Commodities and resource currencies are on a roll to start the new trading week, coming out of a big weekend for conferences.
The China-led One Belt, One Road (or New Silk Road) conference on increasing land trade across Eurasia attracted a lot of attention in the media and was well received by traders. Hope the longer term prospects for trade may improve offset disappointing Chinese industrial production.
Base metals have been on the rise today with Copper gaining 0.8%, same as the Hang Seng. Resource currencies have also been in rally mode today with CAD, AUD, NZD and NOK all posting strong gains. The loonie has been getting a big boost from a 3% rally in oil prices boosted by reports OPEC and Saudi Arabia support extending production cuts well into 2018.
GBP and EUR have also been trading higher today. More weekend UK election polls showing the Conservatives with a commanding lead have provided more support for UK markets. News of a North Korean missile test didn’t have any impact on gold and JPY which are mixed. Meanwhile at the G7 finance ministers conference, participants kicked discussion of trade issues off to the leaders’ summit later this month.
Today is the last day of the main part of earnings season. But the commodity price action suggests resource stocks could be most active which could put a tailwind behind Canadian and UK markets. US data centres around the Empire manufacturing report.
Chart Signals: Oil and metals rally plus a Golden Cross for Cable
North American and European Indices
US 30 is holding steady bouncing around between 20,900 and 20,940 still below 21,000 as it continues to trend sideways between its 50-day average near 20,780 and a double top near 21,130. RSI still falling toward 50 indicates a pause within an uptrend.
US SPX 500 is holding steady just below 2,400 where a double top remains in place, trading between 2,391 and 2,397. Next resistance near 2,405 with next support near 2,382. Falling RSI indicates slowing upward momentum.
US NDAQ 100 peeked up above 5,700 to a new high then dropped back into the 5,683 to 5,690 zone. It’s unclear at this point if this is a breakout or a bearish reversal but RSI remains really overbought leaving the index vulnerable to a correction.
UK 100 is breaking out today, clearing the top of a failed head and shoulders pattern near 7,440 then driving toward 7,465 before dropping back for a rest of old resistance as new support. Rising RSI confirms increasing upward momentum. Next resistance near 4,500 with support rising toward 7,435 from 7,400.
Germany 30 continues to consolidate recent gains in a channel between 12,650 and 12,900, dropping back form 12,840 toward 12,740 today. Overbought and falling RSI indicates upward momentum fading and a pause or correction possible.
Copper continues to turn back upward with support moving up toward $2.50 and the price testing a Fibonacci cluster between $2.53 and $2.55. A breakout would signal the start of a new upswing with next potential resistance at the 200-day average earn $2.58.
US Dollar Index has turned back downward taking out 99.00 as it continues to fall away from 99.60. RSI failed to retake 50 indicating the recent rally was a trading bounce within a bigger downtrend that has now resumed. Initial support possible near 98.60 then 98.35.
USDJPY is sitting on 113.35 a 50% retracement of its previous downtrend. The pair ran into resistance near 114.35 and has started to drop back with next support possible near 113.00 then 112.15.
EURUSD continues to rebound within its $1.0850 to $1.1000 consolidation range, rallying up from $1.0930 toward $1.0970. Next resistance on a breakout possible near $1.1025 then $1.1130. RSI holding 50 indicates recent trading as a normal pause within an uptrend.
EURGBP is testing 0.8500 resistance where a breakout would signal an upturn with next resistance possible near 0.8535 a previous high and the 50-day average. RSI has regained 50 to signal momentum turning upward.
GBPUSD successfully tested $1.2830 support to keep its uptrend intact and has rallied up into the $1.2910 to $1.2940 area but is still struggling with $1.3000 round number resistance. The 50-day average appears about to stage a golden cross of the 200-day.
USDCAD is breaking down today, taking out $1.3640 to complete a descending triangle top and falling toward $1.3600. Next potential support near $1.3570 then the $1.3500 round number. RSI falling toward 50 indicates confirmation of a downturn pending.
CADUSD is breaking out of a base today, clearing $0.7325 and advancing on $0.7350 with next potential resistance near $0.7375 where a measured move and Fibonacci test converge, followed by the $0.7410 to $0.7420 area where the 50-day average and another retracement level cluster. RSI rising toward 50 indicates confirmation of an upturn pending.