2023 Commodities Forecast by Solidecn.com

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Chart of the Day - Gold

Fitch downgrading US credit rating from AAA to AA+ is the big news in the markets today. However, the market's reaction has been fairly muted given how significant this news can be. It should be noted that Fitch is the second major ratings agency to downgrade US credit from top-tier rating - S&P did so back in 2011 and has not upgraded it back since. Should the third major ratings agency - Moody's - follow suit and also downgrade US credit from AAA grade, this could have serious implications on US bonds. Some funds are obliged to hold only AAA grade bonds and once neither of three major agencies has such a rating on US credit, those funds may be obliged to sell their Treasury holdings, potentially triggering a slump in the TNOTE market.

However, the rationale behind Fitch downgrade is disputed. Fitch said that repeating debt ceiling disagreements over the past 20 years, last-minute solutions to debt ceiling problems, rising general government deficit as well as issues with US governance are the reasons behind the move. US officials rejected the rationale behind the decision saying that downgrade from Fitch is baseless and bizarre.

Announcement from Fitch yesterday after close of the Wall Street session triggered some volatile market moves. US equity futures launched overnight trading with an around 0.4% bearish price gap. There were also some notable safe haven flows into USD, JPY and gold. However, a bulk of those moves have been reversed already.

Taking a look at GOLD chart at D1 interval, we can see that a potential major reversal pattern is building up. GOLD pulled back to the $1,940-1,950 price zone, where previous price reactions as well as the 50-session moving average (green line) can be found, but bearish momentum began to slow. Should we see a rebound off this area, the right should of a potential inverse head and shoulder pattern would surface. In such a scenario, neckline of the pattern at $1,980 will be on watch as a break above could trigger an almost $90 jump, which would push GOLD close to all-time highs.​

 

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Important Technical Setup on Gold

Gold is once again trading near its lowest levels in a month, but bulls are seeking hope in the recent rebound that occurred on Friday and was preceded by a small doji candlestick. Gold recovered from initial declines on Friday and gained significantly by the end of the day as US jobs data came in mixed and EURUSD rebounded.

Friday's candlestick could potentially mark a local low and also the right shoulder of an inverse head and shoulders pattern. Today, we are witnessing a pullback in gold, which puts the fate of the right shoulder at stake.

As seen in recent months, there is a significant correlation between gold and EURUSD. Having said that, rebound in EURUSD could be the best scenario for gold bulls. In theory, it may happen this Thursday when US CPI data for July is released at 1:30 pm BST. Market expects headline US CPI inflation to accelerate from 3.0 to 3.3% YoY, with a monthly increase of 0.2% MoM.

Neckline of the inverse head and shoulders pattern on GOLD can be found in the $1,980 area. Should we see price rise and break above this hurdle, it could pave the way for a larger upward move with a textbook range of the breakout from the pattern being $2,066 per ounce.​

 

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DE30 - Chart of the Day

Global markets have calmed after yesterday's turmoil that was triggered by a combination of a few factors - Moody's rating agency downgrading a number of US banks, Italy approving a windfall tax on 2023 bank profits and China releasing disappointing trade data for July. Major European stock markets indices launched today's trading with around 1% gains and an empty economic calendar suggests that things may remain calm until US CPI release tomorrow at 1:30 pm BST.

German DAX is trading 1% higher on the day. Taking a look at DAX futures (DE30) at D1 interval, we can see that the index is attempting to break back above the psychological 16,000 pts mark. Bulls managed to halt declines and defend the upward trendline in the 15,900 pts area. It should be noted that DE30 has been largely stuck in the sideways move in the 15,900-16,300 pts range over the past 3-4 months, spare for few false breakouts. A positive price reaction to the lower limit of the range suggests that a move towards the 16,300 pts may be next. However, a stronger catalyst may be needed to push the index above the trading range.​

 

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US500

Today could be significant both for the shaping of the FED's future monetary policy and the direction of the main Wall Street indices, US100 and US500. The July reading will likely be the first in exactly a year when inflation was higher year-on-year compared to the previous month. According to the consensus, CPI inflation is expected to be 3.3% Y/Y, while in June it was 3.0% Y/Y. So far, the main indices have responded positively to lower readings, resulting in increases in US500 and US100 and a weakening dollar. However, today, a re

On US500 and US100, we observe an interesting situation. Both instruments are trading close to the lower limit of the upward channel, which has been respected since the beginning of March 2023. Therefore, if today's data falls below expectations, it may cause a rebound in the indices and euphoria in stocks driven by lowering inflation. Otherwise, the market may react with declines and break through the key support line.

