Oil Settles Above The Key $40 Level

Oil Video 06.07.20.

Oil Fails To Get Significant Upside Momentum

Oil managed to settle above the key $40 level but did not get much momentum as the rising number of COVID-19 cases in the U.S. kept oil prices in check.

According to data from Johns Hopkins University, the U.S. has already recorded almost 2.9 million cases, and the recent data implies that the spread of the coronavirus in the U.S. is increasing.

However, a recent Reuters report highlighted the fact that traffic in some affected states did not show signs of significant weakness which is bullish for the oil market.

At this point, it looks like the oil market will continue to ignore any negative developments on the coronavirus front until it sees that additional virus containment measures have tangible negative impact on oil demand.

So far, oil demand has been increasing, and this upside trend provided material support to oil prices. Tomorrow, traders will have a chance to evaluate the new API Crude Oil Stock Change report which will show whether the increase of demand puts pressure on crude inventories.

The Spread Between The Front-Month Contract And Longer-Dated Contracts Continues To Narrow

During the acute phase of the coronavirus crisis, the spread between the front-month contract and longer-term contracts has been significant as traders were worried about the availability of oil storage in the near term.

At this point, this spread has almost disappeared. The spread between the front-month August 2020 contract and the December 2020 contract is about 50 cents.

This is a significant indication that the market is rather tight thanks to coordinated production cuts from OPEC+ and natural production cuts from U.S. oil producers.

Current OPEC+ production cuts of 9.6 million barrels per day (bpd) are set to end in July, when the group will transfer to production cuts of 7.6 million bpd. Originally, the plan implied production cuts of 9.7 million bpd but Mexico was not ready to continue the initial cuts as it had big plans for its oil industry.

The current futures curve is telling us that the market is well-prepared for the upcoming increase of oil production from OPEC+ countries. In case the current optimism of the equity markets finally finds its way to the oil market, oil will have more room for upside.

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

Silver Price Daily Forecast – Silver Gets Closer To $18.50

Silver Video 06.07.20.

U.S. Dollar Weakness Provides Additional Support To Silver

Silver enjoyed upside and headed towards the test of the nearest resistance level below $18.50 as the U.S. dollar lost ground against a broad basket of currencies while gold remained close to yearly highs.

The American currency is having a bad day as the U.S. Dollar Index declined below the 97 level. Previously, the U.S. Dollar Index has stayed in the range between 97 and 97.5. In case it manages to settle below 97, the U.S. Dollar Index may develop downside momentum.

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

Meanwhile, gold continues its march towards $1800. While the stock market is very optimistic about the economic recovery, the continued upside in the gold market shows that traders want to protect themselves against a potential market sell-off. In addition, the rampant money-printing from the world central banks continues to provide support to the precious metal segment.

In a bullish move for silver, gold/silver ratio declined closer to 97 and stays below the 20 EMA at 98.90. Back at the beginning of June, gold/silver ratio was near 95, and a return to these levels will provide additional support to silver while the return to the pre-pandemic levels below 90 would be a major bullish catalyst.

Technical Analysis

Silver July 6 2020

Silver has managed to settle above $18.00 and continues its upside move. Currently, silver is trying to test the nearest resistance level below $18.50. The move to $18.50 has been gradual and silver formed a solid base so it has good chances to get above $18.50.

In this scenario, silver will likely get additional upside momentum and head towards the test of the major resistance level at $19.00. Silver has already been near $19.00 in January and February of 2020 but each attempt to get above this level was followed by a rapid sell-off. This time, silver has much better chances to get above $19.00.

On the support side, the nearest support level for silver is located at the 20 EMA at $17.75, followed by a major support level at $17.50.

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

U.S. Stocks Set To Open Higher As Traders Bet On Swift Recovery

The Stock Market Continues To Ignore Coronavirus Risks

S&P 500 futures are up more than 1% in premarket trading as traders bet on the continuation of economic recovery.

The were no good news on the coronavirus front over the weekend. According to data from Johns Hopkins University, the world has already registered more than 11.4 million coronavirus cases. The number of registered cases in the U.S. is close to 2.9 million.

Australia has decided to close borders between two states with the biggest population as it struggled to contain the second wave of the disease. India has recently surpassed Russia and entered the top-3 by the number of registered COVID-19 cases.

However, the stock market does not believe that any problems on the healthcare front will lead to new serious lockdowns. In this situation, traders are focused on economic reports which mostly come better than expected.

Analysts Expect Material Improvement In Composite PMI For June

Today, the U.S. is set to provide Services PMI and Composite PMI reports for June. Analysts expects major improvements as Services PMI is projected to grow from 37.5 to 46.7 while Composite PMI is set to increase from 37 to 46.8.

Given the recent market optimism, better-than-expected reports will likely provide an additional boost for stocks.

