Talking Points
- Commodities May Extend Losses as US Economic Data Dents QE3
Bets
- Citigroup Earnings Sought to Gauge Market-Wide Impact of Euro
Crisis
- IMF Outlook Update May Hurt Risk Appetite on US Growth
Downgrade
Commodity prices are correcting lower in early European trade
after Friday's sharp rebound in risk appetite. Sentiment-linked
crude oil and copper prices followed share prices higher while gold
and silver found a de-facto boost as the safe-haven US Dollar
retraced downward.
A quiet economic calendar in Europe turns traders' attention to
the US docket. Expectations call for narrow improvement in the
Empire Manufacturing gauge - the first of July's regional activity
surveys to hit the tape - while Retail Sales snap a two-month
losing streak to post a narrow gain in June.
The outcomes may reinforce the recent stabilization in US
economic data (at least relative to expectations), which may
counter-intuitively weigh on sentiment, and by extension on
commodity prices, via a downgrade to Fed QE3 hopes. Significant
follow-though from price action seems unlikely however ahead of
Chairman Bernanke's Congressional testimony later in the week.
On the earnings front, second-quarter results from Citigroup Inc
take top billing today. Traders will be most interested in the
bank's guidance vis-à-vis the Eurozone debt crisis, looking for
evidence on the impact of sovereign and bank solvency jitters in
the on market-wide financial conditions.
The I nternational Monetary Fund is also due to publish an
updated set of global growth expectations. IMF MD Christine Lagarde
has already suggested a downgrade to worldwide performance is to be
unveiled. Markets will be particularly interested in the regional
breakdown. A recession in Europe and slowdown in Asia have been
expected for some time, but a material downgrade to North American
performance may stoke risk aversion.
WTI Crude Oil (NY Close): $8 7 . 10 // + 1 . 02 // + 1 . 18
%
Prices are consolidating above support at 84.14, the 23.6%
Fibonacci retracement. Near-term resistance is at 88.40, the 38.2%
level, with a break above that exposing the 90.00 figure.
Alternatively, a breach of support targets the 81.19-52 area marked
by the June 4 low and the 14.6% retracement.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1589.68 // +17.73 // +1.13%
Prices broke back above 1575.81, the 38.2% Fibonacci expansion,
exposing the 23.6% level sitting squarely at the 1600/oz figure
once again. A falling trend line set from late March, now at
1612.47, compounds resistance. A break above the latter boundary
initially exposes the July 3 high at 1624.81. The 1575.81 level has
been recast as near-term support, with a turn back below that
targeting the 50% Fib at 1555.83.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Silver (NY Close): $27. 33 // +0. 16 // + 0 . 59 %
Prices continue to tread water above support is at 26.75. A
break below that exposes the multi-month triple bottom at 26.05.
Trend line resistance is now at 27.79, with a breach above that
exposing the underside of a previously broken Flag formation
(currently at 28.78).
Daily Chart - Created Using FXCM Marketscope 2.0
COMEX E-Mini Copper (NY Close) : $3.504 // +0.088 // +2.58%
Prices took out resistance at 3.445, the 14.6% Fibonacci
expansion, exposing upside barriers at 3.535 and 3.618. The 3.445
level has been recast as near-term support, with a break below that
targeting the 23.6% Fib at 3.378.
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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