Daily Commodity Outlook, May 22 2020

Daily Commodity Outlook, May 22 2020

Stocks in Asia went lower even after their U.S. counterparty dipped on Thursday night. The S&P 500 closed lower, with signs mounting that Trump will make its tough-on-China stance a key element of his re-election bid. Investors will eye on the National People’s Congress, which is the biggest political event of the year. Top leaders will reveal how much they are planning to spend on stimulus to support the post-virus economy. Beijing is also preparing to address HK issues. 

 

USD stabilizes amid rising political tensions. Beijing is also preparing to impose national security legislation in Hong Kong, a show of legal force that could exacerbate tensions and threaten to reignite violent protests. The geopolitical risks are meaningful, and it’s a concern for the market as a potential source of weakness and a correction.

 

Copper prices tumbled lower as heightened Sino-US tensions along with concerns about a rebound from the coronavirus-led economic slump curbed risk appetite and demand for metals. Three-month copper on the London Metal Exchange (LME) was down 0.4% at $5,369.50 a tonne, while the most-traded July copper contract on the Shanghai Futures Exchange (ShFE) declined 0.9% to 43,810 yuan ($6,158.45) a tonne.

 

Gold eased lower as equities gained on hopes for a swift recovery from the economic slump brought about by the Coronavirus pandemic as countries move towards re-opening of their economies and easing on lockdown measures. Despite that, the downside was capped by optimism over further stimulus measures. 

 

Oil prices retreated from it’s 10 week high after nearly 2 months as fresh doubts over the strength of China’s economic recovery were raised. China was the first country to come out of her virus lockdown and is seen as an example as to how economies would behave once out of the shadow of the virus. Further, rising tensions between US and China further slowed the momentum of rising oil demand and in effect, the price of oil. However the silver lining here would be that oil producers are still committing to production cuts. In line with falling oil prices, CAD weakened overnight as well as the Canadian government looks to help finance big businesses to prevent a bigger fallout from the virus pandemic

 

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Technical & Trade views

 

USDCAD (Intraday bias: bullish above 1.3961)

Daily Commodity Outlook, May 22 2020

 

We turned bullish as price is approaching our upside confirmation where the 38.2% fibonacci retracement and horizontal swing high are. If price could break above this upside confirmation, we could be able to see a bigger rally from there.

 

UKOIL (Intraday bias: Neutral between  36.99 and 35.12)

Daily Commodity Outlook, May 22 2020

Oil seems to be forming a bearish divergence between prices and stochastics. Stochastics is testing resistance as well where price reacted in the past. A short term drop below 1st resistance towards 1st support is now expected.

 

XAUUSD ( Intraday bias: bearish below 1767.712) 

Daily Commodity Outlook, May 22 2020

 

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

 

XCUUSD ( Intraday bias: bullish above 2.36914)

Daily Commodity Outlook, May 22 2020

Price is approaching our support at 2.36914 in line with our horizontal pullback support, ascending support line and 61.8% 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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