At the same time, the market is so focused on the economic recovery that disappointing reports may cause a temporary sell-off.

Gold And Oil Show That Some Fear Is Still Present In The Global Markets

While stocks are trading as if there is no pandemic at all, gold and oil show that the economy is not out of the woods yet.

Gold continues its attempts to get to the $1800 level. Gold is used as a hedge against potential market sell-off and continues to gain ground together with the stock market. This is a very bullish setup for gold mining stocks.

Meanwhile, WTI oil prices are struggling to develop upside momentum above $40 as traders fear that the increased number of coronavirus cases in the U.S. can lead to new virus containment measures and hurt oil demand in the midst of the driving season.

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

GBP/USD Daily Forecast – British Pound Gains Ground As Traders Focus On Recovery

GBP/USD Video 06.07.20.

Recovery Hopes Provide Support To Riskier Assets

GBP/USD continues to trade near 1.2500 as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the 97 level as global markets ignored the continued increase in the number of new coronavirus cases and focused on the economic recovery.

Today, traders will digest final Services PMI and Composite PMI reports from the U.S.. Services PMI is expected to increase from 37.5 in May to 46.7 in June while Composite PMI is projected to grow from 37 to 46.8.

Any positive suprise on the PMI front will likely provide additional support to riskier assets and could put more pressure on the U.S. dollar.

The UK will release Construction PMI and New Car Sales data for June. Construction PMI is forecast to jump from 28.9 in May to 47 in June as the British economy reopened after the serious lockdown. New Car Sales are expected to stay weak as consumers need time to return to their normal lives and plan big purchases.

All recent economic data pointed to a fast economic recovery so global markets were bullish on riskier assets. However, it remains to be seen whether economic numbers will point to a continued fast recovery in the future as the big size of the initial rebound is due to the effect of a low base.

Technical Analysis

gbp usd july 6 2020

GBP/USD managed to get out of the local downside channel and continues its attempts to gain more upside momentum.

The nearest resistance level is located at the recent highs near 1.2530. In case GBP/USD manages to settle above this level, it will head towards the high end of the current trading range at 1.2650.

On the support side, the first material support level is located at the 50 EMA near 1.2450. A move below the 50 EMA will mark a return to the local downside trend. In this scenario, GBP/USD will head towards the next support level at 1.2350.

While GBP/USD experienced significant volatility in recent months, it continues to stay in the trading range between 1.2250 and 1.2650 and will need significant catalysts to get out of this range and start a new trend.

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

USD/CAD Daily Forecast – Range-Bound Trading Continues

USD/CAD Video 03.07.20.

U.S. Dollar Fails To Develop Upside Momentum

USD/CAD is flat in quiet trading as the U.S. dollar lacks direction against a broad basket of currencies while oil stays glued to the $40 level.

The recent economic data has provided support to riskier currencies so USD/CAD has settled below the 20 EMA at 1.3610. At the same time, the rapid increase in the number of new coronavirus cases in the U.S. kept optimism in check and provided some support to the U.S. dollar.

As a result, the U.S. Dollar Index failed to get momentum and settled in the range between 97 and 97.5. Recently, it has made several attempts to settle above 97.5 and one serious attempt to get below 97, but each of these attempts failed due to lack of catalysts.

For now, the potential risks of additional virus containment measures are offset by optimism about the speed of economic recovery. If this balance is not changed in the near term, USD/CAD has decent chances to spend the upcoming trading sessions in a range.

At the same time, the market may be very sensitive to additional positive or negative data so traders will have to monitor both COVID-19 numbers and economic data to determine the market mood.

Technical Analysis

usd cad july 3 2020

USD/CAD continues to trade below the 20 EMA at 1.3610 and fails to get upside momentum. At this point, it looks like USD/CAD has found some minor support near 1.3550. This level has already been tested several times although it’s hard to say that the attempts to breach it to the downside were significant.

The main support level for USD/CAD is still located at 1.3500. A move below this level will lead to increased downside momentum as the current attempt to rebound after the major downside move in late May – early June will come to an end.

On the upside, the nearest resistance level is the 20 EMA at 1.3610. In case USD/CAD manages to get above this level, it will head towards the 50 EMA which has declined to 1.3690 and has more room to decline as USD/CAD stays at lower levels.

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

Oil Stays Glued To The Key $40 Level

Oil Video 03.07.20.

The Number Of U.S. Rigs Drilling For Oil Continues To Decline

U.S. domestic oil production has recently jumped from 10.5 million barrels per day (bpd) to 11 million bpd and remained at this level. The upside in the oil market is the main reason for the increase in production – oil prices near $40 per barrel allow more wells to be profitable.

Nevertheless, the number of U.S. rigs drilling for oil continues to trend down. As per the latest Baker Hughes Rig Count, the total number of U.S. rigs declined by 2 to 263 while the number of rigs drilling for oil declined from 188 to 185.

