Thursday Commodities & Currencies
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
The uptrend in commodity prices has paused perhaps due to some mixed influences. The US Dollar is at a major long-term support level where it may bounce higher, and this may be working against commodities. However, the US economy may have bottomed out and may be started to pick up a little momentum, and this may be working for commodities.
The chart below shows the heavily energy-weighted GSCI commodity index ETF below an important resistance level, but also well above the low of early January. The price action of this ETF will help determine the trend and how commodities are reacting to the mixed impact of the US Dollar and US economic strength.
The Yen has continued to weaken after showing a couple short periods of strength over the last year or so, while the Yen and the US Dollar have been the two punching bag weak currencies of the major world economies for a number of years. The Yen is important because the Yen carry-trade has fueled some of the economic growth and asset price gains around the world. So I believe an inexpensive Yen continues to work in favor of the world economy, and a stronger US Dollar attracts funds specifically to US equities. The Yen/USD ratio at the bottom of the chart will help confirm this currency relationship.
Will gold shares show some strength now that the HUI index sits right at a long-term support line? The index is squeezed tightly between powerful overhead resistance and the 6-year up-trend. The RSI may offer some additional help determining this trend. If the RSI holds above the 40-level it would be favorable for gold share prices.
