Market turns risk-on after a report that Gilead’s remdesivir drug showed promising results for Covic-19 patients. Meanwhile, the market is also cheering the news that President Trump plans to release guidelines allowing state-by-state economic reopening. AUD and NZD are also surging to start Friday’s session, triggered by the risk-on sentiment. The market has shrugged off the risk aversion triggered by recent bleak data. The Labour Department on Thursday said 5.245 million new unemployment claims were filed last week. It is still a staggering number even though it’s lower than the previous week’s 6.6 million. This data follows dismal data showing a record drop in retail sales in March and the biggest decline in factory output since 1946. But overall, Investors are more optimistic about the outlook given Gilead’s promising results and the chances that the U.S. economy could have bottomed as it plans to reopen soon.
Oil price is consolidating in recent lows. On Wednesday, the US reported its biggest weekly inventory stockpile on record. Crude stocks in the US surged by 19 million barrels last week. The inventory report came shortly after the International Energy Agency forecast oil demand would dive 29 million barrels a day in April to levels unseen in 25 years. Negative economic news like rising unemployment, rising inventories, and travel restrictions and falling GDP may continue to weigh on oil.
The dollar is regaining strength, benefiting from the bleak data, even when the data is from the U.S. itself. Downbeat data including another 5.24 million new unemployment claims files reinforced the perception that the U.S. economy is weakening at an unprecedented clip. Against that backdrop, investors looked to the U.S. dollar as a haven, buoying the dollar strength. Gold prices consolidated for the second day against a strengthening USD. The markets expected bad news, but the shocking reality of how bad it is has helped buoy gold prices. But as the risk-on sentiment is back to dominate the market for today, gold and USD could likely drop from the recent high.
Copper is still consolidating waiting for key releases on Friday including China GDP, industrial production and retail sales. There has been some good news for the metal as China bank lending expanded in March, but investors are looking for more confirmation signals before they could push copper higher.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3996)
We turned bullish as the price went back to test our 1st support. The 1st support happens to be a confluence level of the 61.8% fibonacci retracement and horizontal pullback. Price is likely to bounce towards 1st resistance where 38.2% fibonacci retracement is.
UKOIL (Intraday bias: bullish above 27.26)
We turned bullish as price jumped above our 1st support. The 1st support happens to be a confluence level of the 100% fibonacci extension and horizontal overlap support. Price is likely to bounce towards 1st resistance at 30.65 where the 23.6% fibonacci retracement is.
XAUUSD ( Intraday bias: bullish above 1701.52)
We remain bullish technically as the price is bouncing off 1st support at 1701.52 towards 1st resistance is where the 100% fibonacci extension is. Ichimoku cloud is showing a further push up towards 1st resistance is possible. The 1st support happens to be where horizontal swing high isl and could serve as a key support level.
XCUUSD ( Intraday bias: Bullish above 2.3375 neutral below)
Our call is still valid. We remainneutral unless price supasses upside confirmation at 2.3375. Now price is approaching our new upside confirmation at 2.3375 where the important horizontal overlap resistance is. If price breaks above the upside confirmation, it will open up a bigger bounce. Our previous upside confirmation is now our 1st support, where the 50% fibonacci retracement and horizontal overlap support happen to line up well.