Commodity Chart Deck #11

The Dollar is showing weakness and could therefore lift up precious metals, but could rebound in a couple of weeks based on seasonal strength. Here is what you need to know.



The cold weather conditions eased a bit and therefore Coffee and OJ came under pressure. Gold and Silver could gain some momentum, based on Dollar weakness as well as the lowest Realyield we ever saw recorded. Iron Ore came under pressure after China’s Steel futures dip. Moreover we entered a seasonal weak phase for Iron Ore.

US Dollar Update

My opinion on the Dollar Index is still the same. If we see a new higher high, so basically a close above 93.4, the USD Long scenario would be confirmed for me.

But…

Last week the USD showed some weakness (As I saw it coming based on positioning). Because of that I had to open a short long position on the Euro Future. However in a few weeks the Dollar should gain some momentum based on seasonality. That’s why I work with tight stops here.


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Open Futures Positions: 
- Long Gold @ 1803 USD
- Short Lean Hogs @ 107 USX
- Long Crude @ 67.40 USD
- Long Euro @ 1.18465

As always, here are my current top setups, selected from all major commodity markets:

Apart from my commodity picks, it actually looks like bond yields could rise again in the coming months. At least according to my analysis. Here I see strong sales of futures positions on 2, 10 and 30 year bonds from the commercial side. In addition, the seasonality is very supportive until the end of the year for higher yields.


Elsewhere In The Macro World

Crypto seems to be back from the dead. In last weeks report I already mentioned that Bitcoin performed a bullish breakout. Since then Bitcoin gained 24%. This is not even surprising to me because if we see momentum in the crypto space, usually things went along pretty fast in the past.

One interesting thing that I observed was the price surge above the so important 40.800 USD mark, which worked as an important resistance through the last 2 months. During the week the price action struggled to break that mark. But when the Big Money went into weekend, price was able to break the mark. One hour after Wallstreet close, the price finally broke above that resistance. Coincidence or maybe there is more to it. I think this shows once again how smaller players try to bid the price of crypto up again and as it seems to me they’re quite successful doing it.

Next week look out for the latest Manufacturing PMI data on Monday as well as Service PMI on Wednesday. IMO the data was already peakish, so lets see if this trend continues and we will see slower growth (on a high basis) throughout the US economy. On Friday we will receive additional insights into the health of the US economy with the latest labor market report.

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Till next Monday, Lukas

If in the mean time you have any questions, please feel free to contact me via Twitter or Mail.

(The Commodity Report is not investment advice)