Oil Drops As U.S. Oil Production Suddenly Increases

Oil Video 24.06.20.

U.S. Domestic Oil Production Jumps To 11 Million Barrels Per Day

EIA has just provided its new Weekly Petroleum Status Report. As always, traders were eager to learn the latest inventory dynamics.

U.S. crude oil inventories increased by 1.4 million barrels while gasoline inventories decreased by 1.7 million barrels and distillate fuel inventories increased by 0.25 million barrels.

Imports were down by 0.1 million barrels per day (bpd) compared to the previous week, so the increase in crude inventories had another source…

This source is the rapid increase in U.S. domestic oil production. In the previous week, EIA reported that domesic oil production was 10.5 million bpd. This week, it has increased to 11 million bpd.

This is a material bearish catalyst for WTI oil as it means that prices near the $40 level are sufficient enough to bring back some of production. This development is really surprising since most market observers believed that sub-$40 prices were not sufficient enough to provide support to the U.S. shale industry.

Before the new EIA report, oil struggled to settle above the $40 level. Now, it will need even more catalysts to get above this level as traders will worry that a move above $40 will lead to an increase in U.S. domestic oil production.

The Recent Rally Is Put To A Test

Finally, the oil rally, which did not have any meaningful pullbacks for several months, is put to a test. The EIA Weekly Petroleum Status report is certainly bearish due to a rapid increase of U.S. domestic oil production and the continued increase in crude oil inventories.

At the same time, the global markets are once again worried about a potential second wave of coronavirus which could put pressure on oil demand. The near-term catalysts are bearish, so any support for oil will come from those traders who believe in the longer-term improvement of oil fundamentals.

The spread between the front-month contract and the December 2020 contract is less than $1. Such spreads are typical for a normal situation in the markets, although the current market environment is anything but normal. At this point, it looks like we’ll see more oil price volatility in the upcoming trading sessions.

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

Silver Price Daily Forecast – Silver Dips As Gold/Silver Ratio Gets Back Above 100

Silver Video 24.06.20.

Second Wave Worries And Stronger U.S. Dollar Put Pressure On Silver

Silver declined closer to $17.50 as gold/silver ratio got back above 100 amid fears about the coronavirus pandemic.

Industrial demand is a very important component of total demand for silver so it’s not surprising to see silver reacting to fears about partial lockdowns to contain the pandemic.

At the same time, gold continues to benefit from the current market environment. Worries about the coronavirus pandemic and unlimited money-printing are the source of rising demand for gold which has successfully settled above the key resistance level at $1750 and continues its upside move.

Meanwhile, gold/silver ratio has managed to get above the 20 EMA at 99.35 and rallied towards 101. The next resistance level for gold/silver ratio is located at the 50 EMA at 101.80.

This is a very important level since a move above this level will open the way to the next significant resistance at 108 which will be bearish for silver.

Today, the U.S. dollar is also contributing to pressure on silver as the U.S. Dollar Index is rebounding and trying to get closer to the 97 level.

The upside trend in gold is significant so the big question is whether gold/silver ratio will continue to increase or returns below 100. A continued upside move in gold/silver ratio will be bearish for silver, while a return below the 100 level will allow silver to benefit from gold price upside.

Technical Analysis

silver june 24 2020

Silver has declined to $17.50 but received material support at this level. This support level has already been tested many times and proved its strength so silver will likely need additional catalysts to get below $17.50.

If this happens, silver will head towards the next major support level at $17.00. The 50 EMA is currently located at $16.90, and a move below the 50 EMA will mark the end of the current upside trend.

On the upside, a new resistance level has been formed near $18.00. A move above this level will open the way to the test of the next resistance level at the highs seen in early June 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 As Traders Focus On COVID-19

The Worsening Virus Situation In Some U.S. States And The Continued Problems In Latin America Put Pressure On Stocks

S&P 500 futures are pointing to a lower open as global markets turn their attention to the rising number of coronavirus cases in the world.

There is no specific catalyst for current weakness as the situation on the coronavirus front has been worrisome for quite some time.

According to data from Johns Hopkins University, more than 9.2 million coronavirus cases have been recorded in the world, with the U.S. at the top of the list with 2.35 million cases.

Recently, many U.S. states have recorded significant increases in the number of new cases while Latin America is struggling to contain the pandemic.

It remains to be seen whether the current minor sell-off will develop into something more serious since all previous sell-offs have been quickly bought by traders who believe that the unprecedented monetary stimulus from the world central banks will solve all problems.

Gold Shines Amid Virus Worries

Gold managed to settle above $1750 per ounce and continues its upside move as traders try to hedge against a potential market sell-off in case of a new round of lockdowns.

The rampant money-printing also helps gold which is viewed as the preferred way to store value.

