USD/CAD Daily Forecast – Oil Price Rebound Supports Canadian Dollar

USD/CAD Video 10.07.20.

Better-Than-Expected Employment Change Report Provides Additional Support To The Canadian Dollar

USD/CAD tried to settle above the resistance at the 20 EMA at 1.3590 but reversed course after the U.S. dollar started to show weakness against the broad basket of currencies while oil rebounded closer to the $40 level.

The U.S. Dollar Index did not manage to settle below the nearest resistance at 97 and declined to 96.5 after Gilead Sciences revealed positive results of late-stage study on remdesivir which is tested against coronavirus.

Meanwhile, oil failed to gain downside momentum and returned back to recent levels, providing support to commodity-related currencies like the Canadian dollar.

Canada has just reported employment data for June. Employment Change report showed that the economy added 952,900 jobs in June as businesses reopened and hired workers. Analysts expected that the economy will add 700,000 jobs.

Meanwhile, Unemployment Rate decreased from 13.7% in May to 12.3% in June compared to analyst consensus of 12%.

Interestingly, the Employment Change report was better than expected while Unemployment Rate missed analysts’ expectations.

This phenomenon is explained by the increase in Participation Rate which grew from 61.4% in May to 63.8% in June.

A combination of better-than-expected Employment Change report, rising oil prices and renewed optimism about the potential drug against coronavirus provided material support to the Canadian dollar and forced USD/CAD back into the previous trading range between the support at 1.3500 and the resistance at the 20 EMA at 1.3590.

Technical Analysis

usd cad july 10 2020

As I mentioned above, USD to CAD is back to the 1.3500 – 1.3590 trading range. However, it maintains chances to settle above the 20 EMA and develop upside momentum.

In this case, USD to CAD will head towards the next resistance level at the 50 EMA at 1.3660. A successful test of this level will open the way to another major resistance level at 1.3730. The previous serious attempt to develop upside momentum was stopped at this level.

Nothing has changed on the support side for quite some time – the main support level is located at 1.3500, and a move below this level will likely lead to a sell-off which will quickly take USD to CAD to the next support level at 1.3440.

For a look at all of today’s economic events, check out our economic calendar.

Oil Stays Near $40 After Failed Attempt To Gain Downside Momentum

Oil Video 10.07.20.

IEA Improves Its Demand Outlook

International Energy Agency has just provided its closely watched Oil Market Report for July 2020.

According to IEA, the world oil demand fell by 16.4 million barrels per day (bpd) in the second quarter due to lockdowns. Meanwhile, oil supply fell to 86.9 million bpd in June thanks to production cuts from OPEC+ members and natural production cuts from other countries, including U.S. and Canada.

Demand is rebounding faster than expected, and IEA has once again improved its full-year demand outlook to 92.1 million bpd in 2020. For 2021, IEA projects that demand will total 97.4 million bpd. Jet/kerosene consumption makes up the majority of the difference between pre-pandemic demand and demand in 2021.

Interestingly, IEA expects that U.S. oil production will start to increase in the second half of this year. Currently, the U.S. oil production has stabilized at 11 million bpd after reaching a near-term low at 10.5 million bpd.

IEA also expects that Libya can grow its production by as much as 0.9 million bpd by the end of this year. In my opinion, this is a very optimistic assumption since Libyan oil industry experiences severe challenges due to civil war and many attempts to boost production have failed.

Oil Demand Depends On Success In Battle Against COVID-19

IEA noted that pandemic was not under control so the risk to its market outlook was shifted to the downside.

Today’s oil price dynamics are a vivid reminder of the impact of the virus situation on the mood of oil traders.

Earlier, oil was under pressure as traders were worried about another record increase in the number of coronavirus cases in the U.S.

However, WTI oil managed to rebound closer to the $40 level after Gilead Sciences announced that its antiviral drug remdesivir, which is tested against coronavirus, showed success in a late-stage study.

The key question for the oil market right now is whether the recent surge in the number of coronavirus cases will put significant pressure on economic activity and mobility.

If this does not happen, oil has good chances to stay near the $40 level. At the same time, oil will most likely need significant positive catalysts to continue its upside trend and get away from current levels.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Stays Above $18.50

Silver Video 10.07.20.

Silver Tries To Get To The Second Test Of The Major Resistance At $19.00

Silver failed to get above the major resistance at $19.00 on its first attempt but stayed above $18.50 as gold received support above the $1800 level while the U.S. dollar declined against a broad basket of currencies.

Today, the market was initially worried about the worsening situation on the coronavirus front as the U.S. has recorded a record number of daily coronavirus cases.

However, the global risk sentiment got a boost after Gilead Sciences reported that it had additional data from a late-stage study on remdesivir which showed that it significantly improved recovery and reduced death risks in COVID-19 patients.

