Commodities at Risk as Growth Fears Weigh on Risk

Commodity prices are under pressure in European trade as global slowdown fears stoke risk aversion across financial markets in the wake of disappointing economic news-flow over the past 24 hours. The ISM Manufacturing gauge unexpectedly showed factory-sector activity shrank again in August, the composite Eurozone PMI gauge was revised lower and overnight reports from China and Australia struck a dour note.

The US calendar is relatively quiet, with traders left to look to the rhetoric accompanying a rate decision from the Bank of Canada for guidance on North American growth trends. S&P 500 stock index futures are pointing firmly lower, suggesting the risk-off mood is likely to carry forward. This stands to weigh on cycle-sensitive crude oil and copper prices while gold and silver face de-facto selling pressure courtesy of returning haven demand for the US Dollar.

Comex E-Mini Copper (NY Close): $3.470 // +0.012 // +0.35%

Prices are pulling back to support at 3.438, with a break below that exposing the bottom of a rising channel set from the Aug. 2 low (3.420). Near-term resistance lines up at 3.535. A push above that targets the channel top at 3.555.

 

WTI Crude Oil (NY Close): $95.30 // -1.17 // -1.21%

Prices are testing below support at the bottom of a rising channel set from the June 28 low (95.72). Initial resistance is at 97.82, the 61.8% Fibonacci retracement, with a break higher exposing the 100.00 figure and 100.65. Alternatively, a reversal through channel support initially targeting the 50% Fib at 93.90.

 

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