Today, the worries about the virus seem to be real as the U.S. dollar is finally gaining ground against a broad basket of currencies, and the U.S. Dollar Index is trying to get closer to the 97 level.

A combination of virus worries and rising gold prices is bullish for gold stocks which have solid chances to return to highs seen in the middle of May.

Oil Slides Below The $40 Level

Yesterday, oil was trying to develop upside momentum above the psychologically important $40 level but the disappointing API Crude Oil Stock Change report put pressure on oil prices.

Today, the renewed virus worries add to the pressure, and oil-related stocks are positioned for a challenging opening of the trading session.

That said, a quick dip below a key level after a breakout is a normal event for a volatile commodity like oil so it maintains solid chances to continue the upside move.

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

GBP/USD Daily Forecast – British Pound Continues Its Attempts To Move Higher

GBP/USD Video 24.06.20.

British Pound Stays Strong Amid Increased Demand For Riskier Currencies

GBP/USD is trying to settle above the 20 EMA at 1.2500 as demand for riskier currencies stays strong after better-than-expected Flash PMI data across the developed world.

UK has reported that Manufacturing PMI has increased from 40.7 in May to 50.1 in June while Services PMI increased from 29 to 47. Numbers below 50 show contraction, so the services segment remained under pressure while the manufacturing segment managed to get into the positive zone.

In the U.S., Manufacturing PMI grew from 39.8 in May to 49.6 in June while Services PMI increased from 37.5 to 46.7. Judging by the recent weakness of the U.S. dollar, the market widely anticipates that PMI numbers will get above 50 in July.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled near 96.5. Just a few days ago, the U.S. Dollar Index was testing resistance at 97.5, so the U.S. dollar suffered a material sell-off due to increase in risk appetite.

Interestingly, global markets continue to ignore developments on the coronavirus front. The pandemic is raging in Latin America where death toll has surpassed 100,000.

In the U.S., many states have recorded an increase in the number of new cases, and the Washington state has decided to make face masks mandatory to slow the spread of the disease.

In my opinion, the market will continue to ignore the development of the pandemic until it sees that it negatively impacts consumer behavior.

Technical Analysis

gbp usd june 24 2020

GBP/USD is trying to settle above the resistance area between the 50 EMA at 1.2460 and the 20 EMA at 1.2500. In case this attempt is successful, GBP/USD could head towards the high end of the current trading range at 1.2650.

GBP/USD will have to move below both the 20 EMA and the 50 EMA to develop downside momentum. In this scenario, GBP/USD will move towards the test of the recent lows at 1.2350.

Currently, GBP/USD remains range-bound between the support at 1.2250 and the resistance at 1.2650. Volatility inside this range is huge so traders should be prepared to act quickly when the short-term trend changes.

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

USD/CAD Daily Forecast – Test Of Support At 1.3500

USD/CAD Video 23.06.20.

Canadian Dollar Gains More Ground As WTI Oil Gets Above $40

USD/CAD fell towards the support level at 1.3500 as the U.S. dollar found itself under pressure against a broad basket of currencies while oil managed to settle above the $40 level.

The U.S. Dollar Index has declined to 96.5 as demand for safe haven assets decreased amid general market optimism.

The U.S. has recently reported Flash PMI numbers for June. Services PMI increased from 37.5 to 46.7 while Manufacturing PMI increased from 39.8 to 49.6. Both reports were better than analyst expectations.

In Europe, PMI reports were significantly better than expected and provided material support to global markets, increasing demand for riskier currencies like the Canadian dollar.

Meanwhile, WTI oil has managed to get above $40, providing additional support to the Canadian dollar. The current setup is rather bearish for USD/CAD as the U.S. dollar continues to decline against a broad basket of currencies while oil is moving to new highs.

Technical Analysis

usd cad june 23 2020

USD/CAD is currently testing the support level at 1.3500. At the same time, USD/CAD is still in the range between the support at 1.3500 and the recent resistance at 1.3610, and it will have to get out of this range to gain more momentum.

The 20 EMA has declined towards 1.3590 so it remains to be seen whether USD/CAD will face resistance at 1.3610 or the new position of the 20 EMA will serve as a major level.

In any case, a move above the area between the 20 EMA at 1.3590 and the previous resistance at 1.3610 will lead to increased upside momentum. In this scenario, USD/CAD will head towards the next major resistance level at 1.3730.

On the support side, a move below 1.3500 will signal a return to the downside trend after a period of consolidation. In this case, USD/CAD may quickly head towards the next support level at 1.3440.

A move below 1.3440 will open the way to the recent lows at 1.3360. I’d note that while USD/CAD has made a temporary move below 1.3360, this move was experienced right after the U.S. Federal Reserve Interest Rate Decision and the subsequent comments. Such moves are often chaotic and do not show the true support and resistance levels.

