Asian stock market went higher on Friday as the market is looking to end this week in gains.U.S. stock market ended mixed on Thursday night as Jobless claims data disappointed to act as a damper in early U.S. trading, but the upbeat Philadelphia Fed survey for June provided support for the stock market. U.S. and European futures drifted Friday ahead of the quadruple witching day on Wall Street. Treasuries were flat while crude oil rose, with West Texas Intermediate climbing past $39 a barrel.
USD went higher in this mixed market sentiment. The weekly jobless claims in the U.S. remained above the one million benchmarked in the past week, although it reported fewer job losses than previous weeks. In the same time, the Philadelphia Fed survey for the June business outlook rebounded way more than expected -- 27 rather than the minus 21 read that was forecast. That signals the U.S. leading indicator can extend its resurgence, given the strong relationship between the two. As the market becomes pickier with economic data, USD could see some upside as the recovery might need longer than expected.
Copper prices edged higher as PBOC governor’s reassurance that the economic fundamentals remain sound and that the Chinese government will keep liquidity ample in the second half of the year lifted the market risk sentiment. Elsewhere, concerns over the risks of a second wave of Covid-19 infection limited the upside in prices.
Gold prices traded sideways as concerns of a second wave of Covid-19 infections which buoyed demand for the precious metal was countered by a stronger dollar and optimism for a swift economic recovery. Meanwhile, a surge in the number of new Covid-19 cases in the US along with travel curbs implemented by Beijing as they battle a second wave of virus infections limit the downside of the precious metal.
On the last trading day for this week, oil looks set to resume its upwards run on signs that consumption is picking up within economies that are emerging from their lockdowns. However, the rise could well be limited as a resurgence of the virus in Beijing is clouding the long-term outlook. How a major economy like Beijing deals with the 2nd wave and its consumption of oil will likely reflect other economies should they be hit with the 2nd wave as well. In line with the end of the week upwards push for oil, the CAD further strengthened as well.
Technical & Trade views
USDCAD (Intraday bias: bearish below 1.3621)
We turned bearish as price is approaching 1st resistance where the 61.8% fib retracement and horizontal swing high are. Price is likely to reverse off the level towards 1st support where the 61.8% fib extension is.
UKOIL (Intraday bias: bullish above 41.66)
Oil price broke above triangle formation to the upside. With price holding above moving average and MACD above 0, in bullish territory, a further push up above 1st support at 41.66 towards 1st resistance at 42.74 is expected.
XAUUSD ( Intraday bias: Bearish below 1733.136)
Price is facing bearish pressure from our resistance, in line with our descending trend line, 78.6% fibonacci retracement and 78.6% fibonacci extension, where we could see a further drop to our first support level, in line with our 61.8% fibonacci retracement and horizontal overlap support. Stochastic is facing bearish pressure from our resistance as well.
XCUUSD ( Intraday bias: bearish below 2.62375)
Price is facing bearish pressure from our resistance at 2.62375 in line with our horizontal swing high resistance, 127.2% fibonacci extension and 50% fibonacci retracement where we remain bearish below this level and could see a further drop to our first support level, in line with our horizontal swing low support and 100% fibonacci extension. 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.