The continued decline in the number of oil rigs raises hopes that U.S. oil production will not start a new upside trend anytime soon. The market has already reacted nervously to the recent increase of domestic production, and WTI oil was not able to get upside momentum above the $40 level.

Any additional increase in domestic production will come at a very inopportune time as the rapid increase in the number of new coronavirus cases could lead to the implementation of new virus containment measures that will hurt demand for oil.

In this situation, oil bulls should be glad to see the constant downtrend in the number of U.S. oil rigs.

Russia Sticks To OPEC+ Deal

When the OPEC+ deal was reached, some traders were worried that Russia will fail to live up to its promises as it has always had technical difficulties with quickly adjusting its oil production due to climate and geology.

This time, Russia is very serious about the deal. Preliminary reports for June showed that Russia produced 9.32 million bpd including condensate which was not included in the deal.

In May, Russia produced about 0.92 million bpd of condensate so if we assume that condensate production levels were intact, Russia finished June with production of 8.4 million bpd. According to the OPEC+ deal, Russia had to cut production to 8.5 million bpd.

I recently wrote that Saudi Arabia was increasing pressure on those countries who failed to cut their production in line with the OPEC+ deal. As the main OPEC+ members, Saudi Arabia and Russia, are very determined to help the oil market reach balance at higher prices, I’d expect that efforts to force laggards to follow the deal will be successful.

For the oil market, such discipline is a major supportive factor.

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

Silver Price Daily Forecast – Silver Continues To Trade Near $18.00

Silver Video 03.07.20.

Silver Gets Support As Gold Stays Near Yearly Highs

Silver trades near the $18.00 level as the U.S. dollar is flat against a broad basket of currencies and gold stays close to yearly highs.

The U.S. has reported a record number of new coronavirus cases which could provide additional support to safe haven assets. However, the U.S. dollar did not gain much ground in light-volume trading due to the observance of Independence Day holiday.

The U.S. Dollar Index has firmly settled in the range between 97 and 97.5 and will likely need significant catalysts to get out of this range. A move above 97.5 could put some pressure on silver as stronger dollar is bearish for precious metals since it makes them more expensive for investors who have other currencies.

Gold maintains good chances to continue the current upside move, especially in the light of worsening situation with coronavirus in the U.S. Traders have already been buying gold as a way to protect themselves against the potential market sell-off, and a prospect of new lockdowns will be very bullish for gold.

Meanwhile, gold/silver ratio remains glued to the 20 EMA level at 99. Silver benefits from gold price upside as it attracts investment into the whole precious metal segment but it also needs healthy economy as industrial demand is a key component of demand for silver.

Technical Analysis

Silver July 3 2020

Silver has settled in the range between the support level at $17.50 and the resistance level near $18.50. Recently, silver made an attempt to settle back below $18.00 but received material support and has good chances to continue the upside trend.

A successful test of the resistance near $18.50 will open the way to the test of the major resistance level at $19.00.

However, I’d note that silver failed to settle above $19.00 in 2019 and 2020 although it made several attempts and even got above $19.00 for a few days in August 2019. In this light, silver will likely face serious resistance in case it gets to $19.00.

On the support side, silver will likely get some support at the 20 EMA at $17.70 while the main support level is located at $17.50.

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

U.S. Market Upside Threatened By The Rising Number Of Coronavirus Cases

U.S. Sets A New Coronavirus Record

The markets are closed today in observance of the Independence Day holiday but traders will still keep an eye on the developments on the coronavirus front.

The U.S. has recorded more than 55,000 coronavirus cases on Thursday, setting a new daily record for both the country and the world.

At this point, the stock market has mostly ignored the continued spread of the disease in the U.S as the economic data is pointing to a quick rebound.

The recent Non Farm Payrolls report showed that 4.8 million jobs were created in June. The Composite PMI report, which is expected to be released on Monday, is projected to show that Composite PMI has increased from 37 in May to 46.8 in June.

Numbers below 50 show contraction so the economy is not expected to be on an upward trajectory but the pace of decline is slowing down fast and a rebound is considered to be around the corner.

Most likely, the U.S. will continue to report scary coronavirus numbers during the next week. Thus, market’s optimism will be put to a serious test.

Gold Remains The Leader Among Safe Haven Assets

The rampant money-printing from the U.S. Federal Reserve has put some pressure on the U.S. dollar, and the U.S. Dollar Index is stuck between 97 and 97.5 after being as high as 103 in the acute phase of the crisis.

Meanwhile, traders’ attention has switched to gold which has recently managed to settle above the key resistance at $1750 and continues its upside move.

I’d note that many gold stocks are still well below the highs reached in May while gold has settled near yearly highs which creates a good setup for further upside in gold mining equities.

WTI Oil Is Still Struggling To Get Above The $40 Level

Another topic that is certainly worth following in the upcoming week is whether oil will be able to develop upside momentum above the $40 level.