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

Oil Settles Above $40 After Trump Says That Trade Deal Is Intact

Oil Video 23.06.20.

Positive News About U.S. – China Trade Deal Provide A Boost To Oil Prices

Oil managed to settle above the key resistance level at $40 after U.S. President Donald Trump confirmed that the trade deal with China was intact.

Earlier, the markets were worried about the comments of White House trade adviser Peter Navarro who first stated that the trade deal was over but then backpedaled from his previous comment and said that the deal was still in place.

The confirmation of the trade deal is a major bullish factor for the oil market which would have been hit materially if the first phase of the U.S. – China trade deal disintegrated due to increased U.S. – China tensions.

That said, these tensions are not going away. While some observers may point out that coronavirus has contributed to the recent increase of tensions between the two biggest economies or that the upcoming U.S. elections will lead to a new round of tensions, the simple fact is that China has grown to become a big economic power with its own interests.

In this situation, periodic tensions between two big economies which battle for finite markets and resources are inevitable. Thus, oil traders should get comfortable with the regular news flow about U.S. – China tensions and pay attention only to significant developments on this front.

Will U.S. Crude Oil Inventories Decline?

Today, the market will have a chance to digest API Crude Oil Stock Change report, which will be followed by EIA assessment of crude oil inventories that is due to be published on Wednesday.

The key question is whether inventories will finally start to fall. Analysts are cautious and expect that crude oil inventories will increase by 0.4 million barrels while projecting decreases for gasoline and distillate fuel inventories.

The U.S. domestic oil production continues to decline together with the number of drilling rigs, so the market may be anticipating a decrease in inventories. For this scenario to be realized in practice, imports should stay flat while demand should show signs of improvement.

Oil has just settled above the psychologically important $40 level so inventory report will be very important for near-term oil price dynamics. A good report will provide additional upside momentum while a disappointing report could easily push oil back below $40.

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

Silver Price Daily Forecast – Silver Gets Support From Weaker U.S. Dollar

Silver Video 23.06.20.

Gold Settles Above $1750 And Provides Additional Support To Silver

Silver continues its attempts to settle above $18.00 as the U.S. dollar loses ground against a broad basket of currencies while gold is rallying towards new highs.

The U.S. Dollar Index has breached the 97 level and declined towards 96.5 as the world markets are in a rally mode following the release of better-than-expected European Flash PMI data.

The economic activity has started to recover quickly once the lockdown measures were lifted, and traders bet on a V-shaped recovery. This scenario is bearish for the U.S. dollar but rather bullish for silver which needs support from industrial demand.

At the same time, the unprecedented monetary stimulus from the world central banks continues to push gold prices higher. Gold managed to settle above the key resistance at $1750 and tries to gain additional upside momentum.

If this happens, gold will quickly move towards $1800 while other precious metals will likely experience an increase in investor interest.

Gold/silver ratio stays below the 20 EMA at 99.15 and has decent chances to develop downside momentum which would be bullish for silver.

At this point, the general market setup is favorable for silver as the American currency is losing ground while investors continue to show interest in hedging against a potential market sell-off by increasing their exposure to gold and silver.

Technical Analysis

silver june 23 2020

Silver is once again trying to get above the $18.00 level where it faced certain resistance. In case silver gets above this level, it will quickly head towards the test of the next resistance level at the recent highs below $18.50.

As I noted above, the general market setup is favorable for silver while it has plenty of room to develop upside momentum as RSI is far from the overbought territory.

Thus, a potential test of the next resistance below $18.50 has decent chances to be successful, so silver could gain more upside momentum and head towards the test of the major resistance level at $19.00.

On the support side, the nearest support for silver is still located at the 20 EMA near $17.50. In my opinion, silver will need significant catalysts to move below this level.

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 Economic Recovery

Global Markets Move Higher After Better-Than-Expected European Flash PMI Data

Optimism is widespread today following the release of European Flash PMI data. Composite PMI for the Euro Area increased from 31.9 to 47.5 compared to analyst consensus which called for an increase to 42.4.

In the UK, Composite PMI was also much better than expected as it increased to 47.6 compared to analyst consensus of 41.

Today, the U.S. will release preliminary data on Manufacturing PMI, Services PMI and Composite PMI. Analysts expect that Services PMI will increase from 37.5 in May to 46.5 in June, while Manufacturing PMI will increase from 39.8 to 48. However, the market currently projects that PMI reports will be better than analyst expectations.

Not surprisingly, S&P 500 futures are gaining ground in the premarket session as traders bet on the economic recovery. At this point, S&P 500 looks ready to test recent highs above 3200 in the upcoming trading sessions.

Donald Trump Says That Trade Deal With China Is Fully Intact

Global markets had a rather volatile night after White House trade adviser Peter Navarro stated that the trade deal with China was over.

Later, Navarro said that his words were taken out of context and that he was speaking about current tensions while the deal remained in place.

