Daily Commodity Outlook, June 10 2020

Trading Tips

Asian stocks went higher after the correction in the U.S. equity market on Thursday night. S&P 500 futures are up more than 0.5%. Yesterday’s setback in U.S. shares is quickly becoming ancient history. Treasuries, gold and the yen –- the havens –- are floundering. The market has seen a wild rally not only in quality stocks but also distress equity in recent days.  Share prices surged in recent days for at least half a dozen companies that either declared bankruptcy or are on the verge of doing so. While investors are reluctant to call a top in the stock market, the rich valuation could warrant a correction anytime. 

The dollar is poised for a ninth straight day of declines, while ten-year Treasuries yield is going lower. Tonight in the U.S. session we will have the FOMC rate decision. Officials are expected to leave rates above zero and re-commit to using their full range of tools. If the Fed is open to more stimulus to save the economy, we might see this benign market sentiment to continue. Whatever the Fed does, it looks like investors are betting it will be positive for shares.

Copper prices has been making new highs, spurred by China coming out of pandemic-induced lockdown and swathes of stimulus from global central banks. Elsewhere, China’s May imports of unwrought copper and copper products rose 21.1% year on year, but fell 5.5% from April to 436,031 mt, S&P Global Platts calculated based on data released by the General Administration of Customs on June 7. While Shanghai Futures Exchange copper prices hit a three-month high, the rally is not expected to last, with demand lagging the rise in supply and tensions continuing between the US and China. This was echoed by the China Nonferrous Metals Industry Association, which said Chinese copper prices might come under downward pressure as the recovery in consumption would likely lag that of supply in the domestic market, as demand outside of China remains lukewarm.

Gold prices are back above $ 1,700 an ounce as fundamentals continue to support the rally for the precious metal. Risk aversion is flooding back into markets, battering stocks and dragging indices into the red. Looking ahead, there is room for further upside in gold while investors await the end of the US central bank’s meeting for its remarks on state of the economy and clues on future measures.

Oil prices are trading off overnight tops after the API inventory report printed a much larger bearish to consensus build in crude stocks. Oil markets Iraq has asked some Asian refiners to consider forgoing prompt shipments of its Basra crude, raising speculation that OPEC’s second-biggest producer is trying to comply with pledged output cuts. The country, along with some others, was recently taken to task by Saudi Arabia and Russia for pumping above their quotas. 

Technical & Trade views

USDCAD (Intraday bias: bullish above 1.3339)

We turned bullish as price is retesting our 1st support at 1.3339 where the 61.8% fibonacci extension is. Price is likely to bounce  further from here towards 1st resistance where the horizontal swing high is. Price is currently testing the Ichimoku cloud and could go higher across it. 

UKOIL (Intraday bias: bearish below 39.82)

We turned neutral as price is currently testing downside confirmation where the 76.4% fibonacci retracement is. If price breaks below it, it will open up more downside from here. Ichimoku also indicates further downside pressure.

XAUUSD ( Intraday bias: Bullish above 1717.281)

A break above our upside confirmation at 1717.281 could provide the bullish acceleration to our first resistance level, in line with our 78.6% fibonacci retracement. Ichimoku cloud is showing signs of bullish pressure as well. 

XCUUSD ( Intraday bias: bearish below 2.62953)

Price is facing bearish pressure from our first resistance, in line with our 200% fibonacci extension, 76.4% fibonacci retracement where we could see a reversal below this level to our first support level. Stochastic is facing bearish pressure from our resistance as well. 


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