Daily Commodity Outlook, June 18  2020 

Trading Tips

Asian stocks and U.S. equity futures dropped, indicating a revived risk-off sentiment. The safe haven yen and Treasuries advanced, as recovery concerns caused by rising infection numbers in some locations are weighing on the market. S&P 500 Index futures fell on Thursday after the index swung between gains and losses for most of Wednesday before closing in the red. The yuan slipped along with Chinese bond yields after China’s central bank cut a money-market interest rate and injected cash.

USD is taking a pause in this downward trend. On Thursday, China’s state-run news reports that the country’s top diplomat Yang Jiechi and US Secretary of State Mike Pompeo met in Hawaii and articulated their positions and agreed this was a constructive dialogue. If this news could revive the risk-on sentiment, USD might see further weakness ahead. 

Copper prices pared recent losses after promising trial results from the U.K. showed that a steroid used to reduce inflammation in other diseases has been successful in reducing the mortality rate among the severely ill COVID-19 patients. Elsewhere, better-than-expected US retail sales data, increasing by the largest record in May also provided a boost to the market’s risk appetite. That said, the upside in the metal could be limited as investors tread cautiously with concerns over a second wave of virus infection seen in Chinese capital, Beijing as they struggle to contain the outbreak. 

Gold prices edged lower as global equity markets marched higher, boosted by the risk on market sentiment after promising trials from the US showed that the drug dexamethasone was able to reduce the mortality rate of the Coronavirus patients who required respiratory support. Looking ahead, we could see prices trade sideways as traders and investors weigh the bullish elements of a faster-than-expected global economic recovery against the threat of a second wave of global virus infection, as what we are seeing in Beijing now. From a technical outlook, prices are facing bearish pressure from our resistance and descending trend line. 

Oil prices drifted sideways as market participants are now awaiting the next catalyst to determine which direction prices should move. With the 2nd wave of virus outbreak happening in Beijing, the amount of vehicles on the roads have fallen sharply. This gives us a glimpse as to what would happen globally should the 2nd wave hit other economies as well. The renewed danger for energy demand is keeping investors on the sidelines. In line with the mixed sentiment, we see that CAD has been moving in a broad sideways range against the USD.

Technical & Trade views

USDCAD (Intraday bias: bullish above 1.3514)

We turned bullish as price is bouncing from our 1st support where the 50% fibonacci retracement is. If price pulls back to retest the intermediate support where the horizontal swing low is, it could jump further from here. The Ichimoku cloud is showing bullish momentum. 

UKOIL (Intraday bias: bullish above 40.04)

Oil price currently within a triangle formation. Price holding above moving average and reacting above triangle support. Further, Stochastics indicator is testing support as well where price reacted in the past. A short term push up above 1st support at 40.04 towards 1st resistance at 40.91 is expected. 

XAUUSD ( Intraday bias: Bearish below 1732.947)

Price is facing bearish pressure from our intermediate resistance, in line with our descending trend line and 78.6% fibonacci extension, where we could see a further drop to our first support level, in line with our 61.8% fibonacci retracement and horizontal overlap support. Stochastic is facing bearish pressure from our resistance as well. 

XCUUSD ( Intraday bias: bearish below 2.62375)

Price is facing bearish pressure from our resistance at 2.62375 in line with our horizontal swing high resistance, 127.2% fibonacci extension and 50% fibonacci retracement, where we remain bearish below this level and could see a further drop to our first support level, in line with our horizontal pull back support, 127.2% fibonacci extension and 61.8% fibonacci retracement. A break below our intermediate support at 2.53521 would provide the bearish acceleration to our first support level. Stochastic is facing bearish pressure from our resistance as well. 


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