In a tweet, U.S. President Donald Trump confirmed that the deal was intact, boosting global markets. The increase of U.S. – China tensions is a major risk for the world economy so traders are eager to buy equities on signs that the first phase of the trade deal between the two biggest economies will not get hurt.

Oil Settles Above $40

Oil has finally managed to get above the psychologically important $40 level. This move will provide support for the equity market since traders will rush to buy many oil-related equities.

The rally remains strong, and oil did not experience any material pullback since the bottom it reached back in April.

This major upside trend should provide support to the shares of oil majors like Exxon Mobil, BP, Chevron, Royal Dutch Shell which have pulled back from highs reached in early June.

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

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

GBP/USD Video 23.06.20.

Trade Deal With China Comes Into Spotlight

GBP/USD met resistance near the 20 EMA at 1.2490 after it rebounded from the support level at 1.2350. Trading was especially volatile after White House trade adviser Peter Navarro stated that the trade deal with China was over but later corrected his comments and insisted that the deal was still in place.

After the initial turmoil in the markets, the U.S. President Donald Trump tweeted that the deal was fully intact. Initially, Navarro’s comments provided support to the U.S. dollar as traders rushed to buy safe haven assets.

However, the American currency has pulled back after Trump’s comments, and the U.S. Dollar Index has settled near the 97 level.

Yesterday, the U.S. has reported Existing Home Sales which have declined by 9.7% month-over-month in May. Today, traders will digest the New Home Sales report which is expected to show that New Home Sales have increased by 3.5% in May.

In addition,  the market will have a chance to evaluate Flash PMI data for both the U.S. and the UK.

In the UK, Manufacturing PMI is expected to increase from 40.7 to 45 while Services PMI is projected to rise from 29 to 40.

In the U.S., Manufacturing PMI is set to rise from 39.8 to 48 while Services PMI is projected to increase from 37.5 to 46.5.

The UK economy was hit especially hard by virus containment measures so its PMI numbers are expected to be lower. Both economies are still in a challenging situation as PMI numbers below 50 show contraction.

Technical Analysis

gbp usd june 23 2020

GBP/USD faced material resistance near the 20 EMA at 1.2490 and fell towards the 50 EMA at 1.2460. Currently the area between the 50 EMA and the 20 EMA serves as one major resistance area for GBP/USD.

In case GBP/USD manages to get above this resistance area, it will head towards the high end of the current trading range at 1.2650.

On the support side, a move below the 50 EMA will open the way to another test of the support level at 1.2350. In case GBP/USD gets below 1.2350, it will decline towards the low end of the current trading range at 1.2250.

From a big picture point of view, GBP/USD continues to trade in a wide range between 1.2250 and 1.2650.

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

USD/CAD Daily Forecast – The 20 EMA Level Is A True Wall

USD/CAD Video 22.06.20.

Canadian Dollar Gets Support From Stronger Oil

USD/CAD continues to trade in a range between the support at 1.3500 and the resistance at the 20 EMA as the U.S. dollar loses ground against a broad basket of currencies while oil attempts to settle above the $40 level.

The U.S. Dollar Index failed to settle above the resistance at 97.5 and developed downside momentum. Currently, the U.S. Dollar Index has settled closer to the 97 level which is a bearish development for USD/CAD.

Today, the U.S. reported Existing Home Sales for May which declined by 9.7% on a month-over-month basis. Analysts expected a contraction of 3%. In total, 3.91 million existing homes were sold, compared to 5.76 million in February, before the acute phase of the coronavirus crisis.

Oil provides additional support to the Canadian dollar as tries to settle above the psychologically important $40 level. If this attempt is successful, oil will likely develop additional upside momentum which would be bullish for the Canadian dollar. In this scenario, USD/CAD could move below the support at 1.3500.

Interestingly, the U.S. dollar did not get support from the worsening situation on the coronavirus front. The World Health Organization reported a record daily increase in coronavirus cases on Sunday, but traders moved to gold instead of U.S. dollar in search for safe haven investments.

If this trend continues, the U.S. dollar may find itself under more pressure as gold will attract more safe-haven buying.

Technical Analysis

usd cad june 22 2020

USD/CAD failed to settle above the 20 EMA and found itself under some pressure. USD/CAD continues to trade in the range between 1.3500 and 1.3610 and will likely need additional catalysts to move out of this range.

In case USD/CAD gets above the 20 EMA, it will gain upside momentum and head towards the major resistance level at 1.3730. Given the length of the current consolidation phase, I would not expect material resistance near recent highs at 1.3690.

On the support side, a move below 1.3500 will signal a return of the previous downside trend. In this scenario, USD/CAD may quickly head towards the test of the support level 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 The $40 Level

Oil Video 22.06.20.