On US500 and US100, we observe an interesting situation. Both instruments are trading close to the lower limit of the upward channel, which has been respected since the beginning of March 2023. Therefore, if today's data falls below expectations, it may cause a rebound in the indices and euphoria in stocks driven by lowering inflation. Otherwise, the market may react with declines and break through the key support line.​

 

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Wheat - Chart of the Day

WHEAT quotations are gaining during today's session due to an attack by the Russian side on one of the Danube River ports. The head of the military administration of the Odessa region, Oleh Kiper, notified that warehouses and silos were significantly "affected," which is another escalation of the war in the Black Sea zone and another boost to volatility on wheat quotes. At this point, the exact scale of the damage is unknown.

Wheat is still trading with a YTD loss of more than 20% due to abundant harvests in some parts of the northern hemisphere. The U.S. Department of Agriculture on Friday raised its estimate of Russian supplies for the 2023-24 season (domestic cargo estimates were raised to 48 million metric tons for the 2023-24 season. To put this in perspective, this means that nearly a quarter of the world's wheat trade will now come from Russia) and increased its forecast for U.S. wheat stocks by more than analysts had expected.

WHEAT quotations are starting today's session with an upward gap, nevertheless it is worth noting that this is mainly the result of a futures contract rollover. On the spot market, the grain's quotations are gaining 1.16% today.​

 

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Bitcoin - Chart of the Day

Despite positive news in the cryptocurrency market, such as PayPal launching its own stablecoin and the approval of Bitcoin ETFs in Europe, cryptocurrencies remain under selling pressure. Delays in Bitcoin ETF applications by US funds, including BlackRock, have significantly contributed to the declines. Additional catalysts include issues with the decentralized exchange Curve and weaker macroeconomic sentiment in recent days.

In light of these events, yesterday Bitcoin once again broke below the $29,000 level and is currently trading around $28,600. The nearest support level is $28,300, which was tested overnight. After that, the Bitcoin price reacted strongly, rebounding by $400. If this year's upward trend is broken (blue line), we could expect the Bitcoin price to drop to $27,500 or even $26,200. On the other hand, with a positive catalyst, the Bitcoin price could swiftly return above $29,000, and even reach $29,700. Nevertheless, given the absence of positive news, further downward pressure can be expected in the coming weeks.​

 

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Sharp Sell-off for Bitcoin

Bitcoin powerfully declines after WSJ rumors that SpaceX sold off entire, $373 mln Bitcoin holding

The sentiment of the cryptocurrency market has been quite weak for quite some time, and volatility remained at its lowest levels in 7 years. As expected, the period of consolidation and uncertainty ended with a spike in volatility. Bitcoin's price dived to the vicinity of $25,000 on a wave of some negative news. ​

• Yesterday's strengthening of the dollar weakened Bitcoin, which began to lose rapidly during the Wall Street session, on a wave of general risk aversion;​
• A report by The Wall Street Journal indicated that Elon Musk's SpaceX had liquidated a BTC holding worth $373 million, was met with a panic crypto market reaction, although Bitcoin had already been losing and was trading around $27,500 at the time of the news;​
• At the same time, on-chain analysts point out that there is currently no evidence of a Bitcoin sale by SpaceX, and the WSJ report in fact spoke of a 'wrote-down' of the value of BTC held by Musk's company in 2022;​
• At the same time, the SEC has received court approval to appeal the case against Ripple Labs, leading to a dynamic near-20% discount of the Ripple crypto in just a few hours​
• Liquidations of long crypto bulls positions have already amounted to more than $1 billion, according to onchain data, the largest wave of bull liquidations since June 2022, when Bitcoin's price fell to $17,000.​

Looking at BITCOIN chart, the price took a dive after the price fell below the EMA 100 average (blue line on the chart). Nevertheless, it is worth noting that the discount stopped at the level of a key support level, resulting from previous lows and the lower limit of the 1:1 system. If the level of USD 25250 is maintained, a return to growth is not excluded. On the other hand, if the price breaks below $24750 today, the downward movement may gain strength.​

 

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US100 - Chart of the Day

Nasdaq-100 futures (US100) are attempting to climb above the 15,000 pts mark this morning. The index has been enjoying strong gains since Friday evening and the move higher accelerated yesterday. Sentiment towards the tech sector seems to be improving as Nvidia earnings releases approaches (Wednesday after session close). Results from Nvidia are expected to be a test for the AI-related bull market in tech shares. Investors seem to be optimistic with Nvidia shares rallying over 8% yesterday. Previous earnings release from the company triggered an around 25% jump in share price and launched a strong upward impulse on the broad market.