After this news, the U.S. Dollar Index, which has previously tried to get above the 97 level, declined towards 96.5. A weaker U.S. dollar is bullish for silver and other precious metals as it makes them cheaper for buyers who have other currencies.

Meanwhile, gold managed to find support near the $1800 level and continues its upside move. Gold price upside is very important for other precious metals since it attracts more investment money into the segment.

As I wrote yesterday, The Silver Institute reported that silver investment demand increased by 10% in the first half of 2020. As precious metals continue their upside move, investment demand is set to increase further.

Gold/silver ratio continues its downside trend and remains below 97. Gold/silver ratio will have to settle below 95 to gain more downside momentum which will be bullish for silver.

Technical Analysis

silver july 10 2020

Silver found support at $18.50 and will likely make another attempt to get above the major resistance at $19.00 soon.

Compared to the previous attempts to get above this level which took place at the beginning of the year, silver has better chances to gain more upside momentum.

If this happens, silver will head towards the next resistance level at $19.50.

On the support side, the first support for silver is located at the previous resistance near $18.50. A move below this support level will likely lead to increased downside momentum and take silver closer to the next support level near the 20 EMA at $18.00.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Lower As Traders Focus On Virus Data

U.S. Reports More Than 60,000 New COVID-19 Cases For Second Day In A Row

On Thursday, the U.S. reported another record daily increase in the number of coronavirus cases. The pandemic shows no sign of slowdown and starts to put pressure on stocks which continue to trade on high levels.

Most market observers do not expect that the U.S. will implement a second full lockdown as the economy will not be able to take a second hit of this size. Still, the rising number of infected will inevitably put pressure on economic activity as consumers will stay worried about their financial position and health.

Previously, the market has mostly ignored the bad news on the coronavirus front as traders bet that monetary stimulus will continue to provide support for asset prices.

Today, S&P 500 futures are losing some ground in the premarket trading session but it remains to be seen whether stocks will finish the day in the red zone as many traders are focused on buying any pullbacks.

U.S. – China Relations Continue To Deteriorate

The U.S. has sanctioned high-ranked Chinese officials due to alleged human rights abuses against Uighur minority in China.

China has already stated that it will introduce counter-measures against the U.S. China did not provide any details about such measures.

U.S. – China relations are in a clear downtrend which may pose risks for the world economic recovery if countries start to implement more serious measures against each other. For now, the announced sanctions will have no impact on global trade.

WTI Oil Dips Below The $40 Level

Yesterday, I wrote that trading in a tight range was not typical for a volatile commodity like oil. Apparently, some traders lost patience waiting for an upside breakout, and oil declined below the important $40 level.

At this point, oil did not develop significant downside momentum. Currently, it trades near the $39 level. If the downtrend accelerates, oil-related stocks will decline to lower levels, putting additional pressure on S&P 500.

The next few trading sessions will show whether oil has sufficient support below $40. Without such support, oil may soon find itself closer to the 50 EMA at $36.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Virus Worries Boost U.S. Dollar

GBP/USD Video 10.07.20.

British Pound Loses Ground As Demand For Riskier Assets Decreases

GBP/USD declined below 1.2600 as the U.S. dollar strengthened against a broad basket of currencies amid fears that the coronavirus pandemic was getting out of control.

On Thursday, the U.S. has once again reported more than 60,000 new cases of the disease, and traders started to seriously evaluate chances of new lockdowns.

The U.S. released better-that-expected employment reports but they were not able to provide support to riskier assets. Initial Jobless Claims declined to 1.31 million while Continuing Jobless Claims fell to 18.1 million.

In addition to virus fears, demand for safe haven assets is supported by another increase in U.S. – China tensions. The U.S. sanctioned several high-ranked China officials over alleged human rights abuses against Uighur minority.

The markets are worried that the continued deterioration of U.S. – China relations comes at the worst possible time when the world economy tries to rebound while the global number of new virus cases continues to surge.

With no big economic reports scheduled to be released today, GBP/USD dynamics will mostly depend on market sentiment. If traders remain focused on the virus, GBP/USD will stay under pressure.

Technical Analysis

gbp usd july 10 2020

GBP/USD has once again failed to settle above the major resistance at the high end of the current trading range at 1.2650. Since April, GBP/USD made five attempts to get above this level but only one such attempt was successful.

However, even this attempt did not lead to a new upside trend since GBP/USD quickly lost momentum and returned to the previous range between the support at 1.2250 and the resistance at 1.2650.

At this point, it looks like GBP/USD will need significant upside catalysts to settle above 1.2650. If this happens, it will head towards the next resistance level at 1.2750.

On the support side, the nearest support area is located between the 20 EMA at 1.2500 and the previous resistance level at 1.2530. In addition, the 50 EMA is located at 1.2470 so GBP/USD is set to receive strong support near 1.2500.

