Commodity prices are on the upswing in early trade, with all eyes are on the European Central Bank interest rate decision. While markets are pricing in the probability that the ECB remains on hold this time around, traders appear hopeful that ECB President Mario Draghi will offer clues about forthcoming easing in the months ahead at the press conference following the announcement.
Dovish commentary is likely to boost risk appetite considering the slump in the Eurozone represents the most significant headwind facing global growth this year. The Fed Beige Book survey of regional economic conditions is in focus on the US economic calendar. Signs of slowing momentum mirroring the recent disappointing string of data releases are likely to boost resurging QE3 expectations and compound risk-on sentiment across financial markets.
The chipper mood stands to boost growth-geared copper and crude oil prices along with stock prices. Gold and silver are likewise likely to find support as the US dollar retreats from 18-month highs set last week, driven lower by fading safe-haven demand as well as fears of dilution should another round of Fed asset purchases materialize.
COMEX E-Mini Copper (NY Close): $3.308 // -0.006 // -0.18%
Prices are bounding from double bottom support at 3.250., with positive RSI divergence reinforcing the case for an upside scenario. Initial resistance lines up at 3.426, the 76.4% Fibonacci retracement, with a break higher exposing the 61.8% level at 3.534. Alternatively, a drop below support targets the 123.6% Fib expansion at 3.080.
WTI Crude Oil (NY Close): $84.29 // +0.31 // +0.37%
Prices put in a Hammer candlestick above support at 83.34, the 76.4% Fibonacci retracement, hinting an upswing is ahead. Highly oversold RSI studies reinforce the risk of a rebound. Initial resistance lines up in the 90.14-88.54 area, marked by the early September swing top and the 61.8% Fib. Alternatively, a break lower initially exposes 80.16.