Commodities Focus: Soft USD painting a rosy picture

Thursday, 29th June 2017 12:59 - by Rajan Dhall

In the last few days commodities have seen a decent run, the fall in the USD has really helped commodities in general with the DXY  falling 1,77% in the last 3 days alone. Alongside this we have seen some comments out of China, where apparently economic targets will be hit for the year. Let’s look at some of the price action in copper:

We are heading to some major resistance levels on the weekly chart above. The 2.811 level will be a major level but before that there is a downtrend line which originated at the Aug'11 high. The candles look bullish enough for it to continue through the first resistance but the 2.811 will be a struggle.

This is a daily Dalian Iron ore chart (courtesy of uk.investing.com) and you can see we are getting a slight rebound in prices after a long downtrend starting from Feb'17. The likes of BHP will be glad of this, after feeling some pain from the crash in prices. It’s the same as copper which rebounded after the comments from China.

WTI and Brent crude have both rebounded since the OPEC saga died down. We have seen some comments from the likes of Russia saying they have adhered to the cuts, which complemented the rebound but the downside move looked over extended. I can see a small move lower to around $43.50 to set up for a move higher to around the $47 area, once OPEC set up a new meeting or talk up the price again. The key point is still the rise in shale production in the US, but in yesterday’s DOE report we did see production reduce by 100k BPD.