USDCAD H4 05 06 2020 1736

Lately, USD/CAD hasn’t been a lot of fun for traders seeking a solid directional move, actually not too many currency pairs have been finding much traction. But with a little more time that could change as the backing-and-filling price action since the end of the March will eventually give way to clearer price swings.
Given the overlapping price action the downward drift smacks of a corrective move. Currently there is a good floor in place right around 13850, where two declines abruptly stopped and turned into price jumps. USD/CAD may trade back towards this support level, but as long as it holds then a low may be in place.
With the general trend off the March high tilted down there is still some risk that sellers gain the upper hand, but if they don’t then the convergence in price should lead to a breakout in the not-too-distant future. 14260 is the first hurdle to cross of significance upon a break above the March trend-line. A break above there will count as the first higher-high since the Q1 peak.
A run back to the Q1-2020/2016 highs will result in a very meaningful test as a breakout may lead to a rally back levels not seen since the early-2000s. On the flip-side, should none of the top-side thresholds mentioned above get crossed and 13850 support break with momentum, then a larger reversal may be at hand. In any event, traders will likely be best served by remaining patient for the time-being.

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AUDUSD H4 05 06 2020 0925

About 48.13% of retail traders are net long the sentiment-linked Australian Dollar against the US Dollar. Those net long AUD/USD have increased by 12.63% and 12.17% over a daily and weekly basis respectively. From here, recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort. That could speak to a rising share of traders attempting to pick potential bottoms.
AUD/USD may be at risk to a material bearish shift in its price trend after the pair took out rising support from March – blue lines on the 4-hour chart below. Prices did bounce off former resistance-turned-support at 0.6385 – 0.6407. A descent through this area exposes what appears to be the next major area of support between 0.6250 – 0.6266. Resuming the uptrend entails closing above 0.6570.

 

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AUD USD 20200505 10.10

The Australian Dollar barely moved Tuesday after the Reserve Bank of Australia left interest rates on hold at record lows.
The Official Cash Rate thus remains at the 0.25% level, where its been since March 19 after the second of two, quarter-percentage-point reductions that month, part of Australia’s economic response to the coronavirus.
The central bank acknowledged that the economy in its charge faces a terrible economic hit from the contagion. Its baseline expectation is that Gross Domestic Product will fall by 10% in the first half of the year, and by 6% for 2020 as a whole. However, it expects a 2021 bounce-back, and pledged to keep borrowing costs low until employment prospects recover and inflation is durably back to target.
The Australian Dollar has gained since its virus-inspired March lows, buoyed up like other growth-correlated assets by strong remedial action by various governments and, more lately, by hopes that the global economy will start to emerge from lockdown.
That said huge uncertainties clearly remain, with the prospect of a global recession still hanging over the markets, and weak economic numbers all-but certain for months to come. US labor marker data due this week may well underline this sorry fact, with millions of job losses expected.

Oil US Crude 20200505 16.00

Oil prices surged on Tuesday as optimism around ongoing production cuts and a recovery in demand with the reopening of economies around the world pushed prices higher.
West Texas Intermediate, the U.S. benchmark, jumped 13%, or $2.66, to trade at $24.05 per barrel. The contract gained 3.08% on Monday — closing above $20 for the first time since mid-April — and is on pace for its fifth-straight day of gains for the first time since February. International benchmark Brent crude traded 8.5% higher at $29.72 per barrel, and is also pacing for its fifth-consecutive positive session.
Oil demand has fallen off a cliff as the coronavirus pandemic spread around the globe, forcing billions of people to remain inside and bringing air travel to a near standstill. By some estimates as much as a third of worldwide demand was erased in April.
But with economies gradually starting to reopen — a number of U.S. states, including Florida, began phase one reopening plans on Monday, while millions of Italians will return to work this week — investors believe there will be an uptick in demand.
The improving demand outlook comes as producers have scaled back production, which has also supported prices. The historic cut from OPEC and its oil-producing allies, which takes 9.7 million barrels per day offline, went into effect on May 1. Norway and Canada have also curbed production.
In the U.S., data from the Energy Information Administration showed that weekly production averaged 12.1 million bpd for the week ending April 24, roughly 1 million bpd below the all-time high levels from March.

 

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Spot Gold 20200505 10.54

Gold prices were lower on Tuesday morning in Asia, with the prospect of some tentative emergence from coronavirus lockdowns boosting appetite for riskier assets.
Some US states are starting to open up their economies, with countries such as Italy and Finland also allowing more activity after many shuttered weeks.
Still, the underlying haven bid for gold is likely to remain in place given expectations that the virus’ effects have already been severe enough to ensure a global recession. The week’s main economic event will be Friday’s release of official US labor market statistics. These are expected to be the weakest since 1939, with millions more jobs lost.
That underlying haven bid is clearly evident on the daily chart, with prices still confined to a narrow, elevated range even though they’ve broken below their previously dominant downtrend.
Support remains in place at the range’s lower bound $1674.30/ounce, with the psychological $1600 mark lurking below that. The market is clearly in no hurry to test these support levels, however, probably fearful that buyers would emerge soon enough if it did. By the same token however the ground above $1700 remains beyond the bulls. A durable range break will probably be instructive, but there seems little sign of one yet.

 


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