Markets remain risk-on on Friday morning following a strong session in the U.S. On Thursday, U.S. stocks advanced for the third time this week, with the S&P 500 climbing more than 1% and the Nasdaq wiping out its losses for the year. Optimism focused on trade as U.S. and Chinese negotiators plan to meet next week. Tonight’s Nonfarm Payroll number will be closely watched, and the market is expecting 21 million job losses in April.
Gold extended gains on a weaker dollar. USD dropped from recent high as the market is expecting a negative rate by early 2021. Fed funds futures contracts extended their rally from earlier this week and prices for early 2021 contracts surged above 100, a level that marks the boundary to negative interest rates. The five-year Treasury rate also hit an unprecedented low as securities rallied across the curve and falling yields weighed on the dollar.
Copper prices climbed for a fourth straight session overnight as China imports for the metal rose. China's unwrought copper imports rose 4.4 per cent in April from the prior month. In signs of rising demand, on-warrant LME inventories of copper fell to their lowest in a month, slipping 250 tonnes to 190,200 tonnes. The unexpected rise in China export also boosted the sentiment, indicating a possible pickup in China manufacturing activities.
Oil prices drifted slightly higher as Saudi Arabia moves to prop up the oil market by raising prices. However, this move seems muted at best as oil prices are generally still holding within a broader sideways range. Since late April, Saudi Arabia has been reducing her output down from more than 12 million barrels per day. We watch closely the price level at 32.20 for Brent crude. Only a break above such levels will bring further confidence back into the oil markets for the price to continue its recovery. The CAD strengthened against the US dollar in line with the slow rise in oil prices. However, market observers have identified that for now, the USDCAD should be trading around a broader range between 1.39 and 1.40.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.39067)
Price drifted lower overnight. Currently now approaching 1st support at 1.39067, a short term push up above this level towards 1st resistance at 1.40081 is expected. Stochastics is testing support where price bounced in the past before.
UKOIL (Intraday bias: Neutral between 32.21 and 27.48)
Price drifted sideways, holding between 1st resistancec at 32.21 and 1st support at 27.48. As technical indicators are mixed, we prefer to stay neutral for now. Breaking 1st resistance should see price rising higher. Otherwise, breaking below 1st support should see price dropping lower.
XAUUSD ( Intraday bias: bullish above 1711.48)
We turned bullish as price is approaching 1st support at 1711.48 where the horizontal pullback support is. Price is likely to bounce towards 1st resistance at 1742.42 where the 127% fibonacci extension and horizontal swing high resistance are. Trendline is also showing a pullback strategy that price could bounce off the trendline.
XCUUSD ( Intraday bias: bearish below 2.4258)
We turned bearish as price is approaching 1st resistance at 2.4258 where the 78.6% fibonacci retracement and 61.8% fibonacci extension are. Price is likely to drop towards 1st support at 2.2852 where the 50% fibonacci retracement and horizontal overlap support are.