Silver Price Daily Forecast – Silver Rallies Towards $21.00

Silver Video 21.07.20.

Silver Gets To New Highs As Gold/Silver Ratio Declines To Pre-Pandemic Levels

Silver managed to get above the resistance at $20.00 and gained significant upside momentum which led to the test of the next resistance level at $21.15.

The key reason for silver upside is the EU recovery fund deal which will lead to the creation of a 750 billion euro coronavirus recovery fund.

The news on the recovery fund provided material support to precious metals as traders bet on additional upside due to never-ending monetary stimulus.

Gold broke to new highs and continued its upside move as fundamentals remain favorable. Gold has not visited current levels since 2011, and the highs that were reached at that time are now in sight.

There’s also a major development on the gold/silver ratio front. In a major move, gold/silver ratio declined below 88, marking the return to pre-pandemic lows.

As I noted many times, the return to pre-pandemic lows has always been one of the components of the bullish thesis for silver, and now this factor is in play.

Meanwhile, the U.S. dollar remains under pressure against a broad basket of currencies. The U.S. Dollar Index is currently testing lows that were reached back in June.

However, American currency did not gain significant downside momentum, and a rebound from current levels is possible. Such a rebound will be bearish for silver in the near-term, especially given the magnitude of the recent rally.

Technical Analysis

silver july 21 2020

Silver moved above $20.00 and quickly rallied towards $21.15 where it met significant resistance. This resistance level has the potential to be a material obstacle on silver’s way up since RSI is in the overbought territory and a pullback may be coming soon.

If this happens, the nearest material support level for silver is located at $19.50, although some support will likely present itself at higher levels.

On the upside, the next resistance for silver is located at $21.50. However, it should be noted that silver did not trade that high since 2014 so it remains to be seen where silver will meet material resistance in case it gets above $21.15.

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

U.S. Stocks Set To Open Higher Amid Global Optimism On EU Deal

EU Leaders Agree On Coronavirus Recovery Fund

Finally, EU leaders were able to overcome their differences and managed to agree on a 750 billion euro coronavirus recovery fund which includes 390 billion euros of non-repayable grants.

The main recipients of this financial aid are Italy and Spain which were hit hard by coronavirus. Italy will get 209 bilion euros including 81 billion euros in grants and 127 billion euros in loans. In turn, Spain will receive 140 billion euros with 72.7 billion euros in grants and 67.3 billion euros in loans.

This agreement is very important politically since failure to negotiate a coordinated economic response in the face of the global pandemic would have put EU existence under question.

Not surprisingly, global markets cheer the deal. In the U.S., S&P 500 futures are up almost 1% in premarket trading as traders bet that additional money-printing from EU will push asset prices higher.

WTI Oil Breaks Above The Resistance At $41.50

WTI oil spent many trading sessions in a tight range, and the EU deal served as a positive catalyst that allowed it to get above the nearest resistance at $41.50.

Now that the EU deal has been negotiated, oil has good chances to develop upside momentum and get closer to the next resistance level at $44. Such a move will provide material support to oil-related stocks and push S&P 500 higher.

Recently, oil majors like Exxon Mobil, Chevron, BP, Royal Dutch Shell have underperformed the S&P 500. As oil has finally managed to get above the key resistance level, these stocks will likely see increased interest.

Gold And Silver Break To New Highs

Gold and silver mining stocks will also be in spotlight today as both precious metals continued to rally. The upside move is especially significant for silver which has reached levels last seen in 2016.

The main catalyst is the same – the EU deal, which will lead to additional money-printing. In the environment where governments can’t stop printing money, investors bet on precious metals as a store of value.

In the developed world, near-zero interest rates will stay for some years to come, so precious metals will remain an attractive investment option for the foreseable future.

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

GBP/USD Daily Forecast – British Pound Gets Support From Multiple Catalysts

GBP/USD Video 21.07.20.

EU Deal, Vaccine Hopes And Brexit Optimism Provide Support To British Pound

GBP/USD managed to get above the major resistance level at 1.2650 as EU leaders agreed to a historic recovery fund deal while the U.S. dollar remained flat against a broad basket of currencies.

After almost five days of intense negotiations, EU leaders signed a recovery fund deal which should provide support to EU members as their economies try to rebound after the acute phase of the coronavirus crisis.

The recovery fund will be able to use 750 billion euros, including 390 billion of non-repayable grants. In addition to the recovery fund, EU leaders agreed to EU 2021 – 2027 budget of 1.1. trillion euros.

In addition to EU deal, the risk sentiment is supported by hopes for a COVID-19 vaccine. Yesterday, AstraZeneca reported encouraging early-stage trial results of its vaccine while CanSino Biologics’ vaccine showed positive results in a mid-stage study.

British pound is also supported by Brexit hopes after German Foreign Minister Heiko Maas signaled that it was possible to reach an agreement between EU and Britain by October.

