Commodities Look to US Home Sales, German CPI to Drive Risk Trends

Talking Points

  • Crude Oil, Copper May Advance as US New Home Sales Hit 28-Month High
  • Gold and Silver to See Support if Risk Appetite Recovery Weighs on US Dollar
  • Sentiment May Strengthen if Soft German CPI Drives Hopes for ECB Stimulus

Commodities pushed higher as expected through much of the US trading session on the back of broadly better-than-expected economic data set but gains were swiftly erased toward the end of the session after the Fed's Charles Plosser came across the wires. The President of the central bank's Philadelphia branch said the newly-initiated QE3 stimulus effort won't boost employment and endangers the Fed's credibility.

Looking ahead, the spotlight turns to US New Home Sales figures. Expectations call for a print at 380,000 in August, marking the highest reading since April 2010. The outcome may boost hopes that a firming US recovery will be better able to offset a recession in the Eurozone and slowdown in Asia this year, stoking risk appetite and driving growth-geared crude oil and copper prices higher. Gold and silver may likewise find support in such a scenario amid ebbing haven demand for the US Dollar.

In the interim, the preliminary set of September's German CPI figures headlines the European data docket. Forecasts suggest the benchmark inflation rate will drop to 2 percent, backing away from the four-month high at 2.1 percent recorded in the prior month. A print in line with expectations would fall in line with the year-to-date average and probably pass with little fanfare. A significant downside surprise may prove sentiment-supportive however as investors build hopes for additional ECB easing.

WTI Crude Oil (NY Close): $91. 37 // -0. 56 // - 0 . 61 %

Prices broke below support at 91.56, the 38.2% Fibonacci retracement, exposing the next downside objective at 88.83 (the 50% Fib). The 91.56 level has been recast as near-term resistance, with a push back above that targeting the underside of a rising channel set from early July, now at 95.34.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $176 0 . 65 // - 3 . 80 // -0. 22 %

Prices continue to stall after taking out resistance at a falling trend line connecting major swing highs since early November 2011. Near-term resistance is at 1790.55, with a break above that targeting 1802.80. The trend line - now at 1756.34 - has been recast as support. A push back below that boundary sees initial downside barriers at 1725.87 and 1687.84, the 23.6% and 38.2% Fibonacci retracements respectively.

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $3 3 . 76 // -0. 23 // - 0 . 68 %

Prices turned lower from resistance at 34.80, the 76.4% Fibonacci retracement. Initial support lines up in the 32.93-33.14 area, marked by a horizontal pivot level and the 61.8% Fib, with a break below this boundary exposing the 50% level at 31.79. Alternatively, a break above resistance aims to challenge 36.89.

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close) : $3.758 // +0.026 // +0.70%

Prices continue to stall below resistance at a falling trend line set from early February (3.830). 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 level. 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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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