U.S. Oil Rig Count Declines Again

Baker Hughes has reported that the number of U.S. drilling rigs fell by 13 to 266 as of June 19, 2020. The number of rigs drilling for oil declined by 10 to 189.

We have recently discussed whether U.S. oil production will start to increase once WTI oil manages to get above the $40 level. At this point, the recent upside of the oil market fails to stop the decline in the number of drilling rigs.

The recent EIA Weekly Petroleum Status report showed that U.S. domestic oil production dropped by 600,000 barrels per day (bpd) to 10.5 million bpd. As the number of rigs drilling for oil continues to shrink, U.S. oil production may have further room to fall.

Such scenario is bullish for oil since the continued decline in the U.S. domestic oil production may finally put some pressure on elevated inventories. This time, OPEC+ is very serious about achieving perfect compliance with production cuts, so the oil market should have a good chance to start rebalancing once demand picks up to more normal levels.

Coronavirus Is Likely The Only Factor Which Prevents Oil From Going Above $40

As production continues to decline while demand is rebounding, fears about the potential second wave of lockdowns are likely the only catalyst that prevents oil from gaining additional upside momentum.

The World Health Organization has just reported a record daily increase in coronavirus cases, and some traders fear that the world will have to implement additional virus containment measures.

At this point, developed economies continue to reopen, and the problems on the virus front have no impact on physical demand for oil. The world economy is certainly not ready for a replay of April – May lockdowns so even if some countries will face a major increase in new infections, they will be forced to use softer virus containment measures in order to shield their economies from the second blow.

It remains to be seen whether global markets will take this threat seriously as they are very focused on the continued expansion of monetary stimulus measures. If this trend continues, oil will have good chances to continue its current upside move.

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

Silver Price Daily Forecast – Silver Attempts To Settle Above $18.00

Silver Video 22.06.20.

Silver Gains Upside Momentum

Silver continues its upside move and tries to get above $18.00 as the U.S. dollar is losing ground against a broad basket of currencies while gold attempts to get above $1750 per ounce.

The U.S. Dollar Index has recently tried to settle above the nearest resistance level at 97.5 but failed to gain upside momentum and pulled back. U.S. dollar weakness is bullish for silver and other precious metals as it makes them cheaper for buyers who have other currencies.

Gold is finally making a serious attempt to settle above the key resistance at $1750. While the equity market ignores virus worries, gold benefits from traders’ desire to hedge against a potential sell-off in the equity market if the second wave of coronavirus becomes a serious problem.

In case gold develops additional upside momentum, other precious metals will follow. Gold/silver ratio met significant resistance near the 20 EMA at 99.10 and declined below 98, which is another bullish factor for silver. I maintain my opinion that gold/silver ratio has a decent chance to return to pre-crisis levels below 90.

Technical Analysis

silver june 22 2020

Silver has finally managed to settle above $17.50 and gained solid upside momentum. Currently, silver is trying to get above $18.00. In case this attempt is successful, silver will continue to move towards the next resistance level below $18.50, near highs seen in early June.

I’d note that RSI is at moderate levels so silver has plenty of room to develop additional upside momentum. A move above the nearest resistance level will open the way to the test of the major resistance at $19.00.

Silver has not been above $19.00 since September 2019 when it briefly went to $19.65 and quickly pulled back below $19.00. A move above this major resistance level could help silver develop significant upside momentum.

On the support side, the nearest support level for silver is located at the 20 EMA at $17.45. The 20 EMA level has been tested many times when silver was consolidating near the resistance at $17.50. In case silver falls below the 20 EMA, it will head towards the major support level at $17.00.

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

U.S. Stocks Set To Open Higher As Traders Shrug Off Virus Worries

World Health Organization Reports A Record Daily Increase In Coronavirus Cases

On Sunday, the World Health Organization reported 183,020 new coronavirus cases. Most of this cases (116,041) were located in the Americas region.

Meanwhile, Europe also has problems as coronavirus reproduction rate has rapidly increased in Germany while Bulgaria had to make wearing face masks compulsory again.

Despite the worrisome news, S&P 500 futures are pointing to a higher open as traders bet that the unprecedented monetary stimulus from the world central banks will continue to boost asset prices.

The risk-on mode is highlighted by the weakness of the U.S. dollar, which is declining against a broad basket of currencies. The U.S. Dollar Index failed to settle above 97.5 and pulled back below this level.

Oil Struggles To Settle Above $40

WTI oil continues its attempts to settle above the key resistance level at $40. A move above this level will likely lead to increased upside momentum and help most oil-related equities gain more ground, providing support to the whole market.

Oil supply is getting tighter due to oil production cuts while demand improves as economies lift virus containment measures. At the same time, oil traders are worried about the potential second wave of the virus and its implications for the travel industry which is an important source of oil demand.