At this point, British pound enjoys the support of multiple positive catalysts which provide it with a chance to settle above the major resistance at 1.2650 and establish a new upside trend.

Technical Analysis

gbp usd july 21 2020

GBP/USD settled above the key resistance level at 1.2650 and continues its upside move. The nearest resistance for GBP/USD is located at 1.2750.

In case GBP/USD manages to get above this level, it will gain additional upside momentum and head towards the test of the next resistance level at 1.2815, which is the high of the previous attempt to settle above 1.2650.

As I noted above, GBP/USD is supported by multiple catalysts and has good chances to establish an upside trend. To do this, it will have to stay above the key level at 1.2650.

In case GBP/USD moves below 1.2650, it will likely gain significant downside momentum and head towards the next support level at the 20 EMA at 1.2560. Such a move would signal that GBP/USD experienced another false breakout of the key resistance level.

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

USD/CAD Daily Forecast – U.S. Dollar Loses Ground On Vaccine Hopes

USD/CAD Video 20.07.20.

Canadian Dollar Enjoys A Boost After AstraZeneca Reports Encouraging Early-Stage Results For Its COVID-19 Vaccine

USD/CAD moved closer to the low end of the current trading range between the support at 1.3500 and the resistance at the 20 EMA at 1.3580 as the U.S. dollar remained under pressure against a broad basket of currencies while WTI oil continued to trade above the $40 level.

The U.S. Dollar Index has settled below the 96 level and continues its downside move. Today, AstraZeneca reported positive early-stage trial results of its COVID-19 vaccine, providing support to riskier assets.

Interestingly, the vaccine news did not prevent gold from testing yearly highs which signals that safe haven buying has shifted from the American currency to gold.

In the longer run, this shift may present a problem for the U.S. dollar which has settled near lows that were reached back in June. In case the U.S. Dollar Index manages to get below 95.50, the U.S. dollar will gain more downside momentum.

This scenario will be bearish for USD/CAD which will likely find itself below the nearest support level at 1.3500.

Meanwhile, WTI oil fails to gain more upside momentum above the $40 level so Canadian dollar does not get additional support. In case oil moves above the nearest resistance at $41.50, commodity-related currencies like the Canadian dollar will get a boost.

Technical Analysis

usd cad july 20 2020

USD to CAD remains range-bound but trends closer to the low end of the current trading range at 1.3500. This support level has already been tested many times and proved its strength but continued U.S. dollar weakness against a broad basket of currencies increases risks of a downside breakout.

If this happens, USD to CAD will gain downside momentum and head towards the next support at 1.3440. If the downside momentum is strong, USD to CAD may quickly get below 1.3440 and move towards the next support at 1.3360.

On the upside, the 20 EMA at 1.3580 remains the first resistance level for USD to CAD. The next resistance level is located at the 50 EMA, which has declined to 1.3640 and is set to decline further as USD to CAD stays below 1.3600.

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

Oil Mixed As Traders Wait For Stronger Catalysts

Oil Video 20.07.20.

U.S. Rig Count Continues To Fall

The recent Baker Hughes Rig Count report showed that the number of U.S. drilling rigs declined by 5 to 253. The number of U.S. rigs drilling for oil declined by 1 to 180.

Interestingly, current WTI oil prices have so far failed to stop additional declines in the number of U.S. drilling rigs. One of the main risks for the oil market is a rapid increase in U.S. oil production which has currently stalled at 11 million barrels per day (bpd).

The falling U.S. rig count is a bullish factor for the oil market since it shows that current oil prices are not attractive enough to employ more drilling rigs and increase production levels.

The most recent inventory report showed that crude oil inventories decreased by 7.5 million barrels. At this point, it looks like U.S. oil producers are not ready to increase production at current levels. The key question is whether demand was hurt by the recent surge in the number of new coronavirus cases in the U.S.

In case demand recovery continued, crude oil inventories will have a good chance to fall materially from current levels, providing more support to oil prices.

Has The Oil Market Found A Balance?

While a volatile commodity like oil can experience periods of consolidation from time to time, the current situation in the oil market is highly unusual given the current circumstances.

With so many moving parts including the speed of economic recovery, the rising number of new COVID-19 and hopes for a vaccine (AstraZeneca has just reported positive Phase 1 trial results), oil could have easily experienced more volatility. Instead, it remains glued to the $40 level.

Currently, it looks like the oil market has found a balance in which positive and negative catalysts outweigh each other. On the one hand, the economic recovery continues to progress while biotech companies report positive early-trial results for their COVID-19 vaccines.

On the other hand, the number of new coronavirus cases continues to rise, increasing risks of new lockdowns which will hurt oil demand. In addition, inventories remain at high levels and put pressure on the potential oil price upside.

For now, no catalyst was able to tip the scales but it’s hard to expect that the current fragile balance will last long.

