Silver reached our target of $15 and we are now expecting the price to reach $14.85 in the days ahead. We are bearish as the price trend remains bearish and yesterday’s batch of U.S. data raised the likelihood of a Fed rate hike.
In particular we are looking at U.S. Non-Manufacturing which printed 51.1 vs. the 56.5 expected. The employment subcomponent lifted to 59.4 and is in the vicinity of its ten year high. This indicator is not necessarily good at pinpointing the exact outcome of Friday’s NFP, but it does suggest the U.S. labor market is doing well.
Today’s key data is Jobless Claims along with U.S. Unit Labour Costs, and the economist consensus expects an outcome of 262k and 2.5% QoQ respectively. We don’t expect any major reaction on the back of the Jobless claims unless the outcome deviates by a great amount. Responsiveness to Unit Labour Costs should be higher, as the Federal Reserve is looking for inflation to justify a rate hike. Higher unit labour costs than 2.5% QoQ should be bullish.
Trend Remains Bearish $15.33
Silver is short-term bearish below $15.33 and a 50% pullback of yesterday’s range would not surprise us. However, traders will probably use this as an argument to add to short-positions unless the U.S. data turns a 360 degrees. We expect price to reach $14.85 which is today’s ‘Support 2’ level on the Pivot Point Indicator, see the chart below.
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst
Alejandro Zambrano, azambrano@dailyfx.com | Twitter: @AlexFX00
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