A move below this level will signal a return to the local downside trend. From a big picture point of view, GBP/USD has once again proved that it continues to trade in a wide 1.2250 – 1.2650 range.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Gains Ground As Virus Worries Return

USD/CAD Video 09.07.20.

WTI Oil Falls Below The $40 Level And Puts Additional Pressure On The Canadian Dollar

USD/CAD managed to rebound from the support level at 1.3500 but stays below the 20 EMA at 1.3590 as the U.S. dollar is gaining ground against a broad basket of currencies while oil is under pressure.

Earlier, the U.S. dollar experienced weakness as the market mood was positive following the release of better-than-expected U.S. Initial Jobless Claims and Continuing Jobless Claims reports.

The Initial Jobless Claims report showed that 1.31 million Americans filed for unemployment benefits in a week. Meanwhile, Continuing Jobless Claims dropped to 18.1 million as some workers managed to find new jobs.

However, market sentiment changed quickly after the release of U.S. employment reports as traders focused on the worsening coronavirus situation in the U.S. On Wednesday, the U.S. has registered more than 60,000 new cases of the disease.

Renewed worries about potential lockdowns increased demand for safe haven assets and provided support to the U.S. dollar.

At the same time, the Canadian dollar found itself under pressure as WTI oil fell below the key $40 level. There was no specific catalyst for this move, and it looks like general virus worries put pressure on oil.

Canadian oil benchmarks mostly trade in sync with the leading world benchmarks like Brent and WTI so the downside move of WTI oil is negative for the Canadian dollar.

Technical Analysis

usd cad july 9 2020

USD to CAD continues to trade in a range between the support at 1.3500 and the resistance at the 50 EMA at 1.3590. Recent trading sessions have been volatile but USD to CAD did not manage to get out of this range.

In case USD to CAD manages to settle above the 20 EMA, it will likely develop upside momentum and head towards the next resistance level at the 50 EMA which has declined to 1.3665.

On the support side, USD/CAD will need to settle below 1.3500 to gain downside momentum. A move below this level will be a material bearish development for USD/CAD which will head towards the next support level at 1.3440.

For a look at all of today’s economic events, check out our economic calendar.

Oil Under Pressure As Some Traders Lose Patience Waiting For An Upside Breakout

Oil Video 09.07.20.

Oil Does Not Have Enough Near-Term Catalysts To Get Above $41

Oil traded in a very tight range for six sessions in a row and a move out of the range between $40 and $41 was long overdue.

Currently, it looks like the first move may be to the downside as oil is trying to settle below the $40 level.

On Wednesday, the U.S. has reported more than 60,000 new cases of coronavirus, and some traders fear that the continued deterioration of the virus situation may lead to new lockdowns.

In addition, the recent inventory report did not provide reasons for optimism as crude inventories increased by 5.7 million barrels. Gasoline inventories decreased by 4.8 million barrels but that’s normal for the driving season. In fact, I’d bet that many traders expected to see better inventory dynamics.

Oil is a volatile commodity and it cannot stay glued near one level for many days. Ultimately, it will have to follow the path of least resistance. At this point, the risk may be shifting to the downside as the oil market simply lacks additional catalysts to continue the upside move, and a healthy correction may be due.

OPEC+ Will Not Extend Current Production Cuts For August

On July 15, the market monitoring panel of OPEC+ will meet to discuss the recent developments in the oil market. Currently, OPEC+ has agreed to cut production by 9.6 million barrels per day (bpd) until the end of July.

In August, production cuts will decrease to 7.6 million bpd so an additional 2 million barrels of oil will be supplied to the market.

The main intrigue is whether OPEC+ will prefer to provide additional support to the market and extend current cuts for August.

In my opinion, this will not happen. OPEC+ countries are struggling from lower levels of production while some countries like Russia may have problems maintaining current production cuts for technological reasons.

In addition, the U.S. domestic oil production has recently jumped from 10.5 million bpd to 11 million bpd. OPEC+ would not like to provide a “free lunch” for the U.S. oil industry and support prices when the market share of its competitor grows day by day.

In this light, oil will need healthy upside in demand to get above the recent trading range since some of the curtailed supply will soon return to the market.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Tests The Major Resistance At $19.00

Silver Video 09.07.20.

Silver Investment Demand Increases By 10% In The First Half Of This Year

Silver is testing the major resistance level at $19.00 as gold continues its upside move while the U.S. dollar loses ground against a broad basket of currencies.

Spot gold has recently crossed the $1800 mark and continues to move higher. Gold’s upside is a major positive catalyst for all precious metals as it attracts more investment into the segment.

In fact, recent data from The Silver Institute indicated that silver investment demand increased by 10% in the first half of 2020. Industrial demand declined but started to pick up from May as economies began to reopen.