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

Silver Price Daily Forecast – Silver Breaks Above $19.50

Silver Video 20.07.20.

Gold/Silver Ratio Continues Its Downside Move

Silver managed to get above the resistance level at $19.50 and continues its upside move as gold is testing yearly highs while the U.S. dollar is flat against a broad basket of currencies.

The key topics of the day are the ongoing negotiations about the EU recovery fund and the upcoming Phase 1 trial results of COVID-19 vaccine made by AstraZeneca.

The currency market is undecided about what to expect, and the U.S. Dollar Index is mostly flat after testing multi-month lows. However, the downside trend of the U.S. dollar is still intact, which is bullish for precious metals including silver.

Meanwhile, gold tries to break to new highs as it is supported by uncertainty about economic recovery and continued money-printing from the world central banks.

Gold’s upside move attracts investment into the whole precious metal segment and is bullish for silver.

Gold/silver ratio broke to multi-month lows near the 92 level. The downside in gold/silver ratio continues, and pre-pandemic levels below 90 are now in sight.

Gold/silver ratio’s return to pre-pandemic levels has always been a material component of the bullish thesis for silver. I maintain my view that gold/silver ratio has very good chances to get back below 90 and settle at these levels.

Technical Analysis

silver july 20 2020

Silver gained additional upside momentum above the resistance level at $19.50 and continues to move higher. The nearest resistance level for silver is located at $20.00.

A move above $20.00 will be a very significant development for silver as it has not traded that high since 2016. In case silver manages to settle above this resistance level, it will have a chance to get to the test of 2016 highs at $21.15.

On the support side, the previous resistance at $19.50 will likely serve as the first support level for silver. If silver settles below $19.50, it will head towards the next support level at $19.00.

I’d expect that silver will receive material support at $19.00 as those traders who did not believe in the first breakout will try to establish their positions. A move below $19.00 will be very problematic for silver’s near-term upside momentum.

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

U.S. Stocks Mixed As Traders Wait For AstraZeneca’s COVID-19 Vaccine Data

AstraZeneca Set To Release Phase 1 Trial Results For Its COVID-19 Vaccine

S&P 500 futures are mixed in premarket trading as investors wait for the release of Phase 1 trial results of AstraZeneca‘s coronavirus vaccine which are due to be published today in The Lancet.

The market expects to hear good news as AstraZeneca shares have rallied in recent days in expectations of encouraging Phase 1 trial results.

While certain countries have had some success in containing the disease, the pandemic continues to progress. According to data from Johns Hopkins University, more than 14.5 million COVID-19 cases have been registered since the beginning of the pandemic.

In this situation, vaccine is the main instrument which will help the world to return to normal life. Thus, positive news on the vaccine front have the potential to significantly move the markets.

EU Leaders Continue To Discuss Coronavirus Stimulus Plan

EU leaders have recently arrived in Brussels to negotiate a massive coronavirus aid package. Today, they will begin the fourth day of talks.

The main problem is that a group of countries which includes Netherlands, Austria, Sweden, Denmark and Finland are opposed to providing grants to less frugal countries without additional conditions.

At this point, 350 – 400 billion euro out of the projected 750 billion euro recovery fund are expected to be distributed in form of non-repayable grants.

The Euro Area was hit hard by coronavirus and clearly needs additional stimulus. Currently, traders hope that the deal will be reached, but failure to negotiate additional stimulus package will likely deliver a severe blow to the world markets.

Gold Is Ready To Test New Highs

Gold continues to benefit from the unprecedented monetary stimulus from the world central banks and uncertainty regarding the timing of economic recovery.

Gold managed to settle above the psychologically important $1800 level and is currently trading near highs reached in the first decade of July.

The rising gold price environment creates a favorable setup for gold mining stocks, many of which still trade below highs reached back in May.

In the near term, a lot will depend on the above-mentioned EU recovery fund talks as successful negotiations will lead to more money-printing which will be bullish for precious metals.

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

GBP/USD Daily Forecast – Support At 20 EMA Stays Strong

GBP/USD Video 20.07.20.

U.S. Dollar Under Pressure As EU Recovery Fund Talks Continue

GBP/USD continues to trade near the 20 EMA at 1.2540 as the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index has settled below the 96 level and looks ready for the test of multi-month lows that were reached back in June.

The key topic for currency markets is the ongoing EU summit where bloc’s leaders try to negotiate a recovery fund deal.

In case the agreement is reached, riskier assets will likely get a boost while the U.S. dollar may find itself under additional pressure.

At this point, EU leaders failed to reach consensus as the fiscally frugal Netherlands, Austria, Denmark, Finland and Sweden want to impose significant controls on how the aid package is spent by the hard-hit southern EU countries.

However, it appears that the deal is not dead yet, and the downside trajectory of the American currency signals that traders are optimistic that the deal will be ultimately signed.

