 38.2% Fibonacci
retracement at 31.42. A break above that targets the 50% level at
31.99. Near-term supports at 30.29 and 30.72, the 14.6% and 23.6%
Fibs respectively.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
COMEX E-Mini Copper (NY Close) : $3. 736 // +0. 084 // + 2 . 30
%
Prices took out resistance at a falling trend line set from
mid-September and the 61.8% Fibonacci expansion (3.718). The bulls
now aim to challenge the 76.4% level at 3.764, with a break above
that eyeing the 100% mark at 3.839. The 3.718 level has been recast
as near-term support, with the trend line (3.696) and the 50% Fib
(3.680) in focus below that.
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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