Importantly, The Silver Institute predicts that global silver mine supply will drop by 7% in 2020 which is bullish news for silver, especially if industrial demand gets closer to normal levels.

Gold/silver ratio continues its downside move and has settled below 96. Before the pandemic, gold/silver ratio was lower than 90 so there is certainly more room for downside if the market situation normalizes.

Today, silver gets additional support from the U.S. dollar which remains in a downside trend. The U.S. Dollar Index has declined below 96.5 and looks ready to test the 96 level. Weaker U.S. dollar is bullish for silver as it makes it cheaper for buyers who have other currencies.

Technical Analysis

silver july 9 2020

Silver gained significant upside momentum and tries to get above the major resistance level at $19.00. RSI is not in the extremely overbought territory so silver may have more room to run in case gold continues its upside move while the U.S. dollar declines against a broad basket of currencies.

In this case, silver will get above $19.00 and head towards the next resistance level at $19.50. Such a move may be fast since silver’s momentum is strong.

On the support side, the nearest support level for silver is located at the previous resistance near $18.50. A move below this level will open the way to the next support level at the 20 EMA at $18.00.

From a big picture point of view, silver’s upside trend looks solid as it is supported by both technicals and fundamentals.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As Continuing Jobless Claims Report Beats Expectations

Initial Jobless Claims Decline To 1.31 Million

The U.S. has just provided new Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims declined from 1.41 million to 1.31 million. Analysts projected that Initial Jobless Claims would total 13.75 million.

Continuing Jobless Claims report was much better than expected as Continuing Jobless Claims declined to 18.1 million compared to analyst estimates of 18.95 million.

The decrease in Continuing Jobless Claims supports the thesis that the U.S. economy is rebounding faster than previously expected.

Not surprisingly, S&P 500 futures are gaining ground in the premarket trading session after the release of these reports, and the market looks ready to continue the upside trend.

Fed’s Bullard Believes That Unemployment Rate Will Materially Decline By The End Of The Year

Despite the recent surge in the number of new coronavirus cases in the U.S., St. Louis Fed President James Bullard thinks that Unemployment Rate will decline to 7 – 8% by the end of this year.

This optimism is based on the current momentum since Unemployment Rate has declined from 14.7% in April to 11.1% in June. Back in February, when the economy did not suffer from the coronavirus pandemic, Unemployment Rate was just 3.5%.

The road to such levels may be a long one, but a return to Unemployment Rate of 7 – 8% will be a major move forward for the U.S. economy.

Such projections from Fed officials provide additional support to stocks which continue to ignore worrisome news on the coronavirus front.

Oil Continues To Trade In a Very Tight Range Near The $40 Level

Oil stays above the $40 level for the sixth session in a row but fails to get above the $41 level. Such a tight range is highly unusual for a volatile commodity like oil.

Meanwhile, major oil stocks like Exxon Mobil, Chevron or BP are slowly trending down in absence of additional upside catalysts.

In my opinion, the quiet trading in oil cannot last much longer so oil will be ready to break out of the coming range in the upcoming trading sessions, with the corresponding impact on oil-related stocks.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Test Of Major Resistance At 1.2650

GBP/USD Video 09.07.20.

British Pound Enjoys Significant Upside Momentum

GBP/USD continues its upside move and tests the resistance at the high end of the current trading range at 1.2650 as the U.S. dollar loses ground against a broad basket of currencies.

The U.S. Dollar Index has managed to get below the 96.5 level and is trending towards 96. The reason for the U.S. dollar weakness is the continued optimism about economic recovery.

Markets ignore the worrisome developments on the coronavirus front and focus on the improving economic activity. Yesterday, White House economic adviser Larry Kudlow stated that another country-wide shutdown was not an option since it would do more harm than good.

Today, the market optimism will be tested by the release of U.S. Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims are expected to stay high near 1.4 million. Previously, the market has mostly ignored the worrisome Initial Jobless Claims data as it focused on signs of economic rebound.

Meanwhile, Continuing Jobless Claims are expected to decline to 18.95 million. The previous Continuing Jobless Claims report indicated that 19.29 million Americans continued to receive unemployment benefits.

At this stage, Continuing Jobless Claims is a more important metric as it indicates the number of workers who failed to find new jobs after they were laid off during the acute phase of the coronavirus crisis.

Technical Analysis

gbp usd july 9 2020

GBP/USD gained additional upside momentum and headed towards the high end of the current trading range at 1.2650. This is a significant resistance level but the current weakness of the U.S. dollar provides GBP/USD with chances to get above this level on its first attempt.

If this happens, GBP/USD will head towards the next resistance level at 1.2750. In addition, GBP/USD will have a chance to get away from the trading range between 1.2250 and 1.2650 and establish a new upside trend.

On the support side, the nearest support for GBP/USD is located at the previous resistance level at 1.2530. In case GBP/USD settles below this level, it will likely gain downside momentum and head towards the 20 EMA at 1.2490.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Fails To Develop Upside Momentum

USD/CAD Video 08.07.20.