Coronavirus also remains a hot topic as the world gets closer to the 15 million cases mark. The U.S. has recorded almost 3.8 million cases since the beginning of the pandemic, and there are no signs of progress in the world’s hardest-hit country.

While the U.S. dollar has served as the safe haven asset of last resort during the current crisis, it looks like gold has taken this role, putting more pressure on the American currency.

Technical Analysis

gbp usd july 20 2020

GBP/USD remains in the local range between the material support at the 50 EMA at 1.2500 and the major resistance at 1.2650. Attempts to settle below the nearest support level at the 20 EMA at 1.2540 are met with increased buying activity.

In case GBP/USD manages to get below the support at the 50 EMA, it will likely develop material downside momentum and head towards the next significant support at 1.2350.

On the upside, GBP/USD needs to settle above the major resistance at 1.2650 to have a chance to establish an upside trend. If this happens, GBP/USD will head towards the next resistance at 1.2750.

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

USD/CAD Daily Forecast – Stuck Between Support At 1.3500 And 20 EMA

USD/CAD Video 17.07.20.

Canadian Dollar Fails To Gain Upside Momentum As Oil Continues To Trade Near The $40 Level

USD/CAD has once again failed to get out of the range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3580.

The U.S. dollar is losing ground against a broad basket of currencies, and the U.S. Dollar Index continues its attempts to settle below the 96 level. If these attempts are successful, the U.S. dollar may gain downside momentum which will be bearish for USD/CAD.

Today, the U.S. has reported that Building Permits have increased by 2.1% month-over-month in June. Meanwhile, Housing Starts grew by 17.3%. The economic data continues to point to a solid economic rebound in June.

However, the picture may be not as optimistic in July. The preliminary Michigan Consumer Sentiment report for July showed that consumer sentiment decreased from 78.1 in June to 73.2 in July. Analysts expected that it will grow to 79.

Most likely, the coninued surge in the number of new coronavirus cases hurt consumer sentiment. This is a problem for a consumer-dependent economy like U.S.

However, the U.S. dollar, which has served as a safe haven asset of last resort during the current crisis, did not receive much support after the release of Michigan Consumer Sentiment report. It looks like safe haven buying is currently concentrated in gold which continues to trade near yearly highs.

Meanwhile, Canadian dollar fails to develop momentum as oil stays glued to the $40 – $41 range and does not provide additional support to commodity-related currencies.

Technical Analysis

usd cad july 17 2020

The technical picture for USD to CAD has not changed much during the recent trading sessions.

USD to CAD has strong support at 1.3500 which has already been tested many times. A move below this support level will be very dangerous for USD to CAD bulls as it can easily lead to a sell-off which could take USD to CAD closer to the next support level at 1.3440.

On the upside, USD to CAD needs to settle above the 20 EMA at 1.3580 to gain more upside momentum and head towards the test of the 50 EMA level at 1.3645.

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

Oil Stays Range-Bound Between $40 And $41

Oil Video 17.07.20.

Royal Dutch Shell CEO Believes That Oil Demand Will Stay Under Pressure For Years

Now that the acute phase of the crisis has passed, oil majors start thinking about their strategy for the future. A number of majors, including Royal Dutch Shell, have lowered their long-term oil price estimates and decided to cut capex.

Shell CEO Ben van Beurden thinks that the oil market will not experience a V-shaped recovery as demand for mobility will be lower even after the pandemic.

Shell believes that the pandemic has led to a lasting change in lifestyle which will put pressure on future oil demand.

In my opinion, it is too early to talk about long-lasting changes. The negative impact from increased work-from-home in developed countries could be easily offset by rising demand from developing nations when they finally manage to contain the pandemic.

However, such views from top CEOs clearly impact the market mood. WTI oil has been trying to get above the nearest resistance at $41.50 for many days and traders may get nervous if there is no upside breakout in the upcoming trading sessions since the recent inventory data was bullish.

Russia Plans To Direct Additional Oil Production To The Local Market

Yesterday, we discussed the words of Saudi energy minister who stated that the increase of oil production by 2 million barrels per day (bpd) will have little impact on the market since most of this oil would be consumed internally.

These words have recently been confirmed by Russian deputy energy minister Pavel Sorokin who stated that the ministry recommended to direct additional oil production to the local market in order to create reserves.

Russia plans to increase refinery output in August and boost the production of gasoline.

Such plans are bullish for oil since oil prices are sensitive to levels of exports from leading oil producers. If exports stay mostly unchanged, the increase of production will not have a negative impact on the market.

Still, it looks like oil will need additional catalysts to continue the current upside trend. The continued surge in the number of new coronavirus cases and partial lockdowns in various parts of the world pose a material downside risk for oil.

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

Silver Price Daily Forecast – Support At $19.00 Is Strong

Silver Video 17.07.20.

