Commodities have been leading risky assets lower for some time, responding as they do to deteriorating global growth conditions and the implicit lowering of demand for commodities. Weakening Chinese growth outlooks have been the main culprit here, but I expect prospects of a Eurozone recession will likely keep commodities on the soft side more durably. Oil prices (US oil/WTI) have failed once again above $100/bbl and are within reach of testing inside the daily Ichimoku cloud, the top of which rises to 92.30-95.80 next week. Gold prices collapsed back below its daily cloud and looks set to close below $1600/oz for the first time since July. I am also watching the broad-based CRB commodity index which broke below trend line support dating back to the start of the major advance in 2009 and is so far holding above critical horizontal support at 290/95. A break below there would likely signal a much larger commodity sell-off, potentially on the order of another 10-15%. I look at commodities as leading indicators for moves in other risk assets, and for the moment they're hinting at the potential for a greater risk-off move heading into year-end. This would be consistent with the US dollar index breaking up above its weekly Ichimoku cloud and closing above the psychologically significant 80.00 level for the first time since late 2010.
(source : www.forex.com)
No comments:
Post a Comment