Canadian Dollar Stays Strong As WTI Oil Continues To Trade Above The $40 Level

USD/CAD tried to get above the 20 EMA at 1.3590 but this attempt was not successful and it returned back into the trading range between the support level at 1.3500 and the 20 EMA.

There were no important economic reports scheduled to be released today so USD/CAD dynamics mostly depended on general risk sentiment and oil price movements.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, declined to the 96.5 level. The downside move of the U.S. Dollar Index is bearish for USD/CAD.

Oil was mostly flat despite the surprising increase in crude inventories and did not provide additional support to the Canadian dollar.

Tomorrow, the U.S. will release Initial Jobless Claims and Continuing Jobless Claims reports. The Initial Jobless Claims report is expected to show that 1.4 million Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to dip below 19 million.

These reports could have a material impact on markets since they will show whether the recent problems on the coronavirus front have impacted the job market.

Technical Analysis

usd cad july 8 2020

USD/CAD continues to trade below the 20 EMA as recent attempts to gain upside momentum were not successful.

The nearest support level for USD/CAD is still located at 1.3500. A move below this level will lead to increased downside momentum and take USD/CAD to the next support level at 1.3440.

On the upside, the 20 EMA remains the first important resistance level for USD/CAD. This level has already been tested several times and proved its strength.

If USD/CAD manages to get above the 20 EMA, it will be able to gain upside momentum and head towards the 50 EMA at 1.3670.

From a big picture point of view, USD/CAD is in an interesting situation as it is stuck between the resistance at the 20 EMA and the support at 1.3500 and fails to develop momentum.

A move below the support at 1.3500 will initiate a new downside trend, while a move above the 20 EMA will be a significant bullish catalyst for USD/CAD.

For a look at all of today’s economic events, check out our economic calendar.

Oil Mixed After Surprising Increase In Crude Inventories

Oil Video 08.07.20.

Crude Oil Inventories Unexpectedly Increase

Yesterday, API Crude Oil Stock Change report indicated that crude oil inventories increased by 2.05 million barrels.

Today, EIA Weekly Petroleum Status report showed that inventories experienced a bigger increase of 5.7 million barrels. Meanwhile, gasoline inventories decreased by 4.8 million barrels while distillate fuel inventories increased by 3.1 million barrels. This is not something you’d expect to see during the driving season.

The U.S. domestic oil production remained flat at 11 million barrels per day (bpd) which shows that the U.S. oil industry has found some balance at current prices near $40 per barrel.

The main reason for the increase in crude inventories was the increase in imports. According to EIA, imports jumped by 1.4 million bpd to 7.4 million bpd. It looks like some oil which was previously stored on tankers is finding its way to the market as the spread between the front-month contract and longer-dated contracts has almost disappeared.

In my opinion, this is not a bullish report. Crude inventories continue to increase while U.S. domestic production has stabilized at 11 million bpd. The main hope of oil bulls right now is the continued optimism of the global markets.

EIA Increases Its Oil Price Forecast For The Second Half Of 2020

In its Short-Term Energy Outlook, EIA indicated that it had changed its price forecast for both Brent and WTI.

EIA expects that Brent spot prices will average $41 per barrel at the second half of this year and climb to $50 per barrel in 2021. The forecast for the second half of 2020 is higher than the previous one by $4 per barrel, while the forecast for 2021 exceeds the previous forecast by $2 per barrel.

Meanwhile, EIA believes that WTI prices will not be able to average $50 per barrel in 2021 and expects that U.S. oil production will stay at 11 million bpd in 2021.

EIA notes that high inventory levels will limit price gains but expects that inventory levels will decline in the second half of 2020 and through 2021. As we have just seen in the Weekly Petroleum Status Report, this process has not yet begun.

The main risk for oil prices right now is the return of serious virus containment measures. Australia’s Melbourne has entered its second lockdown, Serbia wants to impose a curfew, while Central Asian countries like Kazakhstan and Uzbekistan are reversing their reopenings.

The oil market may not pay attention to these developments right now because they do not include oil’s biggest consumers but the trend is alarming and should be closely monitored by oil traders.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Rallies Above $18.50

Silver Video 08.07.20.

Silver Gains Upside Momentum

Silver managed to get above the resistance level near $18.50 as gold rallied to new highs while the U.S. dollar remained flat against a broad basket of currencies.

Finally, spot gold managed to get above the psychologically important $1800 level. The drivers behind gold price upside are well-known and include the worsening situation on the virus front as well as the never-ending stimulus from the world central banks.

Gold’s upside is a major bullish factor for all precious metals including silver as it attracts more investments into the segment. In my opinion, gold has good chances to continue the current upside move as authorities have no choice but to continue providing stimulus while the pandemic shows no signs of exhaustion.