Silver Maintains Upside Momentum

Silver tested the support level at $19.00 and quickly rebounded back above this level as gold continued to trade closer to yearly highs while the U.S. dollar lost ground against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to settle below the 96 level. A move below 96 could lead to increased downside momentum and push the American currency towards yearly lows that were reached back in March.

This scenario will be bullish for silver and other precious metals as weaker dollar makes them less expensive for investors who have other currencies.

Gold made another attempt to settle below $1800 but the support at this level is strong. Currently, gold is consolidating above $1800 and has good chances to continue the upside move without a pullback which will be a favorable scenario for the whole precious metal segment.

Gold/silver ratio tried to rebound but met significant resistance at the 95 level and returned back below 94. In my opinion, gold/silver ratio maintains solid downside momentum and has the potential to go lower which will be bullish for silver.

Technical Analysis

silver july 17 2020

 

Silver made an attempt to settle below the support at $19.00 but failed to develop any downside momentum and returned back above this support level.

At this point, silver’s upside momentum remains intact, and silver has good chances to get to the test of the nearest resistance level at $19.50.

RSI has declined closer to moderate levels so there is sufficient room to build more momentum in case the right catalysts emerge.

In case silver gets above $19.50, it will head towards the next resistance level at $20.00.

On the support side, the nearest support level is $19.00. This support level has just been tested and proven its strength.

This test was very important since silver experienced material downside after failure to settle above $19.00 at the beginning of this year, so a move below $19.00 could have led to short-term panic among silver bulls.

In this scenario, silver would have gained downside momentum and headed towards the next support level at the 50 EMA at $18.50.

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

U.S. Stocks Set To Open Higher As Housing Starts Increased By 17.3% In June

Netflix Adds 10.1 Million Subscribers But Mr. Market Is Not Pleased

Netflix has recently provided its second-quarter report, missing analyst estimates on earnings and beating them on revenue.

The company reported revenue of $6.15 billion and earnings of $1.59 per share which was not sufficient enough to please the market. Netflix added 10.1 million net global subscribers but traders hoped for a truly blowout quarter.

In addition, Neftlix guided for just 2.5 million net global subscripers to be added in the third quarter.

Netflix shares were up 63% before the earnings release so it was hard to match elevated expectations.

Not suprisingly, Netflix shares found themselves under presure after the release of its earnings report and are losing about 8% in premarket trading.

Netflix report highlights a potential problem for other high-flying tech stocks – expectations are so high that it could be nearly impossible to match them.

European Leaders Try To Negotiate A Recovery Fund

European leaders are meeting to discuss a giant 750 billion euro recovery fund needed to take EU out of recession.

These negotiations will have a material impact on the world markets since failure to come up with a deal will put pressure on commodities and earnings forecasts for multinationals.

At this point, more frugal northern countries do not want to subsidize the already indebted sourthern EU members.

For example, Dutch Prime Minister Mark Rutte has stated that there was a less than 50% chance that a recovery fund deal would be reached during the current summit.

Housing Starts Grow By 17.3% In June

The U.S. has just provided Building Permits and Housing Starts data for June.

Building Permits increased by 2.1% and stay materially lower than pre-pandemic levels. This is not surprising since the economy will need more time to get back to normal while the continued surge in the number of new coronavirus cases threatens the current recovery.

Meanwhile, Housing Starts increased by 17.3% in June. This is a direct result of Building Permits’ growth of 14.1% back in May.

In short, the economic data for June tells a story of robust recovery. The key question is whether the recent problems on the coronavirus front are hurting the recovery in July.

S&P 500 futures are gaining some ground after the release of economic reports.

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

GBP/USD Daily Forecast – Flat Above Support At 20 EMA

GBP/USD Video 17.07.20.

Demand For Riskier Assets Under Question As The Number Of New COVID-19 Cases Surge

GBP/USD stays above the 20 EMA at 1.2535 as the U.S. dollar is flat against a broad basket of currencies despite the surge in the number of new coronavirus cases and increasing U.S. – China tensions.

The U.S. Dollar Index has settled above the 96 level after an unsuccessful attempt to get below June lows. The American currency is supported by increase in demand for safe haven assets which is driven by the worsening situation on the coronavirus front.

On Thursday, the U.S. has reported more than 77,000 new cases which was an all-time high. Elsewhere in the world, Brazil crossed the 2 million cases mark while India registered more than 1 million cases since the beginning of the pandemic.

According to a Reuters report, U.S. officials are discussing the possibility of banning all Chinese Communist Party members from travelling to U.S. If this idea is implemented, U.S. – China relations will hit a new low, increasing risks for the fragile economic recovery.

Worries about virus and another round of trade war between U.S. and China are offset by positive economic data. Yesterday, the U.S. reported that Retail Sales grew by 7.5% month-over-month while analysts expected growth of just 5%.

