Originally published by AxiTrader
Investors are once again focused on the trade tensions between the USA and China, which weighed on risk sentiment. While the reaction in the major FX pairs has been surprisingly subdued, there have been larger moves in commodities, as well as the commodity currencies.
Copper has tumbled for the fifth day in a row, and it is unlikely that it has reached a bottom yet. The clear break below $2.80 support signals that we are likely to see a test of the 200 DMA - which currently resides near $2.63. Traders like to use copper as a leading economic indicator due to the base metals widespread application in most sectors of the economy.
Today has been a wild ride for oil traders as well. WTI collapsed and broke through two key support levels. The decline eventually paused at the 50 % Fibo of the June rally and the commodity managed to gain $0.50 from there. While the move seems a bit extreme in the short-term, the outlook for WTI has turned negative. Solid resistance can now be expected at $70, followed by $71.30. Should it break below the 50 % Fibo, a continuation of the downtrend to at least $67.80 seems likely.
The pressure on the Australian dollar is set to increase in the coming days. Traders should keep a close eye on $0.73 support. A clear break below that significant level would pave the way for a retracement towards the 2016 low at 0.7140.