Such a move will be bullish for the stock market because it will lift oil-related stocks and also because it will show that oil traders see signs of recovery.

Oil is a physical product so it is very sensitive to changes in supply/demand balance. The supply side is currently under control due to coordinated supply cuts, so tangible improvements on the demand side will immediately present themselves in the form of higher oil prices.

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

GBP/USD Daily Forecast – British Pound Tries To Gain More Upside Momentum

GBP/USD Video 03.07.20.

Riskier Assets Enjoy Support After Better-Than-Expected U.S. Employment Reports

GBP/USD continues to trade above the 50 EMA at 1.2450 as riskier assets remain supported by positive U.S. jobs data that was released yesterday.

U.S. Non Farm Payrolls report showed that the economy added 4.8 million jobs. The report was much better than the analyst consensus of 3 million. Meanwhile, Unemployment Rate declined from 13.3% to 11.1% as the economy continued to reopen and more workers were able to find new jobs.

Continuing Jobless Claims stayed high at 19.3 million which is worrisome but markets focused on the blowout Non Farm Payrolls report and supported riskier assets like the British pound.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, continues to trade in the 97 – 97.5 range. A move out of this range will lead to increased momentum in GBP/USD but so far the American currency has failed to develop such momentum.

The U.S. has recorded more than 55,000 new coronavirus cases on Thursday which is a new world record. It remains to be seen whether this data will provide support to the U.S. dollar which continues to serve as a safe haven asset of last resort or markets will ignore virus risks and focus on the improving economic data.

Technical Analysis

gbp usd july 3 2020

GBP/USD stays above the 20 EMA and the 50 EMA and continues its attempts to gain more upside momentum.

The nearest resistance is located near 1.2530. This resistance level has already been tested several times and proved its strength. In case GBP/USD gets above this resistance level, it will head towards the high end of the current trading range at 1.2650.

On the support side, the 20 EMA and the 50 EMA at 1.2450 serve as the first major support level for GBP/USD. If GBP/USD manages to settle below the 50 EMA, it will get back to the downside mode and head towards the next support level at 1.2350.

GBP/USD continues to be very volatile in the wide trading range between 1.2250 and 1.2650. Inside this range, GBP/USD can change its local trend very quickly so traders should stay alert and be prepared for fast moves.

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

USD/CAD Daily Forecast – Resistance At The 20 EMA Stays Strong

USD/CAD Video 02.07.20.

Canadian Dollar Is Mostly Flat As WTI Oil Fails To Gain Momentum Above $40

USD/CAD  continues to trade below the 20 EMA at 1.3615 as the U.S. dollar is mostly flat against a broad basket of currencies while WTI oil is testing the $40 level.

The U.S. Dollar Index tried to settle below the 97 level but received material support and returned back into the 97 – 97.5 range.

Today, the U.S. has released many employment reports which provided support to global markets as they showed signs of recovery.

Non Farm Payrolls report indicated that as much as 4.8 million jobs were added in June, while Unemployment Rate declined to 11.1%. There is a reason for caution as Initial Jobless Claims remained high at 1.43 million while Continuing Jobless Claims were 19.3 million.

However, markets are ready to shrug off any worrisome data if any report provides a reason for optimism so traders did not pay much attention to Initial Jobless Claims and Continuing Jobless Claims reports.

In turn, Canada released the final reading of Manufacturing PMI for June which showed that Manufacturing PMI increased from 40.6 to 47.8. Numbers below 50 show contraction.

Technical Analysis

usd cad july 2 2020

USD/CAD did not manage to settle above the 20 EMA at 1.3615 and continues to trade in a range between the support at 1.3500 and the 20 EMA. Currently, USD/CAD stays close to the high end of this range and makes attempts to get above the 20 EMA.

If these attempts are successful, USD/CAD will head towards the next resistance level at the 50 EMA at 1.3700.

Back in June, USD/CAD spent many trading sessions between the support at 1.3500 and the 20 EMA, and history may repeat itself in case neither the U.S. dollar nor the Canadian dollar get enough catalysts for a decisive move.

The U.S. Dollar Index looks stuck in the 97 – 97.5 range. Without a move out of this range, USD/CAD could have problems with developing significant momentum.

On the support side, a move below 1.3500 will lead to increased interest in USD/CAD as bears will try to create more downside momentum and push it closer to the next support at 1.3440.

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

Oil Continues Its Attempts To Settle Above $40

Oil Video 02.07.20.

Saudi Arabia Increases Pressure On Laggards

In June, OPEC production fell to multi-decade lows as Saudi Arabia led the effort to cut production and achieve better supply/demand balance.

However, Iraq, Nigeria and Angola failed to cut production in line with their quotas. According to Wall Street Journal, Saudi Arabia has threatened to start a price war against these countries if they do not fullfill their promises and cut oil production in line with the OPEC+ deal.