However, the strong rebound of consumer activity may hit an obstacle as generous unemployment benefits are set to expire at the end of July while the increase in the number of new coronavirus cases puts consumer sentiment at risk.

Technical Analysis

gbp usd july 17 2020

GBP/USD has settled above the 20 EMA at 1.2535 which serves as the first material support level. In case GBP/USD settles below the 20 EMA, it will head towards the next support level at the 50 EMA at 1.2490.

A move below the 50 EMA will be bearish for GBP/USD and signal the beginning of the local downside trend. In this scenario, GBP/USD may gain additional downside momentum and head towards the next material support level at 1.2350.

On the upside, the high end of the current trading range at 1.2650 is a very strong resistance level for GBP/USD. Most likely, broader U.S. dollar weakness will be necessary for GBP/USD to get above this level.

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

USD/CAD Daily Forecast – Support At 1.3500 Was Tested Again

USD/CAD Video 16.07.20.

Canadian Dollar Failed To Develop More Upside Momentum

USD/CAD is still located in the range between the support at 1.3500 and the resistance at the 20 EMA at 1.3580 after an unsuccessful attempt to settle below 1.3500.

The U.S. dollar is flat against a broad basket of currencies after the release of U.S. economic data, and the U.S. Dollar Index has settled near the 96 level.

Initial Jobless Claims report indicated that 1.3 million Americans filed for unemployment benefits in a week. Currently, Initial Jobless Claims are stuck at high levels.

At the same time, Continuing Jobless Claims declined to 17.3 million which is a healthy sign that the job situation has started to improve. It remains to be seen whether the reintroduction of certain virus containment measures in some U.S. states will have a visible impact on country-wide job trends.

In Canada, ADP Employment Change report for June showed that private businesses added 1.05 million jobs in June as the economy reopened.

U.S. Retail Sales gained 7.5% month-over-month in June as consumers were supported by generous unemployment benefits. The key question for the market is what will happen when the current support ends.

China may have just provided an answer to this question as its retail sales remained under pressure in June on a year-over-year basis despite the fact that China has managed to contain the virus several months ago.

Technical Analysis

usd cad july 16 2020

USD to CAD did not manage to settle below the support level at 1.3500 and remains in the range between 1.3500 and the 20 EMA at 1.3580.

A move below the support at 1.3500 will likely lead to a rapid sell-off since traders had plenty of time to build long positions near this level so their protective stops are likely located somewhere below 1.3500.

In this scenario, USD to CAD will quickly head towards the next support level at 1.3440. A move below 1.3440 will open the way to the next support at 1.3360.

On the upside, the first important resistance level for USD to CAD is located at the 20 EMA at 1.3580, followed by the major resistance at the 50 EMA at 1.3645.

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

Oil Stays Below The Major Resistance Level At $41.50

Oil Video 16.07.20.

Oil Fails To Gain Momentum After Bullish Inventory Report

On Wednesday, WTI oil failed to gain momentum after the release of EIA Weekly Petroleum Status report which showed that crude inventories declined by 7.5 million barrels.

On Thursday, the same pattern continues as oil fails to gain more ground and stays below the resistance level at $41.50.

Yesterday, Saudi energy minister stated that OPEC+ decision to reduce production cuts from 9.6 million barrels per day (bpd) to 7.6 million bpd will have little impact on the market as the biggest part of the supply increase will be consumed internally by OPEC+ members.

This increase is expected due to the continued economic rebound after the acute phase of the coronavirus crisis. In addition, August is the hottest summer month so traders should expect that demand for air conditioning and holiday-related transportation will increase.

Now that inventories have finally started to fall, oil should have better chances to develop more upside momentum and continue the previous upside trend. However, it looks like oil will need additional catalysts to get to higher levels as several risks are keeping it glued to the $40 level.

What Keeps Oil Glued To The $40 Level?

In my opinion, there are several factors that currently prevent oil from getting to higher levels.

The first factor is the risk posed by uncontained coronavirus pandemic. The situation on the virus front is not getting better. According to data from Johns Hopkins University, the U.S. has already recorded 3.5 million cases of coronavirus since the beginning of the pandemic. In addition, the country has just reported a record daily increase in the number of new coronavirus cases.

The second factor in play is the fear of higher U.S. production in case of price upside. Higher prices will allow U.S. oil firms to hedge their production and facilitate a longer-term upside trend in production.

The third factor is the high inventory levels. The inventory overhang is a material obstacle on oil’s way up so any decrease in crude inventories is an important step on the road to higher oil prices.

At this point, it looks like oil will need continued declines in inventory levels together with positive demand data to have sustainable upside above $41.50.

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

Silver Price Daily Forecast – Silver Tries To Get Above $19.50

Silver Video 16.07.20.

First Test Of Resistance At $19.50 Yields No Results

Silver continues to trade above the $19.00 level but its first attempt to get above the nearest resistance at $19.50 was not successful.

