Pounding Steel
Today’s Spotlight
The steel futures contracts aren?t often on the radar of active traders. Steel futures are quite liquid and are usually held to expiration. However, the price of steel and other base metals can provide insight into global macroeconomics.
Fundamentals
The accelerating pace of job losses in the UK steel industry is a hot political topic in Parliament these days. China has been flooding the steel market with low cost steel. The overall slowdown in the Chinese economy has reduced steel demand. The strong British Pound has also hurt the UK steel industry. These job cuts have put tremendous political pressure on Prime Minister David Cameron who met with Chinese President Xi Jinping during a state visit to the UK last week. The Prime Minister?s Conservative Party holds a slim 12 seat majority in the UK House of Commons and he has faced fierce criticism from opposition parties for not doing enough to protect the British steel industry.
Technical Notes? – View Today’s Chart
Turning to the 6 month continuation chart for the British Pound, we see choppy range bound trading, but there are some indications that the Pound may be entering another bullish run. The 20 and 50 day Simple Moving Averages (SMA) are converging and the 20 day SMA has turned upward and appears ready to cross above the 50 day SMA. The 14 day Relative Strength Index is a moderately bullish 51.44. The case for the bears is made by the series of lower highs the Pound has made since mid-June. A true bull run might be expected if the Pound can break through resistance at 1.5900.
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