U.S. stock futures went higher on Asia Monday, while Asian equity indexes were mixed. Safe havens USD and yen ticked lower as investors weighed encouraging signs of businesses reopening across major economies against sluggish data prints. California’s economy is now 75% open, its governor said, while upstate New York is also set to reopen. Apple Inc. said nearly 100 of its stores have opened. Even so, the Federal Reserve has warned of potential asset-price declines if the pandemic worsens.
USD is heading south on earlier Monday as the market is showing bullish sentiment after Powell’s cautious optimism speech on Sunday. Although U.S. retail sales plunged a record 16% in April, investors are getting tired of sluggish data. Instead, more attention is paid to news from U.S.-China tensions and Fed’s tone.
Copper prices climbed higher on Monday as the reopening of economies paralyzed by the Covid-19 pandemic boosted investors’ hopes of a revival in demand for metals. Three-month copper on the London Metal Exchange (LME) rose 1% to $5,234.50 a tonne, while the most-traded July copper contract on the Shanghai Futures Exchange (ShFE) advanced 0.3% to 42,940 yuan ($6,045.08) a tonne.
According to a report published by CFRA, gold fundamentals have never been stronger, as the Coronavirus outbreak has led to an unprecedented amount of quantitative easing across the globe and we could be seeing a rally that has just begun. Prices are also supported by the macroeconomic backdrop as Gold is often seen as a safe haven asset and a good hedge against economic uncertainty.
Oil prices rose above $30 a barrel at the end of last week as producers in both OPEC and US started cutting production. Further, Iraq has said that it plans to halt output from one of its oil fields due to protests. However investors should still remain cautious as oil price recovery could be short lived should the pandemic worsen. In line with the recent rally in oil, CAD looks to strengthen further against the USD as well. However, the drop of USDCAD could be muted as well should the pandemic worsen.
Technical & Trade views
USDCAD (Intraday bias: Bearish below 1.4116)
We turned bearish as price is approaching first resistance, in line with our horizontal swing high and the trendline. Price is likely to reverse off 1st resistance towards 1st support. MACD is also showing signs of bearish pressure.
UKOIL (Intraday bias: Bullish above 30.52)
Oil prices pushed higher late into the US trading session. However price looks to be exhausted below 1st resistance at 33.86. Stochastics shows bearish divergence and is also testing resistance where price previously reacted in the past a short term drop towards 1st support at 32.08 is to be expected.
XAUUSD ( Intraday bias: bearish below 1767.712)
We turned bearish as price is approaching first resistance, in line with our 127.2% fibonacci retracement and 100% fibonacci extension. Price is likely to reverse off 1st resistance towards 1st support. Stochastic is also showing signs of bearish pressure.
XCUUSD ( Intraday bias: bullish above 2.3278)
We remain bullish as price is bouncing nicely off our first support in line with our 78.6% fibonacci retracement where we are expecting a further push up to our first resistance level, in line with our 61.8% fibonacci retracement and horizontal swing high resistance. Stochastic is approaching support as well.