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Commodities rebounds on weaker Dollar

By Margaret Yang, CMC Markets

Commodities – Major commodities’ prices - including crude oil, gold and silver - rebounded yesterday as the Dollar Index slid for a second day to around 93.80.

The crude oil price closed 3.2% higher on Wednesday, reaching a six-month-high. Last night, the US DoE weekly report showed that the commercial oil inventory has surprisingly dropped by 3.41 million barrels, as compared to market expectation of a 1.5 million rise.

On the other hand, the shutdown of a Nigerian oil pipeline due to militant attacks led to production being cut by around 0.4 million barrels per day. All of these have led to a strong surge in crude prices. WTI crude oil is trading at $45.90 this morning, up from $44.50 yesterday.

The price of gold rebounded to $1,277 from a one-week low of $1,257. The near-term resistance remains at $1,286, which is also the 61.8% Fibonacci level. Silver has also rebounded to $17.40 after touching the 20-SMA at $17.09. The near-term support and resistance level are $16.75 and $17.66 respectively.

Equities – Asian markets closed lower on Wednesday. The Nikkei 225 Index opened 1% higher but gradually erased the gains and ended flat due to a strengthening in JPY. The Hang Seng Index closed 0.93% lower, widening its month-to-date losses to -4.8%, possibly due to profit-taking activities and uncertainties over its economic outlook.

Singapore’s Straits Times Index closed 8.3 points, or 0.30% lower, resuming its consolidation path. The recently released earnings showed that many companies were facing a more challenging global economic environment, the impact of which has been reflected in their profitability and asset qualities.

FX – The Dollar Index retraced for a second day to 93.80. USD/JPY dropped to 108.40. Immediate support and resistance levels for USD/JPY are at 107.00 and 110.00 respectively.

USD/SGD consolidated for a third day to the 1.3670 area after hitting the recent high at 1.3730. EUR/USD rebounded to the 1.1420 area as a result of the softening dollar. AUD/USD climbed to the 0.7360 area after hitting a two-month low of 0.7300, thanks to higher metal prices.

Silver - Cash

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Key technical levels to watch:

  • ‘Golden Cross’ formed. 200 SMA sloped upward.
  • Immediate support levels: $16.75 (61.8% Fibonacci level)
  • Immediate resistance level: $17.66-18.00 (50.0% Fibonacci level)

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.