Wansca » Commodity markets were directionless today with early losses seen

Commodity markets were directionless today with early losses seen

November 23rd, 2011

Interbank traders targeted stops below parity in the Australian Dollar during the local morning as the signs of a fragile market on the back of weak overnight commodity moves put the fear into the commodity currencies. The minor support at 0.9980 was taken out with the price managing to reach 0.9970 before sovereign names were seen buying across most markets and with that the downward spiral was stopped in its tracks. The following short squeeze has all currencies higher with Euro touching 1.3500 after having found support at 1.3450 earlier in the day whilst Sterling could not move above the reported 1.5800 corporate selling. Reports that Merkel and Morti were holding discussions over the current Italian crisis via phone seemed to help the bullish mid session bias of the market but as the afternoon approached all the majors gave up there gains with AUD back at parity, Euro 1.3475 and Sterling 1.5770.

Reports out of Japan that Toyota would not be able to make a profit on US car sales whilst the Japanese currency was below 90.00 has done nothing to stop the strengthening of the Yen as the pair closes the day just above the next pivot point of 76.80. Reports that stops below in the Interbank market are increasingly becoming a target and we cant see a bounce for the USD until these are cleaned out.

Equity markets remained under pressure through the Asian trading session today as the negative sentiment seen in Europe and the US flowed into the region today. Negative comments about the property sector in China today didnt help either and saw China’s Shanghai Composite weaken by 1.50% to 2,425 and Hong Kong’s Hang Seng lost 1.80% to 18,476. South Koreas KOSPI also came under pressure and is generally the leader or loser in the Asian markets, currently weaker by 2.20% at 1,834. Australia’s ASX 200 performed inline with other major bourses as commodity prices remained weak and the AUDUSD dollar continued to fall. The ASX 200 finished trade weaker by 1.90% at 4,177.

Commodity markets were directionless today with early losses seen as equity markets opened and moved to session lows very quickly but we did see some support return in afternoon trade as shorts were seen covering going into the weekend. Crude prices were relatively unchanged with WTI weaker by 0.10% at $98.70 and Brent crude actually gained 0.20% to $108.41 as the spread narrowed slightly after recent losses. Precious metals remained under pressure with Silver declining by 0.40% to $31.37 and Gold finished the session unchanged at $1,720. Copper was relatively unchanged ending the session at $3.40.