Another bad week for commodities in general with the CRB index reflecting the bearish sentiment currently in place across the complex. This weakness was triggered on Friday at the conclusion of the Jackson Hole summit, with the statement from Fed Chair Yellen delivering a hawkish tone and the US dollar duly responding, and continuing through into this weeks price action. The more hawkish tone was not entirely unexpected, given the run up to the release with various Fed members alluding to a rate hike at the forthcoming September meeting. Friday’s candle duly closed with a very deep wick to the upper body, testing the 189 area before closing back near the open of the session at 187.
The index then opened gapped down on Monday just below 186, before Tuesday, Wednesday and Thursday followed through with wide spread down candles, and moving to test potential support in the 178 area on the daily chart. Much of course will depend on the reaction to the NFP data later today, and markets also prepare for the FED meeting later in the month, with every release now scrutinised for validation of Janet Yellen’s Jackson Hole statement. That said, and given the Fed’s ability to backtrack, nothing is certain, and it would be no surprise to see further sitting on the fence and a rerun of last years face saving.
By Anna Coulling
Charts from Reuters/Metastock