A continuation of the current oil rally will have a positive impact on S&P 500 and could push it towards recent highs, so traders should closely watch oil price dynamics in the upcoming trading sessions.

Gold Tries To Get Above $1750

Gold may also have an impact on today’s trading session since it is trying to get above the key resistance level at $1750 on a spot basis.

Gold stocks like Barrick Gold and Newmont Mining have pulled back from their highs reached in May while gold is trying to get to new highs.

This situation creates a setup for increased demand for gold equities in case gold manages to settle above $1750 per ounce and continue its upside move after a period of consolidation.

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

GBP/USD Daily Forecast – Fears Of Second Wave Support U.S. Dollar

GBP/USD Video 22.06.20.

British Pound Remains Under Pressure

GBP/USD settled below 1.2400 as fears about the second wave of coronavirus and continued problems in Brexit negotiations put pressure on the British pound.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled near 97.5 and tries to get above this resistance level.

If this attempt is successful, the U.S. dollar will gain more upside momentum, and GBP/USD will find itself under additional pressure.

Coronavirus is once again in spotlight as the World Health Organization reported a record number of new virus cases in a day. On Sunday, WHO recorded 183,020 cases. Just a week ago, the number of new cases was below 150,000 per day so the pandemic continues to get worse.

Meanwhile, the UK Prime Minister Boris Johnson is set to reveal another easing of the coronavirus lockdown on Tuesday. It is widely believed that he will relax the two-metre social distancing rule which puts pressure on many businesses.

Today, the U.S. will report Existing Home Sales for May. Analysts expect that Existing Home Sales have declined by 2.3% month-over-month as virus containment measures and economic uncertainty put pressure on sales.

Technical Analysis

gbp usd june 22 2020

GBP/USD continues its downside move and has settled below 1.2400. GBP/USD has already tested the support at 1.2350 but this support level proved its strength.

In order to continue the current downside move, GBP/USD will have to settle below the support at 1.2350. If this happens, GBP/USD will gain downside momentum and head towards the low end of the current trading range at 1.2250.

On the upside, the nearest resistance level is located at the 50 EMA at 1.2450. In addition, GBP/USD may face some resistance near 1.2400. In case GBP/USD gets above the 50 EMA at 1.2450, it will have to deal with the next resistance at the 20 EMA at 1.2480.

I’d note that the 20 EMA is declining fast and could soon cross the 50 EMA to the downside, suggesting the continuation of the downside trend. From a big picture point of view, GBP/USD continues to trade between the major support at 1.2250 and the major resistance at 1.2650. Attempts to get out of this range were short-lived, and GBP/USD will likely need strong catalysts to break out of the range.

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

USD/CAD Daily Forecast – U.S. Dollar Tries To Gain Ground Ahead Of The Weekend

USD/CAD Video 19.06.20.

Canadian Retail Sales Decline By 26.4% In April

USD/CAD stays below the 20 EMA at 1.3610 as oil price strength is offset by weak Canadian Retail Sales data.

Canada’s Retail Sales declined by 26.4% month-over-month in April compared to analyst consensus which called for a decline of 15.1%. Please note that while most developed countries have already reported data for May, Canada’s report is for April which was the most challenging month during the current crisis.

On a year-over-year basis, Retail Sales declined by as much as 32.5%. Excluding Autos, Retail Sales shrank by 22% month-over-month. In May, Retail Sales are expected to grow by 19.1% but this data still has to be confirmed officially.

Meanwhile, the U.S. Dollar Index is trying to settle above the nearest resistance at 97.5. If this attempt is successful, the U.S. dollar will continue to gain ground against a broad basket of currencies which will be bullish for USD/CAD.

Oil continues to provide material support to the Canadian dollar as WTI oil has recently breached the psychologically important $40 level. If oil settles above this level, it will likely gain upside momentum and head higher, providing additional support to the Canadian currency.

Technical Analysis

usd cad june 19 2020

USD/CAD still trades in a range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3610. USD/CAD has already tested the high end of this range several times but the resistance at 1.3610 is strong.

I’d note that each pullback from this resistance is stopped at a higher level so the buyer pressure is clearly increasing. Currently, USD/CAD has good chances to get above the 20 EMA unless there is a sudden sell-off in the U.S. Dollar Index.

In this scenario, USD/CAD will gain significant upside momentum and head towards the major resistance level at 1.3730. The 50 EMA is at 1.3740 so this level will likely be very strong.

On the support side, the nearest support level is located at 1.3500. To get below this level, USD/CAD will need additional catalysts, like a major rally in the oil market. If this happens, USD/CAD will head towards the next support at 1.3440.

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

Oil Rises Above The Key $40 Level

Oil Video 19.06.20.

OPEC+ Is Set To Increase Compliance With Oil Production Cuts

Yesterday, I wrote that OPEC+ technical meeting was focused on compliance by those countries who previously failed to bring their oil production in line with their agreed quota.

