RS: Copper, Crude Oil to Rise with Jobs Report Surprise
Commodities are treading water in European trade as traders await the much-anticipated US Employment report. Expectations suggest payrolls rose by a paltry 85,000 in November to mark the weakest performance in five months, with economists citing the negative impact of Hurricane Sandy as the culprit. While a slowdown seems reasonable, the degree of weakness implied by consensus forecasts suggests the final outcome would have to be utterly dismal to be seen as meaningfully disappointing.
To some extent, this caps the degree of negativity likely to emerge after the data comes across the wires. It likewise tilts volatility risk toward the upside in the event of a surprise. A better-than-forecast reading is likely to be supportive, driving cycle-sensitive crude oil and copper prices higher along with stock markets. The outlook for gold and silver appears somewhat clouded however amid conflicting cues from the US dollar, though recent price action has seen precious metals trade alongside risky assets.
Prices are pulling back from resistance at 3.676, the 50% Fibonacci expansion, to retest falling trend line resistance-turned-support set from the September 14 swing high (3.639). A drop below that targets the 38.2% expansion at 3.612. Alternatively, a break above resistance exposes the 61.8% level at 3.742.
Prices moved lower as expected after putting in a Shooting Star candlestick below resistance at the 23.6% Fibonacci expansion (89.48). Sellers have now cleared near-term support is at 87.42, the 14.6% Fib, exposing the channel bottom at 85.71. A break below that targets the Nov. 7 low at 84.04. The 87.42 level has been recast as near-term resistance, with a reversal back above that aiming for 89.48 anew.
