Asian stocks opened modestly firmer Tuesday after a lackluster session on Wall Street. S&P 500 futures were little changed after the benchmark approached its all-time high from February. The tech-heavy Nasdaq 100 lost ground. Treasuries ticked higher. Investors are assessing simmering tensions between the U.S. and China, as well as progress in talks between Democrats and Republicans still negotiating a broader additional virus relief package.
USD is back on the surge backed by escalation of geopolitical risks. China said it will sanction 11 Americans in retaliation for similar measures imposed by the U.S. on Friday, but the list doesn’t include any members of the Trump administration. This revived tensions is helping USD to regain strength.
Copper prices slipped as uncertainty weighed on the market risk sentiment with investors awaiting the decision on whether the U.S. policymakers can approve a new package of fiscal support for the economy badly hit by the pandemic. The most-traded September copper contract on the Shanghai Futures Exchange dropped to 49,580 yuan ($7,115.28) a tonne, its lowest since July 8 while three-month copper on the London Metal Exchange fell 0.6% to $6,270.50 a tonne by 0307 GMT, having lost 1.6% last week, the biggest weekly drop since mid-May. Looking ahead, copper prices remain under pressure as geopolitical tensions and rising number of Covid-19 cases continue to weigh on the market risk sentiment although the growing hopes that a standoff between US Democrats and White House on a new support package could cause prices to pare recent losses.
Gold prices slipped on Tuesday, weighed down by a stronger dollar as investors focused on the fiscal stimulus plan in the United States and escalating Sino-US tensions ahead of key trade talks later this week. Elsewhere, China imposed sanctions on 11 US citizens including lawmakers from President Donald Trump's Republican Party in response to Washington's imposition of sanctions on Hong Kong and Chinese officials accused of curtailing political freedoms in the former British colony while US Treasury Secretary Steven Mnuchin said companies from China and other countries that do not comply with accounting standards will be delisted from US stock exchanges as of the end of 2021. Looking ahead, Gold, often seen as a safe-haven asset could benefit from the rising geopolitical tensions and economic crisis as a result of the pandemic.
Oil drifted higher at the start of the Asian trading session in what was also it’s biggest daily advance in the last 2 weeks as Saudi Aramco’s upbeat assessment of the crude market coupled with signs of slowing spread of coronavirus cases across the US seemed to have helped in the risk on sentiment of Oil. However, it is important to note that further gains may be limited as the global economy as a whole has yet to increase their consumption of oil. CAD strengthened in line with oil prices as a weakening US dollar aided in the CAD outperformance.
Technical & Trade views
USDCAD (Intraday bias: bearish below 1.3359)
Price is facing bearish pressure from our 1st resistance, in line with our horizontal swing high, where we could see a further drop towards 1st support . EMA is also indicating more bearishness
UKOIL (Intraday bias: Bullish above 45.03)
Price holding above ascending trendline support and also moving average.A short term bounce reaction above 23.6% Fibonacci retracement and 1st support at 45.03 towards 1st resistance at 45.57 could be expected.
XAUUSD (Intraday bias: Bullish above 2006.51)
Price is facing bullish pressure from our ascending trend line and first support, in line with our 61.8% fibonacci retracement and 78.6% fibonacci extension where we could see a bounce above this level to our first resistance target. Stochastic is showing signs of bullish pressure as well.
XCUUSD (Intraday bias: Bearish below 2.89410)
Price is facing bearish pressure from our first resistance in line with our descending trend line, 100% fibonacci extension and 78.6% fibonacci retracement where we could see a reversal below this level. Stochastic is facing bearish pressure from our resistance as well.
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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.