Today, oil got additional support from reports that lagging countries promised to better comply with their quotas. If this happens, oil supply will decrease further in July.

Active trading has already shifted to the August 2020 contact, whose spread with the December 2020 contract is roughly 30 cents. Previously, longer-dated contracts traded at a material premium to front-month contracts since traders believed that the supply/demand situation would improve by the end of the year.

Now, the pricing of the front-month contract fully reflects the improvements delivered by recent oil production cuts so this spread is gone.

Oil’s move above $40 could lead to an influx of speculative money into oil and oil-related equities so the upcoming trading sessions will be very interesting.

It remains to be seen whether the market will have worries about a potential surge in U.S. shale oil production as the prices have crossed the $40 mark. For now, such worries will likely take a back seat as traders are focused on economic recovery.

Russia Thinks That One Month Of Additional Production Cuts Will Be Sufficient Enough To Stabilize The Market

In a recent interview to the Russian business newspaper RBC, the head of Russia’s sovereign wealth fund Kirill Dmitriev stated that he did not see reasons to extend current production cuts for more than one month.

According to Dmitriev, economies have started to recover from the shock together with the financial markets, and demand for oil is improving.

Dmitriev is one of Russia’s main negotiators so this is a clear signal that Russia will not support the extension of current production cuts beyond July.

This means that the world oil supply will increase by 2 million barrels per day (bpd) in August. By that time, oil demand should recover significantly, and the market should be ready to absorb additional supply.

However, as shown by the stubbornly high oil inventories, demand strength is not guaranteed. In the upcoming weeks, traders will continue to watch inventory numbers closely to evaluate whether oil demand continues to recover.

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

Silver Price Daily Forecast – Silver Makes Another Attempt To Settle Above $17.50

Silver Video 19.06.20.

Silver Gets A Boost From Gold Price Upside And General Market Optimism

Silver continues its attempts to gain upside momentum and settle above $17.50 as the U.S. dollar loses some ground against a broad basket of currencies while the equity market continues to rally.

The U.S. Dollar Index failed to get above the resistance at 97.5 and pulled back but stayed above the 97 level. A weaker U.S. dollar is bullish for silver as it makes it cheaper for buyers who have other currencies.

Gold is gaining some ground but stays below the key $1750 level. Importantly, gold managed to close above the 20 EMA for a number of trading sessions, and it looks like it has decent chances to test the $1750 level in the near term.

A successful test of this level will boost the whole precious metal segment so silver traders should watch this gold level closely.

Gold/silver ratio did not get above 100 and stays below the 20 EMA at $99.20, increasing the potential for additional downside. Before the coronavirus crisis hit the world economy, gold/silver ratio was below 90, and a return to such levels will be very bullish for silver.

Technical Analysis

silver june 19 2020

Silver is once again trying to settle above the resistance level at $17.50. In my opinion, silver has good chances to get higher as it spent some time near $17.50 without a pullback while the support at the 20 EMA has risen to $17.40.

If silver finally manages to settle above the resistance at $17.50, it will gain upside momentum and head towards the next resistance level at the recent highs below $18.50.

From a bigger picture point of view, an upside move from a solid base could create sufficient momentum to get to the test of the major resistance level at $19.00.

On the support side, silver will have to get below the 20 EMA at $17.40 to develop downside momentum. In this case, silver will head to test the major support level at $17.00. This level has already been tested many times so silver could count on strong support near $17.00.

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

 

U.S. Stocks Set To Open Higher As Upside Trend Stays Intact

China Is Set To Increase U.S. Farm Purchases

According to a Bloomberg report, the U.S. held talks with China in Hawaii and China aggreed to increase the pace of U.S. farm product purchases.

Previously, the potential increase of U.S. – China tensions amid the coronavirus pandemic was viewed as a potential risk to market upside. However, the market has mostly ignored this risk, and stocks barely reacted to mutual accusations between U.S. and China.

Now that the Phase 1 of the trade deal continues to progress, traders have another reason to buy stocks as they bet on a swift recovery from the coronavirus crisis.

S&P 500 futures are gaining ground in the premarket trading session, reflecting the optimism about the decrease of U.S. – China tensions.

WTI Oil Rallies Above $40

Oil is in a bullish mood as traders believe that the reopening of the world economy and the production cuts implemented by OPEC+ members and other countries will help the market reach better balance in the second half of the year.

Previously, WTI oil prices struggled to settle above the $40 mark while Brent oil have already moved above this level. Finally, WTI oil looks ready to continue its upside move.

A move above $40 could lead to increased upside momentum and provide support to oil-related equities. In turn, the increase of demand for oil stocks will likely push the general market higher.

