Daily Commodity Outlook, May 21 2020

Daily Commodity Outlook, May 21 2020

Stocks in Asia went lower even after the rally in their U.S. counterpart on Wednesday night. The U.S. Senate passed a bill that could bar some Chinese companies from listing on American exchanges. The FOMC minutes have shown that the Fed officials acknowledged the severe economic threat posted by the coronavirus and were also concerned by the risks to financial stability.

 

USD went higher political tensions remain on the radar for most investors. The bill that the Senate passed on Wednesday could lead to Chinese companies such as Alibaba and Baidu being barred from listing on U.S. stock exchanges. This has increasingly tense relations between the U.S. and China and could lead to intensifying risk aversion.

 

Copper prices hit a two-month high as an-early stage trial for a Coronavirus vaccine along with moves by several countries to ease lockdown restrictions lifted investors’ optimism. In terms of key levels, prices broke its previous resistance at 2.43030 and could test this level as a support.

 

Gold nudged higher as recession looms even as countries move towards easing of lockdown measures. The macroeconomic landscape, with widespread stimulus from central banks could support the gold rally as it is often seen as a safe haven asset and a hedge against inflation. 

 

Oil prices held its gains after closing at a 10-week high as news of falling crude stockpiles across the US was disclosed. The big drop at Cushing delivery point, the main delivery point for WTI shows that the supply glut is indeed easing. Further, observers see growing optimism that there would be continued pick up in demand for oil. Oil price has also generally drifted higher and surpassed its previous highs. In line with oil, the CAD looks to be strengthening against the USD as well.

 

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Technical & Trade views

 

USDCAD (Intraday bias: bullish above 1.3880)

Daily Commodity Outlook, May 21 2020

We turned bullish as price is bouncing off our first support in line with our 78.6% fibonacci extension where we are expecting a further bounce to our first resistance level, in line with our horizontal  swing high resistance.Ichimoku is indicating more pushdown towards 1st support is possible.

 

UKOIL (Intraday bias: Neutral between  36.99 and 35.12)

Daily Commodity Outlook, May 21 2020

Oil price drifted higher and reached our previous target as expected. However with technical indicators now turning mixed, and no good level for entry has been found. We turn neutral watching 1st resistance at 36.99 and 1st support at 35.12.

 

XAUUSD ( Intraday bias: bearish below 1767.712) 

Daily Commodity Outlook, May 21 2020

Price is facing bearish pressure from our first resistance, in line with our 127.2% fibonacci retracement and 100% fibonacci extension where we could see a drop to our first support level. Stochastic is approaching resistance as well where we might see a reversal below this level.

 

XCUUSD ( Intraday bias: bullish above 2.43030)

Daily Commodity Outlook, May 21 2020

Price is approaching our support at 2.43030 in line with our horizontal pullback support and 23.6% fibonacci retracement where we remain bullish above this level and could see a bounce to our first resistance level. RSI and Ichimoku cloud are showing signs of bullish pressure in line with our bullish bias.

 

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