Market turns risk-off amid doubts over the US’s plan to reopen the world’s largest economy as the novel coronavirus pandemics showed no signs of easing. E-Mini futures for the S&P 500 ESc1 slipped 0.2%, having jumped last week on hopes some U.S. states would soon start to re-open their economies. The dollar found support on Monday and a rally in riskier currencies lost steam, as investors braced for more dire news on the fallout from the coronavirus and governments across the globe moved only cautiously toward an economic re-start.The week ahead brings U.S. monthly employment figures, eurozone survey indicators and quarterly growth in world-trade bellwether South Korea. None are likely to be easy reading.
Crude oil tumbled to a new low, with WTI plunging below $16 a barrel. It is the lowest level since 2001. The drop is largely due to the supply and demand imbalance. Investors are starting to worry that the world could run out of places to store crude oil as the oversupply of crude continues.Now the world is waiting for any good news from the coronavirus front, which has put the world on hold till now.
The dollar, which is considered a safe-haven, found support as investors braced for more dire news on the fallout from the coronavirus and governments across the globe moved only cautiously toward an economic restart. The market is showing more infections globally, and the rising number of confirmed cases are not convincing enough for a quick re-opening. Reported cases of the virus have crossed 2.33 million globally and 159,818 people have died, according to a Reuters tally as of Sunday. Gold prices fell to a more than one-week low on Monday, dragged by the firmer dollar. Although gold is alternatively a safe haven, but USD seems to be the ultimate safe haven. Gold might need another wave of stronger risk aversion to climb higher.
Copper prices advanced on Monday as China, the world’s biggest consumer of the red metal, announced rate cuts to cushion the economic fallout of the coronavirus pandemic.China cut its benchmark one-year loan prime rate (LPR) by 20 basis points (bps) to 3.85%, while the five-year LPR was cut by 10 bps to 4.65%, in line with market expectations. Although China’s economy shrank 6.8% in the first quarter from a year earlier, investors still show confidence in China’s economy expansion given recent fiscal and monetary plan.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3996)
We turned bullish as the price bounced off 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 approached 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 1642.36)
We remain bullish technically as the price is approaching 1st support at 1642.36 towards 1st resistance is where the 100% fibonacci extension is. The 1st support happens to be where 38.2% fibonacci retracement is 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.
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Desmond Leong runs an award-winning research firm (The Technical Analyst finalists 2018/19/20 for Best FX and Equity Research) advising banks, brokers and hedge funds. Backed by a team of CFA, CMT, CFTe accredited traders, he takes on the market daily using a combination of technical and fundamental analysis.