The dollar traded higher against NOK and SEK and unchanged against its other G10 counterparts during the European morning Monday in the absence of any material economic events.
In a quiet day for economic releases, the dollar got off to a soft weekly start after Friday’s lower-than-anticipated NFP number. The only important indicator released was the UK’s construction sector PMI, where a higher-than-expected reading was in contrast to the recent data indicating a cooling down in the housing market, partially caused by the new mortgage rules introduced by the BoE. The attention will now shift to the Bank of England meeting later this week and to the meeting minutes to see whether Governor Mark Carney has changed his concerns over the housing market.
Freeport and Newmont Mining Corp, which account for nearly all of Indonesia's copper exports, said it will resume copper exports by Wednesday. The six-month tax dispute the company had with the government was resolved and the supply of copper from Indonesia will most likely resume to its normal level after total mineral exports fell approximately 27% in the first half of 2014. The preliminary agreement reached today caused the copper price to decline amid expectations of increase in supply.
Copper futures declined during the European morning Monday, but the decline triggered some buy orders marginally below the 3.2000 (S1) support barrier and copper rebounded somewhat. The price has been oscillating between that support zone and the resistance of 3.2550 (R1) since the 25th of July, thus I would remain to the sidelines for now until we exit the sideways path. The RSI lies below 50, while the MACD left its neutral zone and dipped below its zero line. This increases the likelihood for a downside exit of the recent trading range. A clear violation of the 3.2000 (S1) line, which coincides with the 200-period moving average, would signal the completion of a possible minor-term failure swing top and could target the next support barrier at 3.1650 (S2). In the bigger picture, the 14-day RSI declined and at midday in Europe is testing its 50 line, while the daily MACD, although in its positive territory, lies below its signal line. This is an additional reason why, although I remain on the sidelines, the downside exit seems more likely to me.
Support: 3.2000 (S1), 3.1650 (S2), 3.1250 (S3)
Resistance: 3.2550 (R1), 3.2770 (R2), 3.2930 (R3)