Daily Commodity Outlook, July 17 2020 

Trading Tips

Asian stocks were mixed Friday amid signs of fragility in the U.S. tech rally and ongoing  U.S.-China tensions. On Thursday, Netflix Inc. earnings gave a downside surprise, which dampened the worries on the sustainability of the tech rally in the U.S. stock market. Nasdaq and S&P 500 futures edged up though.

USD held onto gains against most currencies as worries on the coronavirus deepened.Another jump in coronavirus infections has forced California and other U.S. states to at least partially shut down again, causing investors to worry about the economy and the labour market. At the same time, President Trump’s administration is considering banning travel to the United States by all members of the Chinese Communist Party, which is likely to escalate the geopolitical tensions.

Copper prices dipped as demand for the metal weakened with around 500,000 t/yr capacity of smelter build-outs in China being scaled back. In line with our fundamentals prices are also facing bearish pressure from resistance levels where we could see a further downside.

Gold, a dollar denominated currency, dipped lower as the dollar strengthens with risk aversion flooding back into the markets. In the short run, prices could edge lower before finding support, in line with the dollar strength that we are expecting. However, we maintain a bullish outlook in the long run as it could benefit from the low interest rate environment and is seen as a hedge against currency debasement and inflation. 

Oil prices drifted lower, adding to its losses at the start of the Asian trading session as the US Jobs report casts further doubt on the recovery of the global economy. Moreover, the pandemic is still out of control in many developed countries and reports coming out from the IEA is starting to sound abit more risk-off regarding the demand and consumption of oil globally. In line with Oil prices falling, the CAD weakened as well causing USDCAD to climb higher.

Technical & Trade views

USDCAD (Intraday bias: bearish below 1.3588)

We turned bearish as price is approaching 1st resistance where the 61.8 fib extension and 78.6 fib retracement are.Price is likely to reverse off the level towards 1st support where the horizontal overlap support is. Stochastics also indicates bearishness.

UKOIL (Intraday bias: Bearish below 43.47)

Oil drifted lower and broke below moving average. Further, MACD looks to be crossing below 0, signifying that bearish momentum is building. A short term drop below 1st resistance at 43.42 towards 1st support at 42.80 could be expected.

XAUUSD (Intraday bias: Bearish below 1804.22) 

Price is facing bearish pressure from our first resistance level, in line with our 78.6% fibonacci extension and 50% fibonacci retracement where we could see a further drop below this level. 

XCUUSD (Intraday bias: Bearish below 2.89507)

Price is facing bearish pressure from our first resistance in line with our horizontal pullback resistance and 50% fibonacci retracement level where we could see a further drop to our first support target. Stochastic is showing signs of bearish pressure as well. 

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