Commodities Take a Hit as Stronger Dollar Leaves Investors Hesitant

The previous week kicked off slowly, but there’s a good chance this week could make some significant moves early on. Although Monday’s economic calendar is not packed with major events, we still need to digest last week’s market shifts. Monday began with significant changes in the USD and Yen. The Empire State Manufacturing Index is the only significant data on today’s calendar, and it’s expected to drop to -3.7 from the previous 10.8 reported.

So, what’s happening on the charts? All pairs with Yen are showing rises, indicating that the Japanese currency is giving back the gains mostly seen on Wednesday and Thursday. There’s also a bit of hesitation with the USD, as last week ended with a considerable strengthening of the American currency, and Monday starts with a slight correction. The sentiment towards the EURUSD pair remains negative, as it managed to set new monthly lows on Friday.

A stronger dollar negatively impacted commodities. Gold remained relatively resilient, but Silver dropped sharply, crashing the 24.4 USD/oz support. Oil also dropped and continues to decline today. If sellers manage to close Monday near the local lows, we should get a fourth consecutive bearish daily candle, marking an end to the rise initiated on the 4th of May.

Indices are expected to start the new week in a mixed mood, with a slightly higher chance of a bullish opening. The DAX and French CAC are starting the new week above major supports, and the drop from the middle of last week seems like a distant memory. The SP500 and Nasdaq are also ready to roll after performing small V-shape reversals overnight.