The Market Ignores All Risks And The Rally Looks Set To Continue

Yesterday, the Continuing Jobless Claims report showed that more than 20 million Americans were still receiving unemployment benefits. Analysts expected that this number will decline below 20 million.

Meanwhile, some U.S. states are facing a significant increase in the number of new coronavirus cases, which does not bode well for the speed of economic and labor market recovery.

The market has previously ignored all bad news and continues to shrug off any  negative data. This highlights the enormous bullishness behind the current upside trend.

At this point, it looks like S&P 500 will need a very serious negative catalyst to get below the 3000 level again. Without such catalysts, S&P 500 will soon reach 3200 and get to new highs.

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

GBP/USD Daily Forecast – U.S. Dollar Supported By Demand For Safe Haven Assets

GBP/USD Video 19.06.20.

UK Retail Sales Report Shows Strong Recovery In May

GBP/USD settled below the 50 EMA at 1.2465 as demand for safe haven assets increased amid fears of the second wave of coronavirus and poor U.S. employment data.

U.S. Initial Jobless Claims report showed that 1.5 million Americans filed for unemployment benefits in a week. Analysts expected that Initial Jobless Claims will decline to 1.3 million.

Continuing Jobless Claims report was also disappointing as Continuing Jobless Claims stayed above the psychologically important 20 million level at 20.5 million.

The disappointing reports provided support to the U.S. dollar as traders increased their purchases of safe haven assets, and the U.S. Dollar Index tested the 97.5 level.

The Bank of England has left its interest rate unchanged at 0.1% and increased its quantitative easing program from 645 billion pounds to 745 billion pounds. These moves were widely expected.

The UK has just released data on Retail Sales for May. Retail Sales increased by 12% month-over-month compared to analyst consensus which called for an increase of 5.7%. In the previous month, Retail Sales declined by 18%.

On a year-over-year basis, Retail Sales declined by 13.1% while analysts anticipated a drop of 17.1%.

Excluding Fuel, Retail Sales were up 10.2% month-over-month and down 9.8% year-over-year.

The data shows that the retail sector has started to recover after the acute phase of the coronavirus crisis. Delayed demand led to a rapid increase in Retail Sales in May.

In my opinion, the most interesting data will be provided in July – August when the initial demand is satisfied and consumers show what the “new normal” looks like.

Technical Analysis

gbp usd june 19 2020

GBP/USD declined below the 50 EMA at 1.2465 and continued the downside trend. Currently, GBP/USD tries to rebound, and the 50 EMA serves as the first material resistance level.

In case GBP/USD gets above this level, it will likely head towards the next resistance at the 20 EMA at 1.2520.

On the support side, GBP/USD has recently received support above 1.2400. If GBP/USD manages to settle below this level, it will head towards the next support level at 1.2350.

From a big picture point of view, GBP/USD continues to go down in a local downside channel while it stays in the wide trading range between 1.2250 and 1.2650.

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

USD/CAD Daily Forecast – 20 EMA Remains A Major Resistance Level

USD/CAD Video 18.06.20.

Canadian Dollar Gets Support From Bullishness On The Oil Price Front

USD/CAD is mostly flat today as the U.S. dollar strength against a broad basket of currencies is offset by oil price upside.

Today, the U.S. has reported disappointing employment data. Initial Jobless Claims stayed high at 1.5 million while Continuing Jobless Claims report showed that 20.5 million Americans were still getting unemployment benefits.

Meanwhile, Canada reported reassuring ADP Employment Change data for May while the New Housing Price Index showed that prices increased by 0.1% month-over-month.

The near-term dynamics of USD/CAD will depend on two main factors. First, the U.S. dollar continues its attempts to rebound, and the U.S. Dollar Index has firmly settled above the 97 level. A continuation of the current trend will be bullish for USD/CAD.

Second, WTI oil has decent chances to get above the nearest resistance at $40 and get additional boost from speculative traders. Canadian oil trades at a discount to WTI but it will also get a boost in case WTI rallies above $40. This scenario will be bearish for USD/CAD.

There’s a possibility that the strength of the U.S. dollar will be offset by higher oil prices, and USD/CAD will continue to trade in a volatile fashion near current levels .

Technical Analysis

usd cad june 18 2020

USD/CAD continues its attempts to get above the 20 EMA at 1.3610. This level has already been tested several times and proved its strength. Previously, USD/CAD met resistance near 1.3630. Given the strength of the 20 EMA level, USD/CAD will develop significant upside momentum if it manages to get above it, so I would not expect much resistance at 1.3630.

In this scenario, USD/CAD will head towards the major resistance level at 1.3730, although it can also face some resistance near the recent high at 1.3690.

On the support side, USD/CAD continues to get buyer interest near 1.3500. USD/CAD has already made three attempts to test this level but they failed. In case USD/CAD manages to settle below 1.3500, it will return to the previous downside mode 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.