Taking a look at US100 chart at H4 interval, we can see that the index was pulling back during the first half of August, but declines were halted at the 14,625-pts support zone last week. The ongoing rebound push the index into an area, where the downward trendline as well as the upper limit of the Overbalance structure can be found. A break above the 15,045-pts zone could hint that the correction is over, and the index will resume gains. In such a scenario, the 15,400-pts zone is the next resistance to watch.​

 

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Silver Gains 1.7%

Silver traders' position for a pause in rate hike cycle

Silver is trading around 1.7% higher today and almost 5% higher week-to-date. In spite of Chinese economy struggling, we have been observing gains not only on the precious metals markets recently but also on industrial metals markets. The latest rate cut from People's Bank of China was somewhat surprising with many being disappointed by a minor scale of the cut to 1-year lending rate and leaving the 5-year rate unchanged.

There has been a lot of speculation over a possible end of the rate hike cycle not only in the United States but also in euro area. While bond yields remain elevated, we can observe a small pullback in market rates today. Meanwhile, silver enjoyed a strong upward move that led to a break above the 50% retracement of the latest downward impulse. Silver bounced off the 22.20 area - a local low from June - and is now trading almost at $24 per ounce - above 50- and 200-session moving average. It should be noted that silver has been one of the best performing commodities over the 12-months but at the same time trades slightly lower year-to-date.​

 

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US100 - Morning Wrap

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• US indices ended yesterday's session with solid gains. The Nasdaq 100 Index gained 1.60%, while the S&P 500 was up 1.10%. The Dow Jones was the day's worst performer, rising only 0.54%.​
• Asian equities and US futures rallied, driven by rising US tech shares and signs that the Federal Reserve's rate-hiking campaign is coming to an end. Stocks in Japan, Australia, and South Korea climbed, with Hong Kong's tech-led surge marking its best performance in a month.​
• The upbeat mood in the Asia-Pacific markets followed the Wall Street session, with the Nikkei rising by 0.92%, the Kospi by 1.12%, the Nifty 50 by 0.39%, and the S&P/ASX 200 by 0.21%.​
• Chinese indices performed exceptionally well after a prolonged period of being strongly oversold. The Hang Seng gained 2.30%.​
• Regarding a potential Australia-EU trade deal, Trade Minister Dan Tehan shared optimism about forthcoming discussions with the EU trade commissioner, emphasizing enhanced access to essential minerals for Europe as one of the strongest positives.​
• The CEO of National Australia Bank, one of Australia's 'big four', believes the country won't face a recession, highlighting the resilience of the housing market despite interest rate hikes by the Reserve Bank of Australia.​
• Nvidia (NVDA.US) shares rose over 6.50% in pre-market trading after surpassing analyst earnings estimates and offering a positive future outlook.​
• Nvidia reported revenues of $13.51 billion versus a $11.04 billion forecast, a 101% year-on-year growth. Earnings per share (EPS) stood at $2.7, compared to a forecast of $2.07 and $0.51 in Q2 2022. Data center revenues reached $10.32 billion against a $7.99 billion forecast, marking a 171% year-on-year surge.​
• The Japanese Yen underperformed today, with USDJPY rising to 145.1. Conversely, after a period of lagging, the EUR emerged as the top performer, with EURUSD advancing 0.12% to 1.0815.​

After strong increases yesterday, the US100 has once again broken above the support line of the upward trend that was recently breached. Good results from Nvidia will likely support the index today, and further increases may continue.​

 

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US 100 - Chart of the Day

Just two days ago, we wrote that the main tech companies index, Nasdaq 100, was striving to break the 15,000-point level. After a strong nearly 8.0% correction that began at the end of July, the index rebounded with significant gains last Friday. At the beginning of this week, the mood in the tech sector started to improve, and in yesterday's session, the index gained a staggering 1.60%, returning again above the support line of the upward trend. After the close, Nvidia's results were published, further solidifying the optimistic sentiment for the Nasdaq 100. Despite the return to euphoric growth, investors should remain focused. The Jackson Hole symposium begins today, where market leaders and bankers are expected to signal the end of the interest rate hike cycle. Reality might again prove different. Recent comments from Federal Reserve members and the Fed's stance suggest that the Fed might not give in so easily, especially since the job market remains strong, and the latest inflation readings were higher than the previous ones, 3.2% year-on-year versus 3.0% year-on-year.

