Big day for base metals, Trump and Trudeau to meet

Stock markets remain well supported to start the week. US index futures‎ and the FTSE are flat to up slightly, while the Dax is up 0.7%. In currency action, USD is up slightly against gold and the majors. Sterling is the top performer, posting gains against USD, EUR and JPY as traders digest last week passage of the Brexit bill by a big majority through the House of Commons last week with no amendments. Debate in the House of Lords is scheduled to start next Monday.

The biggest action so far today has been in base metal commodities which continue to benefit from last week’s strong China trade report which has shifted resource demand expectations upward.. Nickel is up 3.6% while Copper is up 0.6%.This appears to bode well for base metal stocks and the Canadian market especially since the similarly weighted to resources Australian market posted a 0.7% gain overnight.

Canada trading, particularly the loonie may also attract a lot of attention today on political developments. ‎Canadian PM Trudeau is off to Washington to meet with President Trump today. Trade is at the top of the agenda with the new US administration looking to renegotiate or rip up NAFTA. The concern is that even though Trump is targeting Mexico, Canada could get sideswiped in trade disputes. Energy may also come up with the approval process for Keystone XL back up and going.

The big question is whether the two leaders will get along or not and how that could impact relations particularly. The bearish case would say there could be trouble because Trudeau was close to former President Obama with the potential for dustups over climate change or refugees.

On the other hand, PM Trudeau seems to be pretty good at seeing which way the wind is blowing, dumping unpopular ideas and political liabilities overboard (like electoral reform and the latest cabinet reshuffle) and focusing on top priorities. Also a positive, President Trump’s meeting with Japanese PM Abe seems to have gone well with VP Pence to continue engagement and no flareups over trade and currency values.

So, we’ll see soon enough. Around the meeting pipeline stocks like Transcanada and auto stocks like Magna could attract particular attention from traders.

Chart Signals

Chart Signals: Copper breaks out, Sterling climbs, US indices near exhaustion

The main technical event today is a big breakout by copper from an ascending triangle, signalling the start of a new upleg. US indices are also climbing today but have only managed to barely eke out new highs and are starting to look overbought and tired on their RSIs. GBP, meanwhile, looks back under accumulation against both USD and EUR.

North American and European Indices

US 30 remains under accumulation, reaching another new high near 20,335 then slipping back toward 20,320 with support rising toward 20,300. RSI nearing overbought while a negative divergence refuses to confirm recent new highs a sign the current uptrend could be tiring.

US SPX 500 has reached another ne4w high near 2,322 with next potential measured resistance on trend near 2,335. Support moves up toward 2,318 from 2,312. RSI confirms upward momentum increasing but starting to get overbought again.

US NDAQ 100 has touched a new high just barely near 5,238 but is starting to approach 5,250 measured potential resistance. RSI is really overbought and forming a double top suggesting a correction possible with initial support near 5,200 then 5,188.

UK 100 remains in an uptrend but has paused for a rest near 7,275 after trading up toward 7,300 with next potential resistance near 76,365. Support rises toward 7,255 form 7,200.

Germany 30 continues to climb within a 11,445 to 11,900 trading range, driving up from 11,670 toward 11,770 with next potential resistance near 11,845. RSI rallying up off 50 confirms upward momentum increasing.

Commodities

Gold is bouncing around $1,229 a Fibonacci level trading between $1,228 and $1,231 as it continues to consolidate recent gains in the $1,218 to $1,242 range. A double top in the RSI suggests upward momentum has likely peaked for now, but RSI well above 50 suggests no downturn in sight yet either.

Crude Oil WTI is having an inside consolidation day following a rally Friday trading between $53.20 and $53.50 just below $53.85 channel resistance. RSI bouncing between 40 and 60 indicates a sideways trend. Next upside tests possible near $54.65 and $55.00 with next pullback support near $52.90 then the 50-day average near $52.00.

Copper is breaking out today, clearing $2.72 to complete a bullish ascending triangle and advancing on $2.82 before retrenching back to $2.78. Next potential resistance near a measured $2.87 then $2.93 a Fibonacci level. Rising RSI confirms upward momentum accelerating. 

FX

US Dollar Index is still forming a saucer bottom below 101.00 but at the same time is really struggling to get through that resistance level. A breakout there or of 50 on the RSI would signal a new uptrend with next potential resistance near 101.30 then 101.70. A failure, however, would signal an emerging downtrend with potential support near 100.50 then 100.00.

USDJPY is at a technical turning point. Downtrends in the pair and the RSI have been broken but tests underway of 114.05 and 50 respectively may indicate if we are moving into a sideways trend or a new uptrend. Next potential resistance at the 50-day average near 115.00 with next support near 113.00.

EURUSD remains under distribution with $1.0640 a Fibonacci level emerging as lower resistance following a breakdown. RSI breaking under 50 confirms momentum turning downward with next potential support near $1.0585 close to a Fibonacci level and the 50-day average then the $1.0500 round number.

EURGBP is turning downward again, falling away from its 50-day average near 0.8530 back under 0.8500 and on toward 0.8485 with next potential support near 0.8460 a Fibonacci level and the 200-day average with then 0.8345.

GBPUSD remains under accumulation regaining $1.2500 up from $1.2435 and trading toward $1.2525 with next potential resistance near $1.2545 then $1.2585. RSI holding 50 confirms underlying uptrend remains intact.

USDCAD is sitting on $1.3100 up from a higher low near $1.3055 but still in a downtrend below its 200-day average near $1.3145. RSI holding below 50 indicates ongoing distribution. Next potential support near $1.3045 then $1.3000 with next resistance near $1.3200.

CADUSD is holding steady near $0.7630 near the middle of a $0.7560 to $0.7700 trading range. RSI holding just above 50 indicates momentum neutral to slightly positive. Initial resistance near $0.7650 with support in place near $0.7610.

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