The U.S. has just crossed the 3 million confirmed cases mark while states like California and Texas reported record daily increases in the number of coronavirus cases. In such environment, traders will continue to buy gold to protect themselves from the potential sell-off in the equity markets.

Interestingly, there’s no safe-haven buying in the U.S. dollar, and the U.S. Dollar Index is flat against a broad basket of currencies. Gold/silver ratio continues its decline and is located close to the 97 level. The continuation of the current trend in gold/silver ratio will provide additional support to silver.

Technical Analysis

silver july 8 2020

Silver has settled above the resistance level near $18.50 and continues to gain upside momentum. At this point, silver has good chances to test the yearly highs at $19.00 in the near term.

This year, silver made two attempts to get above $19.00 but each attempt was followed by a material sell-off. This time, silver has better chances to get above this key resistance level as gold is rallying and the fundamental situation for the precious metal segment is more favorable.

On the support side, the nearest support level for silver is located at the 20 EMA at $17.90. A move below the 20 EMA will be a big disappointment for silver bulls as it will show that silver is losing momentum. In this case, silver will head towards the major support level at $17.50.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Mixed After Yesterday’s Sell-Off

U.S. Crosses The 3 Million Confirmed Cases Mark

The coronavirus situation shows no signs of improvement as the U.S. has just crossed the 3 million confirmed cases mark while a number of states reported record daily increases in the number of coronavirus cases.

These states include the populous and economically important California and Texas. Yesterday, virus worries led to a sell-off closer to the end of the trading session.

Today, traders stay reasonably optimistic and bet that serious virus containment measures will not be implemented. The world markets are rather nervous but there is no sell-off.

With no important economic reports scheduled to be released today, S&P 500 futures are swinging back and forth in the premarket trading session and stay mostly unchanged.

Gold Gets Above $1800

The rally in gold continues. Previously, gold futures have tested the $1800 level but spot gold settled below this psychologically important level. Today, spot gold has gained more upside momentum and managed to get above $1800 per ounce.

This is a major development for gold mining stocks, many of which continue to trade below their highs reached back in May. I’d expect to see an influx of new money into the segment which will provide material support to gold-related equities.

The fundamental setup is very favorable for gold, and all-time high levels that were reached back in 2011 are now in sight. In my opinion, gold has decent chances to test the $1900 level due to problems on the virus front and rampant money-printing from the world central banks.

Oil Manages To Stay Above $40 Despite The Increase In Inventories

API Crude Oil Stock Change report showed that crude inventories have increased by 2.05 million barrels in a week. Meanwhile, gasoline inventories declined by 1.83 million barrels while distillate fuel inventories declined by 0.85 million barrels.

This report was not very optimistic for the oil market since we are in the middle of driving season and inventories should decline more aggressively given the implementation of production cuts.

However, oil managed to stay above the $40 level which indicates the strength of the current bullish trend. Today, this trend will be tested by the EIA Weekly Petroleum Status report which will provide estimates of inventories and U.S. domestic oil production.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – British Pound Continues Its Upside Move

GBP/USD Video 08.07.20.

Virus Data Again In Spotlight

GBP/USD managed to get above the resistance at 1.2530 and continues its upside trend as the world markets are anxious about the surge in coronavirus numbers while Britain continues Brexit talks with EU.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled below 97 but tries to get back to the 97 – 97.5 range.

The U.S. has reached the 3 million mark in the number of registered coronavirus cases, and the virus data is once again in spotlight.

The Fed is worried that the increasing number of coronavirus cases in the U.S. will lead to consumer anxiety and hurt the ongoing recovery.

It remains to be seen how the markets will interpret the Fed’s worries. On the one hand, the worsening situation on the coronavirus front should be bullish for safe haven assets like the U.S. dollar.

On the other hand, problems with recovery in the U.S. almost guarantee more stimulus from the Fed whose money-printing is bearish for the U.S. dollar.

For the pound, Brexit talks remain one of the biggest drivers. At this stage, the negotiating positions of EU and Britain are rather far away from each other, and traders can expect that negotiations will drag on until the deadline at the end of the year.

Technical Analysis

gbp usd july 8 2020

GBP/USD has gained additional upside momentum and breached the resistance at 1.2530. At this point, the nearest significant resistance for GBP/USD is located at the high end of the current trading range at 1.2650.

At the end of June, GBP/USD tested the low end of the current trading range at 1.2250 but quickly rebounded. I’d expect that the resistance at 1.2650 will be strong and that GBP/USD will need significant catalysts to get out of the current range and start a new upside trend.

On the support side, the nearest support level for GBP/USD is located at the previous resistance level at 1.2530. In case GBP/USD declines below this level, it will head towards the next support at the 50 EMA at 1.2450.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – U.S. Dollar Tries To Rebound

USD/CAD Video 07.07.20.

