US: Annual PPI declines to 8.5% in September vs. 8.4% expected

Annual PPI in the US declined modestly in September.

US Dollar Index stays in positive territory above 113.00 after the data.

The Producer Price Index (PPI) for final demand in the US declined to 8.5% on a yearly basis in September from 8.7% in August, the data published by the US Bureau of Labor Statistics revealed on Wednesday. This print came in slightly higher than the market expectation of 8.4%.

The annual Core PPI edged lower to 7.2% from 7.3%, compared to analysts' estimate of 7.3%. On a monthly basis, the Core PPI was up 0.3%, matching August's print. 

Market reaction

The US Dollar Index stretched higher with the initial reaction and was last seen rising 0.13% on the day at 113.43.

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Silver Price Analysis: XAG/USD seems poised to appreciate further and aim to reclaim $21.00

Silver oscillates in a narrow band and consolidates its recent gains to a multi-week high.

The overnight breakout through the 50-DMA/50$ Fibo. confluence favours bullish traders.

Any meaningful dips could now be seen as a buying opportunity and remain short-lived.

Silver consolidates the previous day's strong gains to a six-week high and remains confined in a range above mid-$20.00s heading into the North American session.

The overnight breakout through the $20.30-$20.35 confluence - comprising the 50-day SMA and the 50% Fibonacci retracement level of the $22.52-$18.15 downfall - favours bullish traders. Positive technical indicators on the daily chart add credence to the constructive set-up and support prospects for a further near-term appreciating move.

Hence, a subsequent move up towards the 61.8% Fibo. level, around the $20.85 area, now looks like a distinct possibility. Some follow-through buying beyond the $21.00 mark would be seen as a fresh trigger for bulls and lift the XAG/USD towards the $21.40-$21.50 intermediate resistance en-route the $22.00 round-figure mark.

The latter coincides with the 100-day SMA and should keep a lid on any further gains for the XAG/USD, at least for the time being. That said, a convincing break above should pave the way for an extension of the recent recovery move from a two-year low, around the $18.15 region touched on July 14.

On the flip side, the $20.35-$20.30 confluence resistance breakpoint now seems to protect the immediate downside ahead of the $20.00 psychological mark. This is closely followed by the $19.80-$19.75 region (38.2% Fibo. level), Friday's swing low around the $19.55 area, and the 23.6% Fibo. level support, around the $19.20 zone.

Failure to defend the aforementioned support levels would negate any near-term positive bias and shift the bias back in favour of bearisha traders. The XAG/USD would then turn vulnerable to weaken further below the $19.00 mark, towards the next relevant support near the $18.40 area en route to the YTD low, around the $18.15 region.

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Oil prices rise as chances of OPEC+ supply boost dim

Oil prices rose in European trading on Friday as attention turned to next week's OPEC+ meeting and expectations that it will dash U.S. hopes for a supply boost.

Brent crude futures for September settlement, due to expire on Friday, gained $2.30 to trade at $109.44 a barrel by 1200 GMT after touching their highest since July 5. The more active October contract was up $2.24 at $104.07.

U.S. West Texas Intermediate (WTI) crude futures rose $2.20 to $98.62 a barrel.

Both contracts are set for a second monthly loss, however, down 4.7% and 6.8% respectively.

A weaker dollar and stronger equities also lent support on Friday. A fall in the dollar makes oil cheaper for buyers with other currencies.

Global equities, which often move in tandem with oil prices, were up on the hope that U.S. monetary tightening would not be as hawkish as initially expected after disappointing growth figures. [MKTS/GLOB]

A Reuters survey forecast Brent and U.S. crude would average $105.75 and $101.28 a barrel respectively this year. [OILPOLL]

Front-month Brent futures are selling at a rising premium to later-loading months in a market structure known as backwardation, indicating tight current supply.

"The oil market in Europe is considerably tighter than in the U.S., which is also reflected in the sharply falling Brent forward curve," said Commerzbank (ETR:CBKG) analyst Carsten Fritsch.

A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, on Aug. 3.

OPEC+ sources said the group will consider keeping oil output unchanged for September, with two OPEC+ sources saying a modest increase would be discussed.

A decision not to raise output would disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month hoping to strike a deal to open the taps.

Analysts, however, said it would be difficult for OPEC+ to boost supply, given that many producers are already struggling to meet production quotas.

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Silver Price Analysis: XAG/USD slumps into mid-$23.00s amid broad commodity sell-off

Silver has slumped towards $23.50 this Monday amid a broader sell-off in risk assets and commodities and as USD strengthens.

Now XAG/USD is below its 200DMA, bears are eyeing an eventual drop towards Q4 2021 lows in the $21.00s.

Spot silver (XAG/USD) prices came under heavy selling pressure on Monday in tandem with a broader downturn in the market’s appetite for risk and downside in other key commodities such as across energy and metals. Traders cited risk aversion relating to the increased risk of lockdowns in China with a Covid-19 outbreak now reported in Beijing, continued pessimism about the prospects for a peace deal in the Russo-Ukraine war and, perhaps most importantly, recent hawkish chatter from central bank policymakers.

Either way, XAG/USD was last trading down nearly 2.5% on the day just above the $23.50 per troy ounce mark, having broken below key resistance in the form of the 200-Day Moving Average at $23.85 and the March lows at $23.97. That means spot silver prices are trading at their lowest since mid-February, prior to the start of Russia’s invasion of Ukraine, with a modest downturn in global yields on the day as a result of risk aversion likely the only thing stopping silver crashing further towards $23.00.

But the bears will be confident in wake of the recent breakout below the 200DMA, with many calling for a drop towards support in the form of the Q4 2021 lows in the $21.00s in the coming weeks as the US dollar continues to rise on hawkish Fed sentiment and risk-off flows. The key risk events for traders to monitor this week include the first estimate of US Q1 GDP growth on Thursday followed by March Core PCE inflation on Friday, with the latter likely to endorse Fed plans/market expectations for a 50 bps rate hike at next week’s meeting.

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Silver Price Analysis: XAG/USD sticks to gains near $24.60-65 area, bearish bias remains

Silver gained some positive traction on Tuesday and snapped three days of the losing streak.

The mixed technical setup warrants some caution before positioning for any further upside.

Sustained move beyond the $25.00 mark is needed to support any near-term positive bias.

Silver built on the overnight bounce from the $24.30-$24.25 region and gained some positive traction on Tuesday, snapping three successive days of the losing streak to a four-day low. The white metal held on to its modest gains through the first half of the European session and was last seen trading around the $24.65-$24.70 zone.

From a technical perspective, the XAG/USD once again showed some resilience below the 50% Fibonacci retracement level of the $22.00-$26.95 move up. The subsequent move up supports prospects for some additional intraday gains, though neutral technical indicators on the daily chart warrants caution for aggressive bullish traders.

Hence, any further positive move might continue to confront stiff resistance and remain capped near the 38.2% Fibo. level, around the $25.00 psychological mark. A convincing breakthrough the said handle has the potential to lift the XAG/USD towards the $25.35-$25.40 intermediate hurdle, en-route the 23.6% Fibo., around the $25.75-$25.80 area.

On the flip side, weakness below the mid-$24.00 mark, or the 50% Fibo. level now seems to find some support near the overnight swing low, around the $24.30-$24.25 region. Some follow-through selling would make the XAG/USD vulnerable to accelerate the slide towards retesting sub-$24.00 levels, or the one-month low touched in March.

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