COMMODITIES: Gains in WTI Futures Last Week Considered Corrective, For Now
A bearish threat in WTI futures remains present and last week’s gains are - for now - considered corrective. A resumption of the bear cycle would open $65.74, the Oct 1 low, and $63.90, the Sep 10 low and key support. For bulls, a stronger reversal to the upside would instead refocus attention on the key short-term resistance at $77.04, the Oct 8 high. Initial firm resistance to watch is unchanged at $72.41, the Nov 7 high. Gold has pulled back from its recent highs. Trend signals remain bullish and a move lower is considered corrective. A key short-term resistance at $2721.4, the Nov 25 high, has been pierced and this represents a positive development. A continuation higher would expose key resistance at $2790.1, the Oct 31 high. Clearance of this level would confirm a resumption of the primary uptrend. First key support is $2605.3, the Nov 26 low.
- WTI Crude down $0.69 or -0.97% at $70.62
- Natural Gas down $0.12 or -3.51% at $3.164
- Gold spot up $7.71 or +0.29% at $2656.1
- Copper down $0.3 or -0.07% at $419.65
- Silver up $0.1 or +0.31% at $30.648
- Platinum down $0.87 or -0.09% at $926.19
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US OUTLOOK/OPINION: US Macro Weekly: Fed Shifts Hawkish As Disinflation Stalls
Our weekly US Macro publication is out (PDF):
- US “Inflation Week” brought largely in-line results, with sequential core CPI coming in a little lower than expected, and headline CPI and core PPI a little higher than expected.
- But overall the takeaway was that there was relatively little if any disinflationary progress in October, exacerbated by what looks like a small sequential acceleration in the core PCE reading for the month.
- The cumulative effect of surprisingly hawkish Fed commentary combined with the slight upside in core PCE (with a helping hand from solid initial jobless claims among other data demonstrating continued resilience) saw a notable shift in rate cut pricing this week.
- The December FOMC meeting appears to be "live", nearing 50/50 implied probability of a hold at one point Friday morning, versus closer to 20% at the start of the week.
- At the end of this document we highlight two major shifts in FOMC tone this week: one is that a "pause" was introduced as a possibility by a senior FOMC member (Gov Kugler); the other is that there is growing concern over the implications of soaring longer-end rates.
- Neutral rate-talk also dominated, and in a hawkish direction - Dallas Fed's Logan mused that the Fed had already perhaps already reached neutral rates.
- It's probably still the case that the FOMC is still in the "thinking about thinking about slowing rate cuts" stage, which means a December cut is the default. But some of the groundwork for a less dovish rate cut path appears to have been laid since the US election (the potentially hawkish implications of which, FOMC members didn't venture into).
- This week’s heavy data slate gives way to a quieter schedule Nov 18-22, with key macro highlights including flash November PMIs and housing market data, with FOMC speakers also of interest after this week’s shift (including Cleveland Fed Pres Hammack).
US OUTLOOK/OPINION: Atlanta Fed GDPNow Steady, PCE Upgraded Despite Control Miss
The Atlanta Fed's GDPNow estimate for Q4 remained steady at 2.5% Q/Q annualized in the Nov 15 update, reflecting higher personal consumption expenditures (now 2.8% vs 2.7% in the prior day's update), offset by downgrades to equipment/ nonresidential structure investment.
- The stronger PCE figure comes despite a softer-than-expected Retail Sales Control Group figure - we think this is a reflection of the higher revision to September's Control Group, which will statistically carry over into the Q4 growth rate.
USDCAD TECHS: Bull Cycle Extension
- RES 4: 1.4210 2.0% 10-dma envelope
- RES 3: 1.4140 1.500 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4122 3.0% Upper Bollinger Band
- RES 1: 1.4106 High Nov 15
- PRICE: 1.4077 @ 16:54 GMT Nov 15
- SUP 1: 1.3959 High Nov 1 / 6
- SUP 2: 1.3891/22 20-day EMA and a key S/T support / Low Nov 6
- SUP 3: 1.3785 50-day EMA
- SUP 4: 1.3611 Low Oct 8
A strong rally in USDCAD this week reinforces the current bullish condition. The pair has topped 1.3959, the Nov 1 / 6 high. This break confirms a resumption of the uptrend and has also resulted in a breach of 1.3977, the Oct 13 2022 high. 1.4140 marks the next upside level. Initial firm support to watch lies at 1.3891, the 20-day EMA. A short-term pullback would be considered corrective.