U.S. Dollar Attempts To Get Back Above The 20 EMA

USD/CAD made an attempt to get above the 20 EMA at 1.3595 but failed to develop additional upside momentum.

The U.S. dollar is flat against a broad basket of currencies, and the attempt of the  U.S. Dollar Index to get above the resistance level at 97 was unsuccessful.

Canada has released Ivey PMI data for June which showed that PMI increased from 39.1 in May to 58.2 in June. This means that Canadian purchasing activity has significantly increased.

However, favorable PMI data failed to boost the Canadian dollar. In addition, oil continues to struggle to gain more upside momentum above the $40 level. A material move above this level will be bullish for commodity-related currencies including the Canadian dollar.

The continued spread of coronavirus provides some support to the U.S. dollar which has served as a safe haven asset of last resort during the current crisis. Recently, Melbourne was forced to impose a six-week lockdown to contain the spread of the disease. If new lockdowns become widespread, the American currency may get more support.

Technical Analysis

usd cad july 7 2020

USD/CAD tried to get above the the nearest resistance level at the 20 EMA at 1.3595 but this attempt was not successful. As a result, USD/CAD continues to trade in the range between the support level at 1.3500 and the resistance level at 1.3595.

RSI is at moderate levels so USD/CAD has plenty of room to develop momentum in either direction.

In case USD/CAD settles above the resistance at the 20 EMA at 1.3595, it will likely get a boost and head towards the next resistance level at the 50 EMA at 1.3670.

On the support side, a move below the support level at 1.3500 will lead to increased downside momentum and take USD/CAD closer to the next support level at 1.3440.

At this point, the support at 1.3500 looks strong, and USD/CAD will likely need significant catalysts to get below this level. In addition, a move below 1.3500 will signal a return to the previous downside trend so there’ll be a lot of interest at this level if USD/CAD gets to the serious test of 1.3500.

For a look at all of today’s economic events, check out our economic calendar.

Oil Continues Attempts To Gain Upside Momentum

Oil Video 07.07.20.

Saudi Arabia Increases Prices Again

While traders watch the daily fluctuations of oil futures prices, most oil is sold on contracts in the real world.

Saudi Arabia has just raised the prices for its oil that is scheduled to be delivered in August. According to a Reuters report, the price for Asian buyers was increased by $1.20 above the Oman/Dubai average price.

Recent reports indicated that China’s crude oil imports were at record levels in June so Saudi Arabia is using the increase in demand to improve pricing.

It’s worth noting that OPEC+ is set to transfer from production cuts of 9.6 million barrels per day (bpd) in July to 7.6 million bpd in August so Saudi Arabia believes that the market will be ready to take more oil at higher prices. This is a bullish view.

Saudi Arabia’s decision has certainly provided support to the oil market and helped oil stay above the key $40 level. However, oil fails to get more upside momentum above this level.

In my opinion, the key reason for this is the fear that the continued spread of coronavirus will lead to new lockdowns and put pressure on economic activity and demand for oil.

Melbourne Is The First Major City To Reimpose A Lockdown, Raising Questions About The Rebound Of Oil Demand

While the coronavirus situation continues to get worse in the U.S., states have mostly limited themselves to closing restaurants, bars and gyms and tried to persuade people to wear face masks in order to control the spread of the disease.

Such measures put pressure on economy and jobs but do not directly hurt the demand for oil.

In Australia, the city of Melbourne faced a surge in the number of coronavirus cases and had to reimpose a lockdown for six weeks. Such a scenario is a true nightmare for the world markets if it gets repeated by other big cities.

At this point, the stock market is only slightly worried about the virus while traders are waiting for new inventory data to evaluate whether demand is rising fast enough to lead to a decrease in inventory levels.

In this situation, oil may continue to ignore the developments on the coronavirus front but additional news about lockdowns will be very dangerous for the current upside trend.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Stays Below $18.50

Silver Video 07.07.20.

Silver Stays Above $18.00 But Fails To Get Additional Upside Momentum

Silver did not manage to breach the resistance below $18.50 but stays above $18.00 as gold/silver ratio rebounded while the U.S. dollar gained some ground against a broad basket of currencies.

Earlier, the U.S. Dollar Index tried to settle above the 97 level but this attempt was not successful. In case the U.S. dollar continues its previous downside move, silver and other precious metals will get additional support as weaker dollar makes them less expensive for investors who have other currencies.

Gold is losing some ground but stays near highs, and its upside trend remains intact. The stock market is once again worried about the virus so gold has chances to get back to the upside mode later in the trading session.

Gold/silver ratio rebounded above 98 but stays below the 20 EMA at 98.85. At this point, gold/silver ratio remains glued to the 20 EMA, and all attempts to develop momentum were short-lived.

