Asian stocks saw modest gains Thursday after a signal from the Federal Reserve that more stimulus will be provided pushed U.S. equities higher and weighed on the dollar. Futures on the S&P 500 Index were little changed after the gauge extended its July rally, with the Fed keeping rates near zero and pledging to use all of its tools to support a recovery from the coronavirus pandemic.
DXY continued the slide as the negative interest rate expectation is still holding in the market even thought Fed keep interest rate unchanged. Fed also pledged to use all of its tools to support an economic recovery, pushing the stock market higher. USD could continue the slide as most of the traders are still expecting the negative real interest rate to hold at least till the end of this year.
Copper prices edged higher as Fed kept its benchmark overnight lending rate anchored near zero, while reiterating its commitment to maintain its bond purchases and a host of lending and liquidity programs in its response to the coronavirus pandemic. Looking ahead, the low interest rates could help to buoy demand for copper due to lower inventory financing costs.
Gold prices remain on track to continue on its uptrend after retreating from its recent highs, as the precious metal found plenty of willing buyers on the market dips, as seen by their almost unchanged finishes. The low interest rate environment and weaker dollar could also buoy demand for the safe-haven asset.
Oil prices drifted sideways and held its gains at the start of the Asian trading session following US Fed announcement that they would take whatever is required to keep the US economy buoyant. However the announcement was dampened as EIA data showed that there was a growing glut of gasoline and distillates. This suggests that demand is still weak during the summer driving season. Further Saudi Arabia is expected to cut its official prices for the first time in 4 months. In line with oil price, CAD drifted sideways and held its own against USD.
Technical & Trade views
USDCAD (Intraday bias: bearish below 1.3319)
We turned bearish as price is testing our downside confirmation where the 78.6% fib extension is. Price is likely to drop further from this level towards 1st support if price breaks below MACD also indicates bearishness.
UKOIL (Intraday bias: Bullish above 43.66)
Price drifted sideways however holding above 23.6% Fibonacci retracement support at 43.66. A break above upside confirmation at 43.88 will see a further rise in prices towards 1st resistance at 44.41.
XAUUSD (Intraday bias: Bullish above 1935.71)
Price is facing bullish pressure from our ascending trend line and first support, in line with our 61.8% fibonacci retracement, 61.8% fibonacci extension and horizontal pullback support, where we could see a bounce above this level. A break above our upside confirmation level could provide the bullish acceleration to our first resistance target. The Ichimoku cloud is showing signs of bullish pressure as well.
XCUUSD (Intraday bias: Bullish above 2.90362)
Price is facing bullish pressure from our ascending trend line and first support, in line with our horizontal overlap support and 38.2% fibonacci retracement, where we could see a bounce above this level. Ichimoku cloud is showing signs of bullish pressure as well.