Asian stocks opened mixed as investors awaited the conclusion of the Federal Reserve’s policy meeting. S&P 500 contracts nudged higher after the benchmark closed lower, with worse-than-estimated results from McDonald’s Corp., 3M Co. and Harley Davidson Inc. weighing on shares.
USD stabilized as the U.S. central bank is set to announce its rate decision Wednesday, and the market anticipates a dovish statement. The market is also expecting the Fed to keep the QE going at least for this year going forward. At the same time, U.S. lawmakers are continuing efforts towards the next fiscal stimulus. Senate Republicans presented the $1 trillion proposal as a first step toward negotiating a compromise with Democrats, who’ve offered their own $3.5 trillion plan.
Copper prices dipped in early Asian trade on Wednesday as top consumer China saw the most new coronavirus infections since April and five U.S. states set one-day records for COVID-19 deaths. Elsewhere, investors remain cautious as they await the US Federal Reserve announcement, which is expected to reiterate its accommodative policies at the end of its two-day meeting on Wednesday, allowing interest rates to stay lower for longer. Looking ahead, the low interest rates could help to buoy demand for copper due to lower inventory financing costs.
Gold prices rallied to a new historical high at the start of the week before retreating from its recent high. Looking ahead, we maintain a bullish bias on the precious metal as the surging number of Covid-19 numbers along with the bold warning by Goldman Sachs group that the dollar is in danger of losing its status as the world’s reserve currency could support the gold rally.
Oil prices held its losses and drifted sideways as analysts across the board continued to forecast that US crude stockpiles are continuing to swell. This forecast overshadows the expectations for a dovish statement from the US Fed. Further, the timeline for OPEC+ to open up supply lines is coming closer and we may see a supply glut soon. In line with oil prices, the CAD drifted sideways as well and is also holding within a broader range.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3401)
We turned bullish as price is testing our upside confirmation where the 61.8% fib retracement is. Price is likely to bounce further from this level towards 1st resistance if price breaks above. MACD also indicates bullishness.
UKOIL (Intraday bias: Neutral between 43.53 and 42.93)
Oil drifted sideways and still holding below descending trendline resistance. However with technical indicators giving mixed signals and with price holding between 1st resistance at 43.53 and 1st support at 42.93, we prefer to remain neutral for now.
XAUUSD (Intraday bias: Bullish above 1931.35)
Price is facing bullish pressure from our ascending trend line and first support, in line with our 61.8% retracement and horizontal pullback support, where we could see a bounce above this level. The Ichimoku cloud is showing signs of bullish pressure as well.
XCUUSD (Intraday bias: Bullish above 2.86093)
Price is facing bullish pressure from our ascending trend line and first support, where we could see a bounce above this level. Ichimoku cloud is showing signs of bullish pressure as well.