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Yesterday’s ISM non-manufacturing index exceeded expectations and we have a situation where traders are taking good news as a reason to take profit off the table. This sentiment is what we should expect from Asian traders today, especially with headlines on China’s debt concerns popping up again.
The cautious trading is seen across the board in commodities where gold is now testing the $1300 level that we see as the key support line to whether this short-term rebound will be sustained. The medium- to long-term tone remains bearish.
Crude retreats as the Libyan exports are expected to resume next month. Production will be increased to 800,000 from 700,000 barrels a day, according to the Libyan Oil Minister. He also urged the US to lift sanctions on Iran.
Technically we still see Brent supported by a bullish triangle (resistance level at $110) and the possible scenario is a re-test of the support around $105, if there are fundamental developments before retesting $110.