Technical Analysis

silver july 7 2020

Silver has recently made another attempt to get above the nearest resistance level below $18.50 but this attempt was not successful. Silver has already made three attempts to get above this level during the recent trading sessions so this resistance level is strong.

Most likely, silver will need additional upside in gold or a decline of gold/silver ratio to get above $18.50. If this happens, silver will likely gain significant upside momentum and head towards the major resistance level at the yearly highs at $19.00.

In my opinion, silver will have good chances to get above $19.00 if it gets to the test of this level as precious metals are supported by low interest rates and rampant money printing from the world central banks.

On the support side, the first support level for silver is located at the 20 EMA at $17.80. If silver gets below this level, it will head towards the major support level at $17.50.

The support at $17.50 has been tested many times and proved its strength, and a move below this support level will signal a change of the short-term trend.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Lower As Traders Take Profits After The Recent Upside Move

With No Important Economic Reports Scheduled To Be Released Today, Traders Focus On The Spread Of The Virus

S&P 500 futures are losing ground in premarket trading as the stock market shifts its attention to virus data.

Yesterday, stocks were boosted by better-than-expected U.S. Services PMI and Composite PMI reports. There are no major economic reports scheduled to be released until Thursday when the market will digest the new data on Initial Jobless Claims and Continuing Jobless Claims.

In this environment, traders’ attention naturally turns to the developments on the coronavirus front. The situation does not look good as the pandemic shows no signs of a slowdown.

According to data from Johns Hopkins University, more than 11.6 million cases of coronavirus have been recorded since the beginning of the pandemic. In recent days, the world has recorded more than 200,000 new cases per day which is the all-time high.

U.S. May Ban Social Media Apps From China

The U.S. is set for another round of tensions with China as it may ban the country’s social media apps as they may share information with the Chinese government.

Meanwhile, companies like Facebook and Twitter have announced that they would not take requests for user data from Hong Kong’s government due to the new security law.

China will likely try to retaliate against any restrictive measures so U.S. – China relations will continue to follow their downside trend.

European Commission Revises Its Economic Forecast To The Downside

While stocks trade as if there is no pandemic at all, the situation is challenging for the real economy. According to the new forecast from the European Commission, Euro Area’s economy will decline by 8.7% in 2020 and rebound by 6.1% in 2021.

The previous forecast called for a decline of 7.7% in 2020 and growth of 6.3% in 2021. The reopening of the economy is not proceeding as fast as previously expected as governments have to balance their economic priorities with virus containment measures.

The slowdown in the EU will directly impact U.S. multinationals. At the same time, it also raises questions regarding the recent optimism about the rebound of the U.S. economy which currently faces a surge in the number of virus cases.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – U.S. Dollar Tries To Find Support

GBP/USD Video 07.07.20.

Risk Appetite In Spotlight Amid Worsening Coronavirus Situation And Increasing U.S. – China Tensions

GBP/USD continues to trade near 1.2500 as the U.S. dollar is mostly flat against a broad basket of currencies after yesterday’s sell-off.

Yesterday, global market optimism boosted riskier assets, but better-than-expected U.S. Services PMI and Composite PMI reports provided some support to the U.S. dollar and stopped the decline of the U.S. Dollar Index.

Services PMI increased from 37.5 in May to 47.9 in June while analysts expected that it will grow to 46.7. Composite PMI also grew to 47.9. While numbers below 50 show contraction, PMI reports indicated that the economy is rebounding faster than expected.

In the UK, New Car Sales report highlighted that car sales were down 34.9% year-over-year in June. This was a major improvement from the May report which showed that New Car Sales were down 89% year-over-year due to the lockdown. Meanwhile, Construction PMI increased from 28.9 in May to 55.3 in June, indicating a very fast rebound of construction activity.

Today, the market will likely focus on evaluating risks from the continued spread of coronavirus and another round of tensions between U.S. and China.

In California, coronavirus-related hospitalizations have jumped by 50% over the last two weeks while Miami had to close restaurant dining due to the spread of the disease. So far, the markets have mostly ignored the worsening situation on the coronavirus front which was bearish for the U.S. dollar.

On the U.S. – China front, U.S. Secretary of State Mike Pompeo indicated that U.S. may ban social media apps from China, including TikTok.

Technical Analysis

gbp usd july 7 2020

The technical picture for GBP/USD did not change much in recent trading sessions. GBP/USD continues to trade near 1.2500 and tries to get above the nearest resistance level at 1.2530.

If this happens, GBP/USD will get additional upside momentum and head towards the high end of the current range at 1.2650. As GBP/USD spent several trading sessions just below the resistance at 1.2530, a move towards 1.2650 may be quick.

On the support side, the nearest support is still located at the 50 EMA at 1.2450. A move below this level will signal a return of the local downside trend.

For a look at all of today’s economic events, check out our economic calendar.