Daily Commodity Coverage: August 14, 2020

Trading Tips

Friday is having a mixed risk appetite as Asian stocks started a new quarter in a muted fashion, indicating that the commodity market could also lack direction. Investors are monitoring accelerating virus infections that threaten to set back reopenings and stall the economic recovery. New cases could rise to 100,000 a day if behaviors don’t change, according to some infectious-disease expert. 

As most commodities are sensitive to USD,  USD’s direction is the key to watch. Currently, USD is range trading lacking a clear direction. The total claims of 963,000 for the week ended Aug. 8 were well below the estimate of 1.1 million from economists surveyed by Dow Jones. It is the first time that first-time claims for unemployment insurance last week fell below 1 million since March 21, signalling that the labour market is continuing its recovery from the Covid-19 hit. Market is still pondering if this good news could reverse the USD bearish trend.

Copper prices remain under pressure as China’s data fell short of expectation and uncertainty over the US stimulus package continues to weigh on Copper prices. Looking ahead, we maintain a bearish view on copper, keeping in mind that Chile, one of the world’s top producers of copper is ramping up production. 

Gold pared recent losses, edging higher as the overall sentiment in the gold space remains very bullish. The safe haven asset is often seen as a hedge against currency debasement and inflation and we believe that it will continue to thrive in a low interest rate environment, keeping in mind that most of the major upward drivers for gold remain in place, including massive money printing, low interest rates and rapid escalation of Sino-US tensions, exacerbated by bans on TikTok and WeChat and the upcoming U.S. elections. That said, while the precious metal remains on track to continue its uptrend, we could be seeing corrections along the way, such as the 10% decline that we witnessed in early August. These corrections are a very healthy sign for the gold market as they allow time for consolidation and present buying opportunities to ride the long term bullish trend.

Oil headed for its weekly gain as signs continue to emerge, showing a recovery in the demand for this energy. Further, IEA mentioned that world markets should tighten for the rest of the year as activity slowly recovers as OPEC+ continues to keep oil production in check. According to some experts, while the US inventory data has been supportive, the focus should still be on the US coronavirus stimulus package. In line with oil prices, the CAD continued its outperformance against the USD. However it drifted sideways during the asian trading session.

Technical & Trade views

USDCAD (Intraday bias: bearish below 1.3233)

USDCAD

Price is facing bearish pressure from our 1st resistance,  where we could see a further drop below this level. A break below our downside confirmation target could provide the bearish acceleration to our first support target.

UKOIL (Intraday bias: Bullish above  44.79)

Price tested and reacted above 61.8% Fibonacci retracement. Stochastics is holding above support as well. A short term push up above 1st support at 44.79 towards 1st resistance at 45.38 is possible.

XAUUSD (Intraday bias: Bullish above 1948.86)

Price is facing bullish pressure from our ascending trend line and a break above our upside confirmation area at 1948.86 could provide the bullish acceleration to our first resistance level. Stochastic is testing our support at 9.82 as well, where we could see a bounce above this level.

XCUUSD (Intraday bias: Bearish below 2.86093)

Price is facing bearish pressure from our first resistance and descending trend line, where we could see a further drop below this level. A break below our downside confirmation level at 2.77082 could provide the bearish acceleration to our first support target. RSI is facing bearish pressure as well.

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