Asian stocks and U.S. equity futures slipped Monday after deaths around the world from the coronavirus topped half a million and infections continued to mount in American states. Crude oil fell. On Friday, we have seen tech stock woes led by Facebook and some big names. The market is worrying that this correction in the tech sector could continue. Treasuries edged higher.
The U.S. economic calendar remains quite empty for today and risk sentiment could play a key role in determining the direction of the USD. The latest updates suggest that global COVID-19 deaths reach half a million with the figures from the current epicentre US also coming in as worrisome. But if stock market correction is to ease this week, USD could continue the weakness.
Copper prices rallied, driven by supply disruption in Chile, one of the world’s largest producers of Copper as they battled to contain the widespread virus, along with pressure from unions to improve employees’ work conditions. Meanwhile, the upside in the metal remains capped with the Dollar strength as economic uncertainty buoy demand for the safe haven asset.
Gold pared Friday’s losses as the spike in the number of Covid-19 infections worldwide rattled investors’ confidence of a swift economic recovery. Looking ahead, we maintain a bullish view on the precious metal as it could benefit from the stimulus measures adopted by central banks and is often seen as a hedge against currency debasement and inflation.
Oil prices pulled back further as virus infections and fatalities surpassed grim milestones in a clear reminder that the worst days of the virus are far from over. Further, in the US, Texas where infection rates are now the highest, the state has reinstated measures to halt the spread of the virus. If not for efforts by OPEC+ to cut production, the fall in oil price would have been a lot faster. In line with the drop in oil prices, we see that the CAD is steadily underperforming against the USD.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3655)
We turned bullish as price is approaching intermediate support where the horizontal overlap support is. Price is likely to bounce off the level towards 1st resistance where the horizontal overlap is.
UKOIL (Intraday bias: Bearish below 40.90)
Oil reversed and drifted lower. With price now holding below moving average and MACD below 0, bearish momentum looks to be increasing. A drop below 1st resistance at 40.90 towards 1st support at 39.47 is expected.
XAUUSD ( Intraday bias: Bullish above 1768.59)
Price is approaching our first support where we could see a bounce above this level to our first resistance level. Ichimoku cloud and RSI are showing signs of bullish pressure in line with our bullish bias.
XCUUSD ( Intraday bias: bearish below 2.68889)
Price is facing bearish pressure from our first resistance where we remain bearish below this level and could see a further drop to our first support level, in line with our horizontal swing low support, 38.2% fibonacci retracement and 78.6% fibonacci extension. Stochastic is facing bearish pressure from our resistance as well.