Meanwhile, the U.S. dollar is flat against a broad basket of currencies while gold lacks momentum but remains above the psychologically important $1800 level.

The U.S. Dollar Index has settled near the 96 level after an attempt to rebound. The U.S. has recently released important economic reports but they did not have much impact neither on silver nor on American currency.

Initial Jobless Claims were 1.3 million while Continuing Jobless Claims declined to 17.3 million. Retail Sales report showed solid growth of 7.5% on a month-over-month basis but it remains to be seen whether the current momentum will continue when generous unemployment benefits come to an end.

Gold is under minor pressure today as it continues to consolidate above the $1800 level. The current upside trend stays intact, and gold has good chances to get to new highs, providing support to the whole precious metal segment including silver.

Gold/silver ratio is rebounding after declining to the 93 level but stays in the downside trend. I maintain my opinion that gold/silver ratio has decent chances to return to pre-pandemic levels below 90. Such a move would provide material support for silver.

Technical Analysis

silver july 16 2020

Silver made an attempt to get above the resistance level at $19.50 but failed to develop additional momentum. However, silver maintains solid chances for a successful test of this level.

In this case, silver will gain more upside momentum and head towards the next resistance level at $20.00. A move above $20.00 will provide silver with a chance to establish a significant medium-term upside trend.

On the support side, the nearest material support for silver is located at the previous resistance level at $19.00. Traders will be watching this level closely since silver quickly moved lower after failure to settle above $19.00 at the beginning of this year.

In this light, traders will be afraid of a false breakout. A move below $19.00 may lead to a sell-off which will take silver closer to the next support level near the 20 EMA below $18.50.

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

U.S. Stocks Set To Open Lower Despite Solid Retail Sales Growth

Continuing Jobless Claims Decline To 17.34 Million

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

Initial Jobless Claims report showed that 1.3 million Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 1.25 million.

Meanwhile, Continuing Jobless Claims declined from 18.1 million to 17.3 million. The report was better than the analyst consensus of 17.6 million.

I’d note that Initial Jobless Claims remain stubbornly high but Continuing Jobless Claims are showing signs of improvement which means that some people who lost their jobs were able to find new employment opportunities.

S&P 500 futures are under pressure in the premarket trading session after the release of employment reports. Most likely, the market needs more catalysts to continue the current upside trend since stocks are at very high levels.

Retail Sales Report Shows Solid Growth

U.S. Retail Sales grew by 7.5% month-over-month in June compared to analyst consensus which called for growth of 5%. On a year-over-year basis, Retail Sales increased by 1.1%.

A recent Reuters report suggested that people were spending more thanks to generous unemployment benefits so the strength of Retail Sales is not suprising.

In my opinion, the market will start evaluating the future scenario when the support from generous unemployment benefits will come to an end.

China GDP Grows By 3.2% Year-Over-Year In The Second Quarter

China GDP gained 3.2% in the second quarter after contracting by 6.8% in the first quarter. This news put pressure on Asian markets and also impacted the early trading of S&P 500 futures as traders hoped for bigger growth.

Retail Sales declined by 1.8% year-over-year in June while analysts expected that the report will show growth. China was the first country which was hit by coronavirus so analysts and traders watch its economic data closely to evaluate the potential recovery path for other countries.

The slowdown in consumer activity will be more problematic for developed Western countries which heavily rely on the services industry which was severely hit by coronavirus-related restrictions.

At this point, economic data from China does not promise a swift recovery of consumer activity. However, investors should keep in mind that China focused on helping industries rather than on providing direct support to citizens.

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

GBP/USD Daily Forecast – Resistance At 1.2650 Stays Strong

GBP/USD Video 16.07.20.

Demand For Safe Haven Assets Increases As China’s Retail Sales Disappoint

GBP/USD is losing ground after another unsuccessful attempt to settle above 1.2650 as the U.S. dollar rebounds against a broad basket of currencies.

The U.S. Dollar Index found support below the 96 level and tries to gain some upside momentum. Continued tensions between U.S. and China as well as weak China’s retail sales provide support to safe haven assets like the U.S. dollar.

China’s retail sales declined by 1.8% in June while analysts expected growth of 0.3%, highlighting the long-lasting weakness in consumer activity. This is a warning sign for economies which are more dependent on consumer activity like the U.S.

The UK has just released the Claimant Count Change report for June. The report was much better than expected at -28,100 compared to analyst consensus of 250,000.

Unemployment Rate for May was also better than expected at 3.9% compared to analyst consensus of 4.2%.

Today, the U.S. will provide several reports which have the potential to move the markets.

U.S. Retail Sales are expected to increase by 5% month-over-month in June. A recent Reuters report suggested that those who received unemployment benefits spent more than when they were working so the Retail Sales report has the potential for a positive suprise.

That said, markets may focus on the future when the generous unemployment benefits will come to an end.

