The arrest of the chief financial officer of the Chinese telecoms company, Huawei Technologies, by the Canadian authorities, who now faces extradition to the US over possible violations of sanctions against Iran, is causing quite a stir in financial and commodity markets, Investors are concerned over the breakdown of Sino/US relations that were already on a knife’s edge. China is requesting that both Canada and the US to “rectify wrongdoing”. Investors presume that this will break the cease-fire and turn into a far more severe diplomatic conflict between the US and China with dire implications for global economic growth.
Silver has been protected by the bulls but remains in negative territory and unable to break above the pivot line at 14.51. While the precious metals attract a bid in uncertain times, today’s market volatility continued and commodities have started to underperform. Silver’s monthly doji leaves the upside corrective outlook in place while near-term price action still looks consolidative. Silver had spiked to the 100-D SMA and top of the Bollinger band resistance but was forced back below the pivot. Silver then found demand, but the ATR shows there is no trend at this juncture. The 200-4hr support is located at 14.44 that meets the positive sloping 50 4hr SMA of which if gives way, the downside is open to S3 at 14.32.
“FX likely to view payrolls with an asymmetric bias; USD has been stable despite aggressive Fed repricing so a payrolls beat should not impact the USD as much as a disappointment,” analysts at TD Securities explained.
Closely linked to commodities is the Aussie which is taking a beating this week. We have some minor support around 0.7190/7200 / (55-day MA at 0.719). The next level of support comes in at 0.7131 at S3. A break of 0.7100 opens 0.7021 2018 lows. Bulls need to get above 0.7280 and the confluence of the 23.6% Fibo of 2018 range and the 10-D SAM to target R1 at 0.7391.