Asian shares and U.S. stock futures went lower on Tuesday, erasing Monday’s gains as a renewed decline in oil prices overshadowed optimism. Although we have seen easing of coronavirus-related restrictions globally, risk aversion is still dominating the market today. From Italy to New Zealand, governments announced the easing of restrictions, while Britain said it was too early to relax them there. New York state is not expected to reopen for weeks. .
On Monday, Bank of Japan on Monday ramped up risky asset purchases and pledged to buy unlimited amounts of government bonds to combat the economic fallout from the coronavirus epidemic. Investors are waiting for new progress from the other two central banks. The U.S. dollar and the euro were flat as ahead of the Federal Reserve policy decision due on Wednesday and a European Central Bank meeting Thursday. The Fed has already announced a slew of measures to combat recession risks from the coronavirus pandemic and is expected to stay on hold this week. The ECB is likely to extend its debt purchases to include junk bonds and provide more liquidity in the market.
Gold, a safe-haven often bought during times of uncertainty, fell for a third consecutive trading session in signs of improving risk appetite on Monday. On Tuesday, gold is trading in a sideways manner around $1,708 per ounce as the risk sentiment turns a bit bearish on Tuesday. While the risk sentiment is unclear yet today, gold could consolidate for a while before clear signals come.
Copper rose to its six-week high, buoyed by the bullish sentiment from the COVC-19 front. The most-traded June copper contract on the Shanghai Futures Exchange advanced as high as 2.6% to 42,880 yuan ($6,059.15) a tonne, a level unseen since April 17. Overall, investors are more optimistic about the pick up of manufacturing in China, as the ease of restrictions across the globe could lead to a demand recovery for China’s manufacturing sectors.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3996)
We remain bullish as price is likely to approach 1st support, which happens to be a confluence level of the 61.8% fibonacci retracement and horizontal swing low support. Price is likely to go higher towards 1st resistance where the previous swing high is.
UKOIL (Intraday bias: bearish below 21.74)
We remain bearish as price is approaching 1st resistance, which happens to be where the 38.2% fibonacci retracement is, and price is likely to reverse off 1st resistance towards 1st support.
XAUUSD ( Intraday bias: bearish below 1718.42)
We turned bearish as price broke below the downside confirmation at 1718.42 where the 61.8% fibonacci retracement and horizontal overlap resistance are. Price is likely to drop towards 1st support at 1642.36 where the 38.2% fibonacci retracement and horizontal overlap support are.
XCUUSD ( Intraday bias: bullish above 2.3514)
We remain bullish as price is likely to break above upside confirmation, which happens to be previous horizontal swing high. Price is likely to go higher towards 1st resistance at 2.4152 where the previous overlap resistance is.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.