In addition, the U.S. will release new Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are expected to stay high at 1.25 million while Continuing Jobless Claims are projected to drop to 17.6 million.

Technical Analysis

gbp usd july 16 2020

GBP/USD has once again tested the high end of the current trading range at 1.2650 but failed to settle above this resistance level. As a result, GBP/USD has declined back towards the nearest support level at the 20 EMA at 1.2530.

In case GBP/USD moves below this level, it will head towards the major support level at the 50 EMA at 1.2490.

A move below the 50 EMA will allow GBP/USD to gain more downside momentum and start a new near-term downside trend which can take it closer to the low end of the current trading range at 1.2250.

On the upside, the resistance at 1.2650 remains a true wall for GBP/USD which needs significant upside catalysts to settle above this level.

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

USD/CAD Daily Forecast – Support At 1.3500 In Sight

USD/CAD Video 15.07.20.

Vaccine Hopes Boost Demand For Riskier Assets Like Canadian Dollar

USD/CAD returned back to the previous trading range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3585 as the U.S. dollar lost ground against a broad basket of currencies amid hopes for COVID-19 vaccine.

The U.S. Dollar Index continued its downside move and tested the 96 level. Currently, the U.S. Dollar Index is located not far from lows reached in June. In case the U.S. Dollar Index settles below these lows, USD/CAD will find itself under increased pressure.

The Bank of Canada decided to leave its interest rate unchanged at 0.25%, in line with analysts’ consensus. The central bank stated that economic growth would not return to pre-pandemic levels until 2022 which is not surprising as economic growth forecasts have been steadily revised to the downside since the beginning of the pandemic.

In the U.S., Industrial Production increased by 5.4% in June on a month-over-month basis. Manufacturing Production grew by 7.2%. Both reports were better than analyst expectations.

On a year-over-year basis, the situation continues to look grim as Industrial Production declined by 10.8% while Manufacturing Production declined by 11.2%.

Currently, markets are driven by hopes for a vaccine. If this optimism prevails, riskier assets like the Canadian dollar will get additional support, and USD/CAD may fall below the support level at 1.3500.

Meanwhile, oil continues its attempts to settle above the nearest resistance at $41.50. A move above this level will be bearish for USD/CAD.

Technical Analysis

usd cad july 15 2020

USD to CAD failed to stay above the 20 EMA and moved back into the previous trading range. The nearest support level for USD to CAD is located at 1.3500. This is a very important level which has been tested several times in recent months.

A move below 1.3500 will likely lead to a sell-off as it will signal that USD to CAD is ready to return to the downside trend. In this scenario, USD to CAD may quickly find itself at the next support level at 1.3440.

On the upside, the 20 EMA at 1.3585 is the first resistance level for USD to CAD, followed by resistance at the 50 EMA at 1.3650.

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

Oil Attempts To Gain More Momentum As Crude Inventories Decrease

Oil Video 15.07.20.

U.S. Crude Oil Inventories Decrease By 7.5 Million Barrels

EIA Weekly Petroleum Status report confirmed yesterday’s API Crude Oil Stock Change report and showed that crude oil inventories decreased by 7.5 million barrels.

The main reason for this decrease is a major drop in U.S. crude oil imports which averaged 5.6 million barrels per day (bpd), a decline of 1.8 million bpd compared to the levels seen in the previous week.

Gasoline inventories decreased by 3.1 million barrels while distillate fuel inventories decreased by 0.45 million barrels.

The U.S. domestic oil production remained flat at 11 million bpd. It is obvious that the U.S. domestic production has stabilized at current levels and will not decline unless WTI oil prices dive below the $40 level.

The report looks rather bullish for oil since oil inventories decreased more than analysts expected. At the same time, the main driver for the decrease is a decline in imports so some traders would prefer to see additional positive catalysts before betting on oil price upside from current levels.

Saudi Arabia’s Energy Minister Signals That OPEC+ Will Reduce Production Cuts

Not surprisingly, Saudi Arabia signaled that OPEC+ will transfer to a new phase of production cuts as the market situation has materially improved.

This move is widely expected and should not put pressure on the market. In addition, Saudi Arabia continues to put pressure on countries who previously failed to meet their quotas.

Thus, the transfer from production cuts of 9.6 million bpd to the new level of 7.6 million bpd will be gradual since laggards will have to make additional production cuts in August.

The key question is whether WTI oil has enough catalysts to get above the nearest resistance at $41.50 and continue the upside move.

On the one hand, the demand for oil is rebounding while inventories have finally started to fall.

On the other hand, the U.S. oil production has bottomed and is ready to increase if prices go up. In addition, new lockdowns pose a threat to current oil demand recovery, although markets believe that a vaccine will soon solve the problem.

In my opinion, WTI oil has decent chances to develop additional upside momentum from current levels but failure to do this in the upcoming trading sessions could lead to a sell-off.

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