At this point, this report did not put any pressure on oil prices as oil continues its attempts to settle above the $40 level after the release of better-than-expected inventory report.

In my opinion, the risks of a true price war are low. Saudi Arabia has enough weight to put significant pressure on laggards and force them into agreed production cuts.

Most likely, Angola, Nigeria and Iraq will have no choice but to follow the deal as Saudi Arabia could easily reach out to their customers and offer them oil at a lower price.

Oil Stuck At Sea Finds Its Way Back Into The Market

According to a recent Reuters report, the volume of oil stored at sea tankers has started to decrease as demand improved and oil prices increased.

Importantly, the spread between the front-month contract and the longer-dated contracts has significantly narrowed. Currently, the spread between WTI August 2020 contract and the December 2020 contract is just 60 cents.

For Brent oil, the spread is almost non-existent. Previously, such a spread was very significant as the market was worried about near-term oil storage capacity but anticipated that the situation will get better closer to the end of the year.

Now, such fears are gone, and the decisive production cuts from OPEC+ together with natural production cuts from U.S. producers have materially improved the market situation.

Since storing oil at sea comes at a cost, it makes little sense to wait for the end of the year while making payments to tanker owners if the spread between the front-month contract and the longer-dated contracts is small.

In the near-term, excessive oil from tankers may put some pressure on the oil market but working through this oil is very important to achieve better oil prices in the future.

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

Silver Price Daily Forecast – Silver Dives Below $18.00

Silver Video 02.07.20.

Solid U.S. Non Farm Payrolls Report Puts Pressure On Precious Metals

Silver is under pressure after the release of better-than-expected U.S. Non Farm Payrolls report which provided major support to the equity market and caused a sell-off in gold.

The report showed that the U.S. economy added 4.8 million jobs in June compared to analyst consensus of 3 million. Not surprisingly, the markets have interpreted this report as a major sign that a robust recovery is just around the corner so risk assets gained ground while safe haven assets found themselves under pressure.

Gold, which has recently tried to get close to the $1800 level, has declined closer to the key $1750 level. In fact, the whole precious metal segment is under pressure as silver, platinum and palladium are also losing ground.

Gold/silver ratio rebounded a bit but stays below the 20 EMA at 99.10. Gold/silver ratio has been mostly flat since mid-June although it made several attempts to get away from the 20 EMA level. At this point, it looks like additional catalysts are necessary to move gold/silver ratio in either direction.

Recently, silver tried to get above $18.50 as gold was rallying towards new highs but this attempt was not successful. Nevertheless, silver maintains solid chances to continue the upside move due to rampant money-printing from the world central banks and traders’ desire to use precious metals as a hedge against a potential equity market sell-off.

Technical Analysis

silver july 2 2020

Silver failed to settle above $18.50 and declined below $18.00. Importantly, silver did not found material support at $18.00 which has previously served as a resistance level.

Currently, silver is trading in the range between the support at $17.50 and the resistance near $18.50. In addition to the support level at $17.50, silver may also get some support at the 20 EMA at $17.70.

A move below $17.50 will likely lead to a rapid sell-off since it is highly likely that many traders have put their protective stops below this important level.

On the upside, silver will have to get above the resistance near $18.50 to continue the current upside trend and head towards the test of the major resistance level at $19.00.

While the recent downside move is disappointing for silver bulls, the upside trend remains intact, and silver still has decent chances to get to the test of yearly highs at $19.00.

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

U.S. Stocks Set To Open Higher As Non Farm Payrolls Report Easily Beats Expectations

Initial Jobless Claims Report Shows That 1.43 Million Americans Filed For Unemployment Benefits In A Week

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

Initial Jobless Claims were 1.43 million, down from 1.48 million in the previous week. Analysts expected Initial Jobless Claims of 1.35 million.

Continuing Jobless Claims were mostly flat at 19.3 million. The previous reading of 19.5 million was revised to 19.23 million. The analyst consensus called for Continuing Jobless Claims of 19 million.

Both reports were a bit worse than expected but S&P 500 futures have increased their gains during the premarket trading session as other employment reports have easily beaten expectations.

Unemployment Rate Declines To 11.1%

In June, Unemployment Rate was 11.1% compared to analyst consensus of 12.3%. In May, Unemployment Rate was 13.3%, so the situation has materially improved.

Non Farm Payrolls report showed that the economy added 4.8 million jobs in June. Before the release, analysts expected that Non Farm Payrolls will total 3 million.

The Non Farm Payrolls report is much better than expected and is set to provide additional support to the market. Today, stocks have a very good chance to build upside momentum on optimism about the recovery.

WTI Oil Continues Its Attempts To Settle Above The $40 Level

The recent EIA Weekly Petroleum Status Report showed that U.S. crude oil inventories declined by 7.2 million barrels. Initially, this report failed to provide additional support to the oil market, and WTI oil continued to trade below the $40 level.

