Asian shares rallied to three-month highs on Monday as progress on economies reopening helped offset jitters over riots in U.S. cities and the geopolitical tensions between the U.S. and China. There was also relief that while President Donald Trump began the process of ending special U.S. treatment for Hong Kong to punish China, he left the Phase one deal intact.
The dollar slipped on Monday as investors looked past unrest in the United States to the global economic recovery from the coronavirus. On Friday, we have a very weak print of U.S. personal spending. Even as emergency government aid gave incomes a boost in April, coronavirus lockdowns caused Americans to shut their wallets, prompting the personal spending to have dropped by 13.6% - the largest drop in consumer spending on record. Yet investors are showing optimism over the economies reopening and the rally in the stock market, and USD could weaken further if the optimism is to continue.
Copper prices climbed higher as U.S. President Donald Trump’s response to China's security legislation on Hong Kong was not as severe as the market had expected. Investors heaved a sigh of relief after Trump ordered the process of eliminating special U.S. treatment for Hong Kong but did not mention any action that would undermine the U.S.-China Phase 1 trade deal. Trump’s response to the tensions lingering over Hong Kong has been closely watched by the markets and investors who fear that a new tariff war could put a further dent on the global economy and weaken the demand for copper.
Gold prices soared higher after reports of riots in the United States sparked a new wave of risk aversion returning to the markets, and rattled investors’ confidence as they reel from the deepening Sino-US rift. Looking ahead, demand for the metal could climb higher, driven by fresh concerns on the recovery of the already dampened global economy as a result of the pandemic.
While at the end of last week we saw oil making a late upwards push, at the start of the Asian trading session, oil prices held steady and started drifting sideways as traders took into account the weekend unrests coming out from across the U.S, coupled with deteriorating trade relations between US and China… Amidst this back drop, observers are still waiting for OPEC+ meeting happening this month and are expecting that the coalition could look to extend supply cuts. In line with oil price drifting sideways, the CAD held its own against the USD despite the USD weakness and drifted sideways as well.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3634)
We turned bullish as price is bouncing from our 1st support where the 61.8% fibonacci extension is. Price is likely to bounce here towards our 1st resistance where the 61.8% fibonacci retracement is. Ichimoku also shows further pushdown towards 1st support is possible here.
UKOIL (Intraday bias:Bearish below 38.52)
Oil rose higher and drifted sideways. With stochastics now testing resistance where price pulled back in the past and price coming close to a key Fibonacci extension level, a short term pull back below 1st resistance at 38.52 towards 1st support at 36.46 is expected.
XAUUSD ( Intraday bias: bullish above 1740.166)
We caught the breakout perfectly previously. Price is currently testing our intermediate resistance level where a break above this level would provide the bullish acceleration to our first resistance target. RSI and Ichimoku cloud are showing signs of bullish pressure as well.
XCUUSD ( Intraday bias: bullish above 2.42516)
We caught the bounce perfectly previously. Currently, price is facing bullish pressure from our ascending trend line and support level, in line with our 61.8% fibonacci extension and 38.2% fibonacci retracement, where we remain bullish above this level and could see a bounce to our first resistance level. Stochastic and Ichimoku cloud are showing signs of bullish pressure, in line with our bullish bias.