Oil Stays Near $41 As Traders Remain Optimistic On Recovery

Oil Video 04.08.20.

Additional Decline In Inventory Levels Is Required To Push Oil Prices Higher

A few days ago, WTI oil made an attempt to settle below the $40 level on worries about the continued spread of coronavirus and the resulting second wave of new virus containment measures.

The move turned out to be a one-day sell-off, and oil quickly returned back above the $40 level. However, oil struggles to gain additional upside momentum that will push it above the nearest resistance level at $42.50.

In the near-term, the main negative factor for oil is the spread of the virus which sometimes leads to new, limited lockdowns. Most likely, mass vaccination will not take place until 2021, so coronavirus will remain a major factor at least until the end of the current year.

On the other hand, inventories have started to decline while recent Manufacturing PMI data suggests that economic recovery continues around the world.

In my opinion, oil needs a material decline in inventory levels to have a chance to settle above $42.50.

Since the virus will likely continue to limit economic activity and mobility until the end of this year, the oil market needs to slowly work through excessive inventories to reduce pressure on oil prices.

Today, the market will have a chance to digest API Crude Oil Stock Change report which is expected to show that inventories have continued to decline.

While this report may not be sufficient enough to push oil above $42.50, it could provide more support for oil prices and position them for future breakout.

Current Oil Prices Are Likely Not Sufficient Enough To Boost U.S. Oil Production

Yesterday, we have discussed the recent Baker Hughes Rig Count report which indicated that the number of U.S. rigs drilling for oil declined by 1 to 180.

Tomorrow, EIA wil release its Weekly Petroleum Status Report which will show whether U.S. production has increased from the previous level at 11.1 million barrels per day (bpd).

At this point, it looks that U.S. firms are not ready to significantly increase production when WTI oil is near the $40 level.

Investors and creditors are very focused on balance sheet strength so firms are forced to limit their ambitions in order to maintain access to equity and debt markets which provide vital support at times of low oil prices.

In case the upcoming report shows that U.S. oil production remained flat at 11.1 million bpd, oil may get additional support since such report would indicate that weeks of $40 oil were unable to move production higher.

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

Silver Price Daily Forecast – Silver Stays Above The Support At $24.00

Silver Video 04.08.20.

Silver Price Volatility Decreases

Silver trades above $24.00 as the U.S. dollar tries to continue its rebound against a broad basket of currencies while gold stays just below the $2000 level.

The U.S. Dollar Index has managed to settle above the support at 93.5 and is currently heading towards the nearest resistance at 94. A move above the 94 level will likely lead to increased upside momentum and push U.S. Dollar Index towards the 20 EMA which is located at 94.75.

Such a move may put material pressure on silver and gold since stronger dollar makes precious metals more expensive for buyers who have other currencies.

In addition, this move may trigger increased speculative activity from those traders who are willing to bet on silver price downside.

Meanwhile, spot gold continues to show its strength and stays just below the key $2000 level. Gold has moved from $1800 to $1980 without any pullback which highlights significant demand from traders and investors. In case gold is able to get above the $2000 level, silver will likely experience significant upside momentum.

Volatility in gold/silver ratio continues to decrease as it tries to settle near the 81 level. Gold/silver ratio is at levels that were last seen in September 2019 so it needs some time to go through a period of consolidation.

If gold/silver ratio does not rebound in the near term, it will have good chances to continue the downside move which would be bullish for silver.

Technical Analysis

silver august 4 2020

Silver continues to trade in a range between the support at $24.00 and resistance at $24.95.

RSI has recently declined but stays in the overbought territory so silver may need additional consolidation before it is ready to continue the upside move in case  sufficient upside catalysts emerge.

In case silver gains more upside momentum and settles above the resistance at $24.95, it will head towards the next resistance level at $26.20.

On the support side, silver’s move below $24.00 may trigger a minor sell-off as it will indicate that silver has started to lose near-term momentum.

If this happens, silver will likely decline towards the next support level at $23.25.

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

U.S. Stocks Set To Open Lower As Traders Wait For Additional Upside Catalysts

Coronavirus Aid Package Talks Continue

Coronavirus aid package negotiations are finally showing some signs of progress but there’s clearly more work to be done. At this point, Republicans still want to cut unemployment benefits to $200 per week while Democrats want to keep them at $600 per week.