However, the optimism about the global economic recovery is increasing, and oil is once again trying to get above $40 and gain more upside momentum.

Major oil stocks like Exxon Mobil, Chevron, BP, Royal Dutch Shell have been under pressure for several weeks as investors started to question long-term perspectives of big oil after BP and Shell signaled that they will make huge writedowns due to changes in outlook for oil and gas.

In case oil manages to get more momentum above $40, traders will likely focus on near-term recovery and provide support to oil-related stocks, pushing S&P 500 to higher levels.

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

GBP/USD Daily Forecast – Waiting For U.S. Employment Reports

GBP/USD Video 02.07.20.

British Pound Tests The 1.2500 Level

GBP/USD continues to rebound as optimistic economic data provides support to riskier currencies like the British pound.

Yesterday, U.S. ISM Manufacturing PMI report for June showed that PMI increased from 43.1 in May to 52.6 in June. Markit Manufacturing PMI report was also optimistic, showing growth from 39.8 in May to 49.8 in June.

In addition, market optimism was supported by renewed vaccine hopes as Pfizer and its partner BioNTech SE reported positive results for the ongoing Phase 1/2 study of coronavirus vaccine.

This optimism put pressure on the U.S. dollar, and the U.S. Dollar Index declined towards the 97 level after unsuccessful attempts to settle above 97.5.

Today, the market will focus on additional employment data from the U.S. Traders will digest Non Farm Payrolls, Initial Jobless Claims, Continuing Jobless Claims and Unemployment Rate reports.

Unemployment Rate is expected to decline from 13.3% in May to 12.3% in June as businesses added jobs while the economy reopened. Traders will likely pay significant attention to Continuing Jobless Claims which show how many workers are still getting unemployment benefits.

The unemployment reports are set to be market-moving as they will provide a chance to evaluate the speed of the economic recovery so traders should expect significant volatility today.

Technical Analysis

gbp usd july 2 2020

GBP/USD is making a significant attempt to get out of the local downside channel. After rebounding from the major support level at 1.2250, GBP/USD quickly gained significant upside momentum and managed to get above the 50 EMA at 1.2440.

In case GBP/USD is able to stay above the 50 EMA, it will have good chances to develop additional upside momentum and head towards the high end of the current trading range at 1.2650.

On the support side, the nearest material support is located at the 50 EMA at 1.2440. If GBP/USD gets below this level, it will return back to the downside channel.

In this scenario, GBP/USD will once again find itself on the road towards the low end of the current trading range at 1.2250.

From a big picture point of view, GBP/USD remains range-bound and will need significant catalysts to start a new trend.

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

USD/CAD Daily Forecast – Canadian Dollar Supported By Economic Data

USD/CAD Video 01.07.20.

Canadian Dollar Is Supported By Increased Demand For Riskier Assets

USD/CAD continues to trend down as the U.S. dollar is losing ground against a broad basket of currencies after the release of U.S. economic data.

The U.S. Dollar Index has once again failed to settle above the key resistance at 97.5 and declined closer to the 97 level.

U.S. ADP Employment Change report was worse than expectations as it showed that 2.37 million jobs were created in the private sector in June compared to analyst consensus of 3 million. However, the report for May was revised from -2.76 million to 3.07 million.

U.S. Manufacturing PMI increased from 39.8 in May to 49.8 in June. ISM Manufacturing PMI report was even more bullish for riskier assets as it showed that PMI increased from 43.1 in May to 52.6 in June. Numbers below 50 show contraction.

Another factor that supported riskier assets today was the announcement of preliminary results for Phase 1/2 trial of COVID-19 vaccine from Pfizer and BioNtech SE which showed promising results.

Canadian dollar could have received more support but oil failed to settle above the $40 level. Such a move would have been bullish for all commodity-related currencies.

The main risk for the Canadian dollar right now is the worsening situation on the coronavirus front which can ultimately offset the optimism about the better-than-expected economic data.

Technical Analysis

usd cad july 1 2020

USD/CAD has settled below the 20 EMA at 1.3615 and is back into the range between 1.3500 and the 20 EMA. Previously, USD/CAD spent many trading sessions in this range, and it is possible that the same pattern will present itself this time in case bullish and bearish factors are balanced.

In case USD/CAD manages to get above the 20 EMA, it will find itself in a new trading range between the 20 EMA at 1.3615 and the 50 EMA at 1.3700. The 50 EMA is set to decline lower so this range will get tighter over time.

On the support side, the nearest support for USD/CAD is located at 1.3500. A move below this level will signal the continuation of the previous downside trend. In this scenario, USD/CAD will get additional downside momentum and 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 Stays Below $40 Despite Significant Crude Inventory Draw

Oil Video 01.07.20.

U.S. Domestic Oil Production Stays Flat At 11 Million Barrels Per Day

The U.S. Energy Information Administration has just provided its Weekly Petroleum Status Report. According to EIA, crude oil inventories decreased by 7.2 million barrels. This decrease was much bigger than analysts expected.

Imports were down by 0.6 million barrels per day (bpd), contributing to the inventory draw. Gasoline inventories increased by 1.2 million barrels while distillate fuel inventories decreased by 0.6 million.

In general, this was a solid inventory report since it showed that crude oil inventories have finally started to decrease. However, the decline in imports played a major role in the total inventory draw so the report is not as bullish as it could have been.

In addition, the U.S. domestic oil production remained flat at 11 million bpd. It looks like oil producers have found some balance at current oil price levels, and the downside trend in production is over.

I can’t say that this is bearish for the oil market since U.S. has materially cut its oil production since the beginning of the crisis, but oil traders should expect that U.S. domestic oil production will start to increase if prices get above $40 per barrel.

Virus Worries May Be The Main Reason Why Oil Fails To Settle Above $40

The U.S. has just set a new virus record, reporting more than 47,000 new coronavirus cases in one day. Some other countries also deal with spikes in the number of new cases.

Britain has recently been forced to impose a lockdown on the city of Leicester as the number of coronavirus cases surged. Kazakhstan is planning a two-week lockdown starting from July 5 as it is hit by the second wave of the virus. Some U.S. states have already been forced to close bars and delay reopening of indoor dining.

While the stock market is able to ignore such news since stock traders count on the support provided by the never-ending stimulus from the world central banks, oil traders cannot ignore the risks of new lockdowns since oil is a physical product.

New lockdowns will immediately lead to a decrease in demand for oil and also postpone the full reopening of aviation and other travel. At this point, it looks like oil will need some stabilization on the virus front to settle above the $40 level.

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

Silver Price Daily Forecast – Silver Breaks Above $18.00

Silver Video 01.07.20

The Next Resistance Below $18.50 In Sight

Silver managed to get above $18.00 and developed significant upside momentum. Currently, silver is testing the next resistance below $18.50 as the U.S. dollar is flat against a broad basket of currencies while gold is trying to get closer to the $1800 level.

The U.S. Dollar Index has failed to settle above the key resistance at 97.5. A move above this level will likely lead to increased upside momentum for the U.S. dollar which would be bearish for silver as stronger dollar makes it more expensive for buyers who have other currencies.

Recently, the U.S. dollar has been range-bound, which allowed silver to make a successful breakout of the $18.00 level.

Gold continues its upside move, supported by virus fears and huge monetary stimulus from the world central banks. The gold price upside is bullish for silver, especially given the fact that gold/silver ratio has managed to settle below the 20 EMA at 99 and continues to trend down.

Before the crisis, gold/silver ratio was below 90, and a potential return to pre-crisis levels is an important part of the bullish thesis for silver.

At this point, the setup for silver remains bullish as gold continues to rise while gold/silver ratio stays below 100 and shows signs of weakness.

Technical Analysis

silver july 1 2020

Silver gained upside momentum above $18.00 and tested the next resistance level below $18.50. On its first attempt, silver did not manage to settle above $18.50, but it will continue such attempts in case it manages to stay above $18.00.

In case silver gets above $18.50, it will head towards the test of the major resistance level at $19.00. This year, silver made two attempts to get above $19.00 but both attempts were unsuccessful. Silver faced very significant resistance and quickly returned back below $18.00.

This time, silver should have better chances to get above $19.00 as the fundamental situation is favorable and silver looks ready to develop more momentum after a period of consolidation.

On the support side, a move below $18.00 will put silver back into the trading range between the major support at $17.50 and $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 Virus Worries Return Again

A New Virus Record In The U.S.

The U.S. has just reported a record daily increase in the number of coronavirus cases. According to data from Johns Hopkins University, the total number of registered cases in the U.S. exceeds 2.6 million.

Today, the markets are paying attention to the worsening situation on the coronavirus front, and the S&P 500 futures are losing ground in premarket trading.

The main threat is a new set of virus containment measures which will put additional pressure on the economy that is trying to recover from the initial shock.

It remains to be seen whether the market that hopes for the never-ending monetary stimulus will focus on the virus situation in the longer-term. In recent weeks, traders have shown their ability to quickly forget about the virus when they saw positive headlines.

Gold Rallies Towards $1800

Meanwhile, traders continue to buy gold as a means to protect themselves from rampant money-printing and potential global market sell-off.

Gold futures have already touched the $1800 level, while spot gold has settled close to this level.

I’d note that major gold stocks like Barrick Gold, Newmont Mining or Agnico Eagle Mines are still well below their highs that were reached in May so a rally is possible across the whole gold mining segment.