Nasdaq 100 (US100), after four days of gains, continues to rise today, gaining 0.40% before the Wall Street opening. The index has returned above the support line of the rising trend marked on the chart with a navy line. Currently, the bulls are battling resistance at the 15,400-point level. If the momentum isn't halted, it's conceivable the index might aim to retest the peaks at 15,900-16,000 points. However, if hawkish remarks are made during Jerome Powell's speech at Jackson Hole tomorrow, the market might once again retreat below the support line currently at around 15,100 points.​

 

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Germany Consumer Sentiments - Lower GFK Reading

A recent report shows that German consumers are feeling less confident about the economy. The GfK, a market research company, found that consumer sentiment in Germany is lower than expected and has decreased from the previous reading. This has caused a slight drop in the value of futures contracts on the DAX, a stock market index in Germany.

This decrease in consumer confidence could be a sign that the German economy is weakening. The European Central Bank (ECB) has been tightening its monetary policy, but with this new information, there may be pressure to keep interest rates unchanged at their next meeting in September.

According to the GfK, the chances of a strong economic recovery before the end of the year are decreasing. It is unlikely that private consumption in Germany will have a positive impact on the economy in 2023. This means that people may not be spending as much money, which could slow down economic growth.​

 

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WTI is testing $83 per barrel area amid expectations of further supply cuts

WTI (West Texas Intermediate) is a type of crude oil that is used as a benchmark for oil prices. It is currently trading at around $83 per barrel, which is higher than usual. This is happening even though the US dollar has become stronger, which usually causes oil prices to go down.

The main reason for the increase in WTI price is that people are worried that OPEC+ countries will reduce the amount of oil they produce. Saudi Arabia has already said that it might continue to produce 1 million fewer barrels of oil per day until October. Russia might also continue to produce 0.5 million fewer barrels of oil per day until October.

Another thing that could affect oil production is the hurricane season in the Gulf of Mexico. This area produces around 2 million barrels of oil per day, but if there are hurricanes, production could be reduced. The Gulf of Mexico also has many natural gas drilling rigs, so the price of natural gas (NATGAS) could also be affected.

Barclays thinks that the reduction in oil production by OPEC+ countries is more important than any changes in demand for oil in China. They expect the price of Brent (another type of crude oil) to go up to $97 per barrel next year.

Finally, it's worth noting that a recent report from the US showed that there are 10.5 million fewer barrels of crude oil in storage than there were before. This means that there is less oil available, which could also cause prices to go up.​

 

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Oil - What You Need to Know

Recently, Russia and Saudi Arabia decided to keep reducing the amount of oil they produce until the end of 2023. This move has made a big impact on the price of oil worldwide. These two countries are important in the oil market, and their decision to cut back on oil production has made experts think that oil prices will go up. After this announcement, the price of Brent crude oil went up by more than 1.5%, reaching over $90 per barrel. The price of U.S. West Texas Intermediate (WTI) crude oil also went up by a similar amount, reaching $86.5 per barrel. This decision to extend the cuts was a surprise because most investors thought the cuts would only last until October.

To make sense of these numbers, Saudi Arabia said it would keep producing 1 million fewer barrels of oil each day for another three months, until the end of December 2023. Russia, on the other hand, decided to export 300,000 fewer barrels of oil each day for the same period. These cuts are on top of the cuts that the OPEC+ group had already agreed on, which will last until the end of 2024. It's important to know that Saudi Arabia needs the price of Brent crude oil to be around $81 per barrel to manage its budget, according to the International Monetary Fund. Russia, on the other hand, can manage with a lower oil price but wants to make more money to support its war efforts in Ukraine.

Because there's not a lot of oil available right now, and the future is uncertain, the price of oil is likely to stay high in the short term. Rystad Energy, a research group, predicts that the demand for liquid fuels worldwide will be about 2.7 million barrels per day more than what's available in the next few months. The price of Brent crude oil for the month ahead is at its highest point in nine months, which means people expect there to be a shortage of oil soon. But there's a catch: in the U.S., oil refineries usually close for maintenance in September and October, which means they'll use less oil during that time. This could help keep oil prices from going too high.

Looking ahead, the OPEC+ group will have a meeting in November to decide how much oil they should produce in early 2024. Their decision will be really important in deciding how much oil costs and how the oil market works.​

 

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Bitcoin Analysis

Cryptocurrencies extend losses amid fears of FTX asset liquidation!

Bitcoin is down 2.70% and is struggling to maintain the key support zone at the level of 25,200 dollars. The sentiment in the market is not improving, and the upcoming decision on September 13th regarding the liquidation of FTX assets with a total value of 3.4 billion dollars is causing another wave of panic. The next level of support is 24,800 dollars. This was the low on June 15, 2023, following the market panic due to the delisting of many altcoins and SEC lawsuits.

