We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The British Pound may fall as #Brexit commences, but will the Bank of England cut rates? The US Dollar could rise if the Fed spooks markets with plans to unwind repo operations $GBPUSD #BoE #GBP #Sterling - https://www.dailyfx.com/forex/fundamental/forecast/weekly/gbp/2020/01/26/British-Pound-May-Yet-Fall-on-Brexit-BoE-and-Fed-Are-Risks.html?CHID=9&QPID=917702 https://t.co/v39NsmOCwa
  • Central bank independence has several advantages and disadvantages. Find out what they are in-depth with @MartinSEssex here: https://t.co/wVFXbbTxf1 https://t.co/5VQdkbIqTo
  • Last week was more of the same, a narrowing range following the UK general election fireworks; GBP/USD has a couple of clear signposts to keep an eye on. Get your $GBPUSD technical analysis from @PaulRobinsonFX here: https://t.co/3pJfj0w2AX https://t.co/Cm6zhnBSGR
  • The $AUD is pressuring four-month trend support against its US counterpart as sellers fight to reassert the dominant, long-term downtrend. Get your market update from @IlyaSpivak here: https://t.co/Bup64Arva9 https://t.co/OLpavqPOVA
  • RT @globaltimesnews: A total of 1,052 cases of #coronavirus have been reported as of Jan 25 in #Hubei Province, with 129 in critical condit…
  • RT @FactSet: $SPX is reporting revenue growth of 2.9% for Q4, led by the Health Care (11%), Utilities (9%), and Communication Services (9%)…
  • The AUD has been hit by the risk-appetite pullback occasioned by the spread of Wuhan-strain coronavirus. This week may see domestic focus return, if headlines allow, with key inflation data due. Get your $AUDUSD market update from @DavidCottleFX here: https://t.co/UIpwno0pSq https://t.co/kib4d1mA0q
  • RT @anilvohra69: USD inverted (red) is correlated to Excess Reserves (blue) and Reserve Balances (green). 1/2 https://t.co/bbO1pPWY4F
  • RT @FactSet: $SPX is reporting a decline in earnings of -1.9% for Q4, led by the Energy (-42%), Consumer Discretionary (-14%), and Material…
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/6iMyDFqnqe
Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

2012-03-07 09:57:00
Ilya Spivak, Sr. Currency Strategist
Share:

Talking Points

  • Copper to Rise as Risky Assets Correct Higher After Yesterday’s Selloff
  • Silver Likely to Outperform Gold as US Dollar Pullback Boosts Metals
  • Crude Oil Aims Higher But Iran Tensions Downgrade May Counter Gains

As we discussed yesterday, commodities came under broad-based selling pressure as a market-wide flare-up in risk aversion weighed on demand for growth-sensitive assets while boosting the safe-haven US Dollar. A correction now appears underway, with most benchmark commodity prices following a cautious recovery in European stock exchanges higher. S&P 500 stock index futures are pointing upward as well, hinting more of the same is likely as Wall Street comes online.

A slowdown in German Factory Orders may offer a bit of a counterbalance to the chipper mood, with expectations pointing to a 0.6 percent increase in January following a 1.7 percent gain in December. With that in mind, orders have been trending lower since mid-2009, so a mere reinforcement of the status quo may not be enough to derail corrective momentum. On the other hand, an upside surprise is likely to have a disproportionately positive effect in the current environment.

Later in the session, the spotlight will turn to the ADP employment report to set the tone for official US jobs data due on Friday. Expectations call for an increase of 215,000 jobs in February, marking a meaningful improvement over the 170,000 gain in the prior month. This too appears likely to fuel the bounce in risky assets, pointing to recoveries in crude oil and copper(although the announcement of new talks between Iran and Western powers may limit gains in the WTI contract). In a reversal of yesterday’s trading dynamics, improving sentiment is also likely to weigh on the US Dollar, offering a boost to gold and silver prices. The gold/silver ratio continues to show a significant inverse correlation with the S&P 500, meaning the cheaper metal is likely to outperform in a risk-on environment.

WTI Crude Oil (NY Close): $104.70 // -2.02 // -1.89%

Prices followed a bearish Three Outside Down candlestick pattern with a break below support at 105.82, the confluence of the 23.6% Fibonacci retracement and a rising trend line set from the February 2 swing bottom. Sellers now target the 38.2% Fib at 103.28. The 23.6% level has been recast as near-term resistance.

Commodities_to_Recover_as_Profit-Taking_Fuels_Bounce_in_Risky_Assets_body_Picture_3.png, Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1674.32 // -32.18 // -1.89%

Prices took out support at 1687.97, the 38.2% Fibonacci retracement, exposing the 50% Fib at 1656.38 as the next downside objective. The 1687.97 level has been recast as near-term resistance.

Commodities_to_Recover_as_Profit-Taking_Fuels_Bounce_in_Risky_Assets_body_Picture_4.png, Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $32.95 // -1.03 // -3.02%

Prices continue to decline after completing a Bearish Engulfing candlestick pattern below resistance at 36.99, the August 29 2011 swing low. Sellers have narrowly taken out support at 32.97, the 38.2% Fibonacci retracement, although secondary support at the February 16 low (32.63) needs to be overcome before the 50% level at 31.67 is exposed. The 23.6% retracement at 34.59 is acting as near-term resistance.

Commodities_to_Recover_as_Profit-Taking_Fuels_Bounce_in_Risky_Assets_body_Picture_5.png, Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.738 // -0.122 // -3.16%

Copper is moving closer toward validating a Head and Shoulders top chart pattern below the 4.0 figure, with prices taking out rising trend line support set from the December 15 swing low. The bears now aim to challenge the would-be H&S neckline at 3.713, with a close below that completing the formation and exposing a measured target at 3.438. The trend line, now at 3.837, has been recast as near-term resistance.

Commodities_to_Recover_as_Profit-Taking_Fuels_Bounce_in_Risky_Assets_body_Picture_6.png, Commodities to Recover as Profit-Taking Fuels Bounce in Risky Assets

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

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.