Fundamentals remain very bullish for gold which looks set for additional upside following the period of consolidation in April – June.

ADP Employment Change Report Is Worse Than Expected

The U.S. has just released the ADP Employment Change report for June which showed that private employment has increased by 2.37 million. Analysts expected that ADP Employment Change report will show that the private sector added as much as 3 million jobs in June.

Tomorrow, the U.S. will release additional employment reports which include Initial Jobless Claims, Continuing Jobless Claims and Non Farm Payrolls.

The Initial Jobless Claims report is expected to show that 1.35 million Americans filed for unemployment benefits in a week, while Continuing Jobless Claims are projected to drop to 19 million. Meanwhile, the Non Farm Payrolls report is expected to show that 3 million jobs were added in June.

In case the upcoming employment reports are worse than expected, the market may experience a sell-off since a fast economic recovery cannot take place without a rapid recovery of the job market.

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

GBP/USD Daily Forecast – Support At 1.2250 Remains The Key Level

GBP/USD Video 01.07.20.

The Test Of The Key Support Level Was Unsuccessful

GBP/USD has rebounded from the support level at 1.2250 and settled above 1.2350. Yesterday, markets were optimistic on signs that recovery is going faster than expected.

Today, this optimism will be tested by the bad news on the coronavirus front. The U.S. has recorded the biggest one-day increase in the number of coronavirus cases, which could trigger fears about a new series of lockdowns.

Currently, the U.S. dollar is flat against a broad basket of currencies after very volatile trading on Tuesday, and the U.S. Dollar Index has settled near the key 97.5 level.

A move above this level will likely lead to increased upside momentum for the U.S. dollar and serve as a bearish catalyst for GBP/USD. The U.S. Dollar Index has already made several attempts to settle above 97.5 but each attempt met heavy resistance.

In addition to coronavirus news, the market’s risk appetite will be tested by the release of U.S. ADP Employment Change report for June which is expected to show that the private sector added 3 million jobs.

The U.S. will also release the final reading of Manufacturing PMI which is expected to increase from 39.8 in May to 49.6 in June.

Technical Analysis

gbp usd july 1 2020

GBP/USD failed to settle below the low end of the current range at 1.2250 and quickly rebounded above 1.2350. Despite the rebound, GBP/USD remains in the local downside trend and stays in a downside channel.

In order to get out of the downside channel, GBP/USD will have to get above the 20 EMA and the 50 EMA at 1.2435. A move above this level will likely lead to increased downside momentum and take GBP/USD closer to the next resistance level at 1.2530.

On the support side, the nearest support level for GBP/USD is located at 1.2350. In case GBP/USD manages to settle below this level, it will head towards the low end of the current range at 1.2250.

From a big picture point of view, GBP/USD has once again proved that it continues to trade in a wide range between 1.2250 and 1.2650. GBP/USD will surely need significant catalysts to get out of this range and establish a new trend.

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

USD/CAD Daily Forecast – Test Of The 20 EMA At 1.3620

USD/CAD Video 30.06.20.

Canadian Dollar Gains Ground As Demand For Riskier Currencies Increases

USD/CAD found itself under pressure as the U.S. dollar lost ground against a borad basket of currencies after better-than-expected CB Consumer Confidence report.

At this point, it looks like U.S. coronavirus aid measures are working and consumers’ mood is improving. Consumer confidence is very important for the economic rebound so the market reaction is not surprising.

Following the report, demand for safe haven assets like the U.S. dollar decreased, and the U.S. Dollar Index declined below the key resistance at 97.5.

Earlier, the U.S. Dollar Index made a serious attempt to settle above this resistance level and even reached 97.8 but failed to get additional upside momentum and returned back into the trading range between 97 and 97.5. This move was bearish for USD/CAD which suffered a material sell-off.

Canada has just reported GDP numbers for April. Not surpisingly, GDP declined by 11.6% on a month-over-month basis. However, the report was better than the analyst consensus which called for a decline of 13% and provided additional support to the Canadian dollar.

USD/CAD traders should also watch oil closely since it is near the key $40 level. A move above this level will provide additional support to commodity-related currencies like the Canadian dollar and put more pressure on USD/CAD.

Technical Analysis

usd cad june 30 2020

USD/CAD is testing the support level at the 20 EMA at 1.3620 after an unsuccessful attempt to settle above the resistance at the 50 EMA at 1.3710. In case USD/CAD manages to stay above the 20 EMA, it could stay in the range between the 20 EMA and the 50 EMA for some time.

A move below the 20 EMA will open the way to the test of the next support level at 1.3500. In addition, such a move will signal that the upside momentum in USD/CAD is under question.

On the upside, USD/CAD will need to get above the resistance at the 50 EMA to continue the upside move. If the test of the 50 EMA level is successful, USD/CAD will get additional upside momentum and head towards the next resistance level at 1.3800.

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