The liquidation of funds from FTX is to take place gradually, with between $100-200 million entering the market week by week. However, the details of the transaction are not yet known. It is possible that the assets will be sold on the OTC market - outside exchanges. In this case, all market concerns are panic, which only confirms the stage of the cycle we are currently in.

Another date to watch this week is the statement by the SEC chairman, Gary Gensler, before the Senate Banking Committee, which will take place on September 12th.​

 

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Apple One Step Closer to iPhone 15 Debut​

Apple's stock (AAPL.US) has gone up this year. However, the company hasn't shared its plans for artificial intelligence (AI) technology yet. Also, their second-quarter results showed that device sales are not growing, even though they're still making record profits and increasing their profit margins. Today, Apple is going to show off the new iPhone 15, which is always big news in the tech world. If they give any hints about future developments for their AI system, Siri, during this event, it could affect their stock price.

Looking at the chart of Apple (AAPL.US), we see that the price has settled below the SMA50 and SMA100, and the last time it traded below both of them was at the beginning of the year. The main resistance level is set by the 23.6 Fibonacci retracement of the upward wave from January. A potential lower oversold range is at $170, where we see the 38.2 Fibo, and just below at $165 runs the long-term trendsetting SMA200 (red line).​

 

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Bitcoin is testing its highest levels since August 31 ahead of the FOMC decision.

Today, we're seeing a general recovery in the cryptocurrency market. Interestingly, there aren't major changes happening in the foreign exchange market, especially with the dollar. In recent times, we've noticed that Bitcoin's performance is often linked to other assets like Wall Street indices or gold. Even though US100 contracts are having a weaker day today, Bitcoin is on the rise, which is also in line with an increase in gold prices. This could be due to the upcoming Federal Reserve meeting that might signal the end of interest rate increases. In the past, Bitcoin has benefited from a weaker dollar, which was partly due to reduced expectations of a rate hike. If the Federal Reserve adopts a cautious approach now, Bitcoin might break through the 28,000 mark and attempt to reach 30,000 USD. After that, the next target would be 32,000 USD, which is the highest level since May 2022.

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Understanding the Impact of Rising Oil Prices on the Global Economy

The price of oil is going up, and people think it might stay high for a while. Some people think it won't go over $100 per barrel, but others aren't so sure. The price has already hit a 10-month high of $95 per barrel.

Countries like Saudi Arabia and Russia have been producing less oil, which means there's less oil available worldwide. This has helped push up the price.

Higher oil prices can lead to higher prices for other things too, because oil is used in many industries. This could lead to inflation, which is when prices go up across the board. People are worried about this because it could slow down economic growth.The stock market has been reacting to these changes. Some parts of the market might benefit from higher oil prices, while others might struggle.

Investors are trying to protect themselves from the risks of higher oil prices and potential market volatility. They're using certain types of securities to do this. Some investors are still positive about the energy sector and are investing more in it. The changes in the oil market are having big effects on the global economy and financial markets, so investors and policymakers need to keep a close eye on things.​

 

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USD 100 - Chart of the day

With the BoJ's decision, the cycle of publishing monetary decisions of major central banks this week comes to an end. The markets reacted volatile to them, but overall, the indices recorded losses on a weekly basis. The relatively hawkish Fed and its published new dot-plot indicated the possibility of one more hike this year and the postponement of the first-rate cuts. The overtones of this conference broadly affected sentiment around the US100 index and TNOTE.

The US100 index has been recording declines, which have reached, from the perspective of technical analysis, important support zones set by the 100-day exponential moving average (purple curve), which, it is worth mentioning, have not been tested for nearly 6 months. Moreover, the declines themselves are directly driven by the selloffs observed in the debt market, which has historically shown a correlation with the listings of technology companies.

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EURUSD Analysis

The German Ifo Institute, a research group that studies economic trends, released its latest indices today at 9:00 am BST. These indices are a measure of the business climate in Germany and are based on a survey of about 7,000 companies.

The main index, known as the Business Climate Index, remained unchanged from last month, coming in at 85.7 for September. This was higher than the expected figure of 85.2, indicating a more positive business sentiment than anticipated.

Here's a breakdown of the Ifo indices for August:
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• Business Climate: The index came in at 85.7, which was the same as the previous month and higher than the expected 85.2. This index measures the overall business sentiment in Germany.​
• Current Conditions: This index, which assesses the current business conditions, was 88.7, slightly higher than the expected 88.0 but lower than the previous month's 89.0.​
• Expectations: This index measures business expectations for the next six months. It came in at 82.9, slightly lower than the expected 83.0 but higher than the previous month's 82.6.​

In summary, the indices suggest that the business climate in Germany is stable, with expectations for the future slightly improving.​