Talking Points
- Crude Oil, Copper May Recover as Markets Digest Recent
News-Flow
- Gold and Silver Have Room to Correct if US Dollar Retraces
Lower
Commodity prices are yielding a mixed performance in early
European trade as markets look for the next market-moving catalyst
having somewhat absorbed the weekend's destabilizing political
news-flow out of the Eurozone. S&P 500 stock index futures are
pointing narrowly higher, hinting growth-geared crude oil and
copper prices may have room to correct higher while the US Dollar
pulls back, offering anti-fiat gold and silver a chance to retrace
some lost ground as well.
Risk sentiment may be quick to unravel again however as traders
digest the May's
ECB monthly report
, which this time around included the quarterly survey of
professional forecasters polled by the central bank and considered
instrumental to the policy-setting process. Growth forecasts for
2012 and 2013 were downgraded. This year, a deeper recession is now
expected, GDP shrinking 0.2 percent compared with 0.1 percent
estimated in February. Next year, output is now seen adding 1
percent, down from 1.1 percent expected previously.
Meanwhile, the inflation forecast has been revised sharply
higher to 2.3 percent in 2012 and 1.8 percent in 2013 compared with
previous bets on 1.9 and 1.8 percent respectively. On balance, this
hints at an environment where the ECB will be slow to offer
stimulus even as headwinds strengthen, a dismal prospect for
overall growth considering the Eurozone is overwhelmingly likely to
be the most significant drag on global performance for the
foreseeable future.
On the US economic data front, weekly jobless claims data as
well as the March set of Trade Balance figures are on tap. Federal
Reserve Chairman Ben Bernanke is also due to cross the wires, but
the outing may not offer much fodder for price action. Bernanke is
speaking at a Chicago Fed conference on efforts to strengthen
capital reserves, so the probability that something meaningfully
game-changing emerges seems relatively low as traders remain
preoccupied with the likelihood of a QE3 program.
WTI Crude Oil (NY Close): $ 96 . 81 // - 0 . 20 // - 0 . 21
%
Prices continue to grind through support in the 95.78-96.56 area
marked by a horizontal barrier in play since early November 2011 as
well as the 100% Fibonacci expansion. A break below this exposes
92.51. Near-term resistance lines up at 98.89, the 76.4%
expansion.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1 589 . 57 // - 15 . 90 // - 0 . 99 %
Selling continued after completion of a Triangle chart formation
carved out since late March - a setup indicative of bearish
continuation - with prices narrowly taking out support at 1591.00
marked by the 50% Fibonacci expansion. The bears now aim to
challenge the 61.8% level at 1569.73. The 50% Fib has been recast
as near-term resistance, with a push above that targeting the 38.2%
level at 1661.75. Longer term, the Triangle pattern implies a
measured downside objective at 1548.21.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Silver (NY Close): $ 29 . 21 // -0. 23 // - 0 . 79 %
Prices are showing a Hammer candlestick following a test of
support at the bottom of a falling channel established since early
March (now at 28.87), hinting a bounce may be ahead. Initial
resistance lines up at 29.71, with a break above that targeting the
channel top at 31.04. Alternatively, a push through the channel
bottom and 28.70 would expose 27.06.
Daily Chart - Created Using FXCM Marketscope 2.0
COMEX E-Mini Copper (NY Close) : $3.6 60 // -0.0 18 // - 0 . 49
%
Prices are testing support at a rising trend line set from the
October 3 bottom, now at 3.644. A bounce sees initial resistance in
the 3.696-3.713 area, marked by the October 28 closing high and the
38.2% Fibonacci retracement level, with a break higher initially
exposing 3.756. Alternatively, a push through the trend line sees
the next layers of support at 3.606 and 3.516.
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
Twitter at
@IlyaSpivak
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