Commodity prices are looking for the G7 finance ministers'
summit for guidance as policymakers grapple with the Eurozone debt
crisis and a global slowdown.
Talking Points
- Commodities Consolidate in Overnight Trade Before G7 FinMin
Summit
- Revised German, French CPI Data to Shape Outlook for ECB
Stimulus
- Italian Bond Sale Results May Spark Eurozone Crisis Fears if
Yields Rise
- US Q3 Earnings Likely to Overshadow Tame Economic Data
Calendar
Commodities are treading water in overnight trade as markets
take advantage of a short respite in fundamental event risk ahead
of the G7 finance ministers' summit today in Tokyo. The gathering
will have plenty of key issues on the agenda as the Eurozone debt
crisis continues to fester while fears about slowing global
economic growth gain traction.
Traders will be keen to scour the communiqué issued at the
culmination of the sit-down and any sideline commentary from key
officials to glean guide expectations for global stabilization
efforts. While concrete policy prescriptions rarely emerge at such
outings, the times they do tend to be accompanied by sharp
volatility across financial markets. The possibility of such an
outcome this time around seems credible considering the wide
spectrum of critical issues at hand.
On the data front, the final set of September's German, French
and Spanish CPI figures is in focus in European trade. Downside
revisions may prove supportive for risk appetite as traders
speculate that lower inflation will create room for ECB stimulus, a
critical consideration considering the recession in the Eurozone
represents the most significant headwind for global economic
performance. By the same token, a revision higher may carry
risk-averse implications, though such an outcome probably carries
less potential for follow-though considering initial data for
September already showed a strong pickup in price growth. Italy
will also sell a tranche of bonds spread across 2015, 2016, 2018
and 2025 maturities. A pickup in yields or particularly soft
bid-to-cover readings may carry negative sentiment implications,
and vice versa.
The US calendar is relatively quiet, with weekly Jobless Claims
and Augusts' Trade Balance report rounding out the docket. The
third-quarter earnings docket may prove more significant with
Fastenal and Safeway due to report results. Guidance from the
former, a global seller of industrial and construction supplies,
will help shape broad-based growth expectations. The latter, a
supermarket chain operator, will help establish a reading on US
consumption trends as investors continue to hope that a firmer
recovery in North America will help to offset weakness
elsewhere.
On balance, a net sentiment-negative outcome to the varied mix
of catalysts on offer stands to weigh cycle - sensitive crude oil
and copper prices. Meanwhile, gold and silver may decline as ebbing
risk appetite boosts haven demand for the US Dollar. Needless to
say, a broadly risk-positive tone is likely to produce the inverse
dynamic.
WTI Crude Oil (NY Close): $91.25 // -1.14 // -1.23%
Prices are testing minor falling trend line resistance at 92.68
that has capped gains over recent weeks. A break higher targets the
94.00 figure, followed by the underside of a rising channel set
from early July (now at 97.67). Near-term support is at 87.70, the
38.2% Fibonacci expansion, with a push below that targeting the 50%
level at 83.76.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $17 62 . 35 // - 1 . 95 // -0. 11 %
Prices continue to push lower after completing a bearish Dark
Cloud Cover candlestick pattern below resistance in the
1790.55-1802.80 area, a setup reinforced by negative R S I
divergence. Sellers have cleared the bottom of a Rising Wedge chart
pattern, exposing the 23.6% Fibonacci retracement at 1747.20 as the
next downside objective. The Wedge bottom, now at 1773.68, has been
recast as near-term resistance. A push back above that threatens
1790.55-1802.80 anew.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
Spot Silver (NY Close): $33.98 // +0.07 // +0.20%
Prices followed the completion of a Bearish Engulfing
candlestick pattern with a drop to range support at 33.66, a
barrier reinforced by the 23.6% Fibonacci retracement at 33.18. A
break below the latter boundary exposes the 38.2% Fib at 31.83.
Negative RSI divergence reinforces the case for a downside
scenario. Near-term resistance stands at the 35.00 figure, with a
break above that initially targeting the October 28 2011 high at
35.66.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
COMEX E-Mini Copper (NY Close) : $3.718 // 0.000 // 0.00%
Prices continue to consolidate below resistance at a falling
trend line set from early February (3.820). A break higher exposes
swing highs at 3.955 and 3.988. Near-term support lines up at
3.707, the 23.6% Fibonacci retracement. A push below that targets
the 38.2% level at 3.627.
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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