Copper jumped to a record while iron ore futures surged more than 10%, adding to concern about inflation

11 May 2021, 03:51

Market Focus

Technology shares led U.S. stocks lower as surging commodity prices stoked concern about whether inflation will derail a growth rebound in the world’s largest economy and spoil a record stock rally.

The tech-heavy Nasdaq 100 Index tumbled 2.6% amid the growing anxiety over inflation, which can threaten longer-horizon revenues typical of the sector. Tesla and Apple were among the biggest decliners. The ARK Innovation ETF resumed its slide. The Dow Jones Industrial Average briefly topped 35,000 for the first time. The benchmark S&P 500 fell from an all-time high. Treasury yields edged higher as traders brace for a busy week of auctions.

Copper jumped to a record while iron ore futures surged more than 10%, adding to concern about inflation. West Texas Intermediate fluctuated after a cyberattack forced the closure of a key U.S. pipeline, which operators hope to reopen by the end of the week.

The run-up in raw materials is intensifying debate ahead of a U.S. CPI report Wednesday that is forecast to show price pressures increased in April. The data will be closely watched by policymakers at the Federal Reserve trying to gauge the speed of the recovery after job growth significantly undershot forecasts.

Main Pairs Movement

The dollar pared losses as equities weakened and some commodities fell. The British pound jumped to its highest since late February against the greenback after the Scottish National Party’s election showing pushed back the risk of an imminent vote on independence.

Currency price action may be influenced by cross-border bond issuance including Canada announcing its first U.S. Dollar bond sale since pandemic and as China Railway Construction eyes debut euro bond.

GBP/USD rose as much as 1.2% to 1.4158, the highest since Feb. 25. The pound was also buoyed by corporate and options buying and interest from macro accounts to reestablish long sterling positions.

Commodity-linked currencies from Australia, Canada, and New Zealand pared intraday gains. AUD/USD was little changed after earlier advancing by as much as 0.6 to the highest since late February; AUD saw interest in 2-month 0.8025 call options. NZD/USD rose as much as 0.1% to 0.7272. USD/CAD slid by 0.3% to 1.21, the lowest since September 2017.

Technical Analysis

EURUSD (4 hour Chart)

Euro fiber once touched topped of the day at 1.2171 level before trims intraday gains, holding negative territory while close to the end of the day, trading below 1.215 level at 1.213 as of writing. At the same time, the greenback remains the weakest currency across the boarded-FX market. For the technical aspect, the RSI indicator shows 58 figures, which alleviates recent over-bought sentiment that pushes down to smooth thresholds. On average price view, 15-long SMA accelerating its ascending slope and 60-long SMA turned its slope to the teeny-tiny upside in day market.

We foresee the market is pretty optimistic for gain traction market seems to build upward momentum despite eurodollar correction it bull movement. On the down way, the first immediate support level is eye on 1.2105 level, 1.207 and 1.2 following. On the up way, we see 1.215 level will be the first tackle resistance as the market tamp down which formed by the price cluster area.

Resistance: 1.215, 1.22

Support: 1.2105, 1.207, 1.2

GBPUSD (4 Hour Chart)

Sterling has raised overall among the top performance on Monday, following last week’s elections. After touching its highest level since Feb at 1.415 around in early Amerian session, the pair holding a slightly move phase, trading at 1.4122 with a 1% rise. For the RSI side, the indicator has breached 78 figures which show the market is experiencing a torrid sentiment. On the other hand, 15 and 60-long SMAs indicator are accelerating their upward slope.

In the near term, the sterling is likely to eye on this week’s U.K. data releases and BoE governor speaking after the good news of the main party pushing for independence in Scotland failed to win. At the current stage, we believed the pound could challenge for the higher stack to toward the last peak at 1.42 around as the market is piling into a long position. However, BoE Governor will speak tomorrow to prospect the eco outlook that could drive wrong-foot fluctuation. For bull favor, the first immediate support is tracking psychologically spot on 1.4 level.

Resistance: 1.4155, 1.42

Support: 1.3959, 1.4

USDCAD (4 Hour Chart)

Loonie had another downside tractions which step down the 1.21 level as the greenback remains poor movement and broadly stronger commodities prices in the day market, trading day to day low at 1.2092 as of writing. Meantime, WTI crude oil traveling at bear step with a slight move in the day but industry material are edged higher stage as expectation of price inflation seems on the trajectory. For the RSI side, the indicator shows 22 figures which suggest an over sought sentiment, moreover, it consecutive for days long. For the moving average side, 15 and 60-long SMAs indicators are remaining in descending movement.

We see price momentum seemingly gird around 1.21 level after it touched down in the day market. Therefore, we expect the market will eye on downside correction movement as it fell to the current stage.

Resistance: 1.2264, 1.238, 1.2491

Support: 1.21