However, both sides have indicated that a deal may be reached in the upcoming days. Later this week, the market will digest several employment reports, including ADP Employment Change, Initial Jobless Claims, Continuing Jobless Claims, Non Farm Payrolls and Unemployment Rate.

These reports may push lawmakers to reach a deal since Initial Jobless Claims are expected to stay high at 1.4 million while Unemployment Rate is projected to marginally improve to 10.5%.

Meanwhile, S&P 500 futures are losing ground in premarket trading as stocks need more positive catalysts to continue their upside move. A new coronavirus aid package or better-than-expected employment reports could serve as such catalysts at the end of this week.

BP Cuts Its Dividend By 50%

BP has recently reported its second-quarter results, missing analysts estimates on revenue and beating them on GAAP earnings. The company reported revenue of $31.2 billion and GAAP earnings of -$5.00 per share.

The company decided to cut its dividend by 50% as coronavirus pandemic put pressure on both current oil prices and future oil price outlook.

Interestingly, BP shares are up more than 6% in premarket trading. It looks like traders have waited for a dividend cut and are rushing to buy the company’s shares.

U.S. Dollar At Crossroads

The U.S. Dollar Index has stabilized near 93.5 after an unsuccessful attempt to get above the 94 level.

The American currency has lost a lot of ground in July so a recent rebound attempt was not surprising.

The future direction of the U.S. dollar may have a significant impact on stocks and commodities. Additional weakness of the American currency could provide support to stocks and push gold above the $2000 level.

At the same time, the continuation of the rebound may put more pressure on oil, which is especially vulnerable given the continued problems on the coronavirus front that have led to reimposition of virus containment measures in various parts of the world.

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

GBP/USD Daily Forecast – U.S. Dollar Fails To Gain More Upside Momentum

GBP/USD Video 04.08.20.

U.S. Democrats And Republicans Make Some Progress In Coronavirus Aid Package Talks

GBP/USD has settled below 1.3100 as the U.S. dollar remained flat against a broad basket of currencies while traders awaited results of U.S. coronavirus aid package negotiations.

The U.S. Dollar Index has settled near 93.5 after an unsuccessful attempt to get above the 94 level.

This is an important moment for the American currency since failure to develop upside momentum above the 94 level will lead to increased pressure and a possible re-test of lows at 92.5. Such scenario would be bullish for GBP/USD.

On Monday, Republicans and Democrats continued their talks on the new coronavirus relief package. Some progress has been made but the aid deal will still require more negotiations.

There is little doubt that U.S. economy needs another massive stimulus to support consumer activity. However, it remains to be seen how the currency market will react to another round of money-printing.

In addition to coronavirus aid bill, traders will likely pay attention to increased tensions between U.S. and China. The U.S. has pushed China’s ByteDance to sell TikTok’s U.S. operations to Microsoft, and China has already stated that it had ways to respond.

Technical Analysis

gbp usd august 4 2020

GBP/USD made an attempt to settle below the support level at 1.3020 but did not manage to gain additional downside momentum and rebounded above the support at 1.3070.

On the upside, GBP/USD faced some resistance near 1.3110. In case GBP/USD manages to settle above this resistance level, it will likely gain additional upside momentum and head towards the next resistance level at 1.3200. Most likely, such scenario would require broad U.S. dollar weakness.

RSI has left the extremely overbought territory but remains elevated so GBP/USD may need to stabilize near current levels before making another move.

From a big picture point of view, GBP/USD continues to trend higher in an upside channel. The recent attempt to gain downside momentum has failed, and GBP/USD maintains good chances to continue the current upside trend.

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

USD/CAD Daily Forecast – Strong Oil Limits U.S. Dollar Upside

USD/CAD Video 03.08.20.

Resistance At The 20 EMA Stays Strong

USD/CAD tried to gain more upside momentum but faced resistance at the 20 EMA at 1.3450 as the U.S. dollar rebounded against a broad basket of currencies while WTI oil returned back above the key $40 level.

The U.S. Dollar Index continued its rebound and managed to settle above 93.5. However, it faced resistance at the 94 level and pulled back. In case the U.S. Dollar Index manages to get above 94, USD/CAD will have a good chance to develop more upside momentum.

While the rebound of the U.S. Dollar Index was bullish for USD/CAD, the oil price upside limited the American currency’s gains against the Canadian dollar.

For WTI oil, the key level is the resistance at $42.50. A move above this level will likely lead to increased upside momentum and provide significant support to commodity-related currencies including the Canadian dollar.

Today, the U.S. has reported Manufacturing PMI data for July. Manufacturing PMI increased from 49.8 in June to 50.9 in July while analysts expected that it would grow to 51.3. Numbers above 50 show expansion.

Canada is set to provide its Manufacturing PMI report tomorrow.

Technical Analysis

usd cad august 3 2020

USD to CAD did not manage to get above the nearest resistance at the 20 EMA at 1.3450 and declined closer to 1.3400. The nearest material support level for USD to CAD is located at 1.3330. This level has already been tested several times and proved its strength.

The resistance at the 20 EMA has the potential to become a significant obstacle on the way up. At this point, USD to CAD may find itself stuck in a trading range between the support at 1.3330 and the resistance at the 20 EMA.

In case USD to CAD manages to get above the 20 EMA, it will head towards the major resistance level at 1.3500. A move above this level will likely lead to increased upside momentum, and USD to CAD will head towards the next resistance level at the 50 EMA at 1.3550.

On the support side, a move below 1.3330 could trigger a sell-off, taking USD to CAD to the next support level at 1.3270.

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

Oil Gets Back Above $40 As Traders Cheer Encouraging Manufacturing PMI Data

Oil Video 03.08.20.

U.S. Oil Rig Count Falls Again

The recent Baker Hughes Rig Count report showed that the number of active rigs in the U.S. remained flat at 251. Meanwhile, the number of rigs drilling for oil declined by 1 to 180.

The previous report showed that the number of U.S. rigs drilling for oil increased by 1 to 181. Some traders have started to worry that such increase signals the beginning of a new upside trend in U.S. production which would be bearish for the oil market.

Fortunately for oil bulls, the new Baker Hughes Rig Count report has indicated that U.S. producers are not ready to meaningfully increase production at current oil prices.

This is especially important at times when OPEC+ countries are increasing their production by two million barrels per day (bpd) as they gradually ease the previous production cuts.

For example, Russia has stated that its oil production was in line with the OPEC+ deal in July while it has reportedly increased its oil production in the first days of August.

In this situation, an increase of production from U.S. shale companies could serve as a material bearish catalyst. However, the recent data indicates that U.S. oil production is set to remain mostly flat in the near term, which is good for the oil market.

Positive Manufacturing PMI Reports Provide Support To Oil Prices

WTI oil’s recent attempt to settle below the key $40 level was not successful, and oil is back above $40.

Oil prices got material support from the release of Manufacturing PMI reports. In Euro Area, Manufacturing PMI increased from 47.4 in June to 51.8 in July. In the U.S., Manufacturing PMI grew from 49.8 to 50.9. Numbers above 50 show expansion.

Traders are betting that recent improvements in the manufacturing segment will boost oil demand and support oil prices.

However, it remains to be seen whether the growth in the manufacturing segment will be sufficient enough to offset worries about new restrictive measures which are implemented to stop the spread of coronavirus.

Most recently, Philippines imposed a new two-week lockdown in its capital Manila to slow down the spread of the disease.

In Europe, the travel sector recovery is once again postponed as countries introduce quarantine measures for travellers and require them to wear masks.

According to a recent Reuters report, most potential tourists from UK, France and Germany will skip a holiday if they need to get tested for COVID-19 and are required to wear face masks. This does not bode well for the recovery of jet fuel demand.

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

Silver Price Daily Forecast – Silver Failed To Get Above Resistance At $24.95

Silver Video 03.08.20.

Silver Finds Itself Under Pressure As U.S. Dollar Continues To Rebound

Silver pulled back closer to $24.00 as the U.S. dollar gained ground against a broad basket of currencies while gold corrected from recent highs.

The U.S. Dollar Index continued its rebound, putting pressure on precious metals and other commodities. The U.S. Dollar Index has managed to settle above the resistance at 93.5 and is trying to get above the 94 level.

If the U.S. dollar continues its upside move, silver may experience more pressure since stronger dollar makes it more expensive for buyers who have other currencies. In case the U.S. Dollar Index will be able to get above the 94 level, it will likely head towards the significant resistance at the 20 EMA at 94.90.

Meanwhile, spot gold made an attempt to test the $2000 level but failed to gain more upside momentum and pulled back closer to $1970. At this point, gold is trying to consolidate just below the $2000 level which is a healthy sign for bulls.

However, a continued rebound of the U.S. dollar may put additional pressure on gold and cause a correction which will be also bearish for silver.

Gold/silver ratio is forming a range between 80 and 85 while volatility decreases. Gold/silver ratio did not manage to immediately rebound after the major downside move that happened in July, which is a bullish development for silver.

Technical Analysis

silver august 3 2020

Silver failed to settle above the nearest resistance level at $24.95 and pulled back. The nearest support level at $24.00 has also been tested during today’s trading session.

Volatility may decrease in the upcoming trading sessions, and silver may find itself in a new trading range between support at $24.00 and resistance at $24.95.

However, this scenario is not guaranteed since silver volatility may increase as a result of rapid moves on the U.S. dollar front or a gold price breakout.

In case silver settles below the support level at $24.00, it will head towards the next support at $23.25.

A move above the nearest resistance at $24.95 will open the way to the test of the next resistance level which is located at recent highs at $26.20.

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

U.S. Stocks Set To Open Higher As Traders Push Equities To Multi-Month Highs

Euro Area Manufacturing Gets Back To Expansion Mode

S&P 500 futures are up in premarket trading in sympathy with European bourses which are gaining ground after the release of Euro Area Manufacturing PMI report.

The report showed that Euro Area Manufacturing PMI increased from 47.4 in June to 51.8 in July. Numbers above 50 show expansion. The return to growth is an encouraging development which may provide additional support to riskier assets.

Today, the U.S. will also release its Manufacturing PMI data. Analysts expect that U.S. Manufacturing PMI increased from 49.8 in June to 51.3 in July. A better-than-expected Manufacturing PMI report can provide more support to U.S. stocks and push them higher.

Republicans And Democrats Fail To Reach Consensus On New Coronavirus Aid Package

Republicans and Democrats continued their negotiations over the weekend but did not manage to reach consensus on the coronavirus aid deal.

Democrats want to preserve special unemployment benefits of $600 per week while Republicans are worried about costs and want to cut benefits to $200 per week.

As usual, there are other negotiating points, but the unemployment benefit topic remains the key source of discord.

Few analysts doubt that the U.S. needs to provide additional support to consumers to keep spending at healthy levels. The U.S. economy is dependent on consumer activity so a decline in spending could significantly hurt the recovery.

Microsoft May Buy TikTok’s U.S. operations

According to a recent Reuters report, U.S. President Donald Trump gave Microsoft 45 days to negotiate a deal to buy TikTok’s U.S. operations. Microsoft has already discussed the potential deal with Trump.

The U.S. has accused Chinese software companies of sharing data of U.S. citizens with the Chinese government, and TikTok is the first company in Washington’s crosshairs.

More Chinese companies will soon feel the same pressure as Secretary of State Mike Pompeo promised that Donald Trump would announce new measures to safeguard U.S. citizens’ data in the upcoming days.

China stated that it opposed actions against its software companies, and retaliation in some form is almost guaranteed.

For now, the U.S. stock market completely ignores another increase in U.S. – China tensions as it is focused on upbeat Manufacturing PMI data from Europe and expectations of good Manufacturing PMI data from the U.S.

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

GBP/USD Daily Forecast – U.S. Dollar Tries To Gain More Ground

GBP/USD Video 03.08.20.

U.S. Democrats And Republicans Fail To Reach Coronavirus Aid Package Deal

GBP/USD trades near 1.3100 as the U.S. dollar is mostly flat against a broad basket of currencies amid continued negotiations about the new U.S. coronavirus aid package.

The U.S. Dollar Index has stabilized near 93.5 after rebounding from recent lows at 92.5. Meanwhile, Republicans and Democrats continued their negotiations during the weekend but failed to reach a deal.

According to White House Chief of Staff Mark Meadows, Republicans wanted to extend some federal unemployment benefits while continuing negotiations on the whole package but Democrats wanted a comprehensive deal.

He also added that he was not optimistic that negotiations would successfully conclude in the near term.

Failure to extend special unemployment benefits poses risks for consumer activity which is the main driver of the U.S. economy. On the other hand, excessive money-printing could put additional pressure on the U.S. dollar and its status as the world’s main reserve currency.

Today, traders will have to digest UK Manufacturing PMI and U.S. Manufacturing PMI reports for July.

UK Manufacturing PMI is projected to increase from 50.1 in June to 53.6 in July.

In the U.S., Manufacturing PMI is expected to grow from 49.8 to 51.3. Numbers above 50 show expansion.

Manufacturing was not hit as hard as services during the current crisis so there’s a good chance that today’s data will be optimistic and provide some additional support to riskier assets.

Technical Analysis

gbp usd august 3 2020

GBP/USD tries to stabilize near 1.3100 following the major upside move.

In case GBP/USD manages to settle above 1.3100, it will have a good chance to test the nearest resistance level at 1.3200.

On the support side, the nearest support level is located at 1.3070. GBP/USD has already made an attempt to settle below this level but this attempt was unsuccessful.

If GBP/USD settles below 1.3070, it will head towards the next support level at 1.3020.

Currently, GBP/USD continues to move in a rather tight upside channel, and the upside trend remains intact.

However, RSI is still in the overbought territory, suggesting that risks of correction remain elevated.

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

USD/CAD Daily Forecast – Resistance At The 20 EMA At 1.3460 Stays Strong

USD/CAD Video 31.07.20.

U.S. Dollar Fails To Gain More Momentum Against The Canadian Dollar

USD/CAD failed to settle above the 20 EMA at 1.3460 and pulled back closer to 1.3400.

Interestingly, the U.S. dollar is gaining ground against a broad basket of currencies today while WTI oil is making another attempt to settle below the $40 level but these catalysts fail to provide support to USD/CAD.

The U.S. Dollar Index has found support near 92.5 and managed to rebound above the 93 level.

The U.S. Dollar Index is seriously oversold so the current rebound may continue in case the right catalysts emerge. Such scenario will be bullish for USD/CAD.

The main worry for U.S. dollar bulls right now is the continued delay of the new U.S. coronavirus aid package due to disagreements between Republicans and Democrats.

The special unemployment benefits of $600 per week are set to expire, and U.S. consumers clearly need additional support.

As shown by today’s U.S. Personal Income and Personal Spending reports, the current measures were working well to support consumer activity.

While Personal Income declined by 1.1% in June after falling by 4.4% in May, Personal Spending increased by 5.6%. This would have not been possible without material government aid.

Meanwhile, Canada reported that its GDP increased by 4.5% month-over-month in May after falling by 11.7% in April. Unfortunately, Canada reports GDP data with a significant time lag so the current report will have no material impact on USD/CAD trading dynamics.

Technical Analysis

usd cad july 31 2020

USD to CAD is currently trading in a range between the support level at 1.3330 and the resistance level at the 20 EMA at 1.3460.

At this point, it looks like USD to CAD will need material catalysts to get out of this range.

In case USD to CAD manages to settle below the low end of the current trading range at 1.3330, it will head towards the next support level at 1.3270.

On the upside, a move above the 20 EMA will signal that USD to CAD is ready for an upside move.

However, USD to CAD will have to get above the major resistance at 1.3500 before it may gain significant upside momentum.

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

Oil Remains Under Pressure As Virus-Related Restrictions Pose Risk For Oil Demand

Oil Video 31.07.20.

New Coronavirus-Related Restrictions Put Quick Oil Demand Recovery Under Question

Yesterday, WTI oil tried to settle below the $40 level as traders turned their attention to the worsening situation on the coronavirus front.

However, weaker U.S. dollar provided material support for oil which managed to return back above $40.

Today, oil is once again under pressure as market participants evaluate multiple headlines which are telling the world that a new round of coronavirus restrictions is just behind the corner.

UK Prime Minister Boris Johnson had to postpone the next stage of reopening as the number of new coronavirus cases increased.

Australia’s Victoria state, which suffers from the second wave of the virus, has signaled that it was ready to introduce new restrictive measures as the number of new infections remained high.

Poland also thinks about new restrictions for those regions of the country that have problems with containing the disease.

Germany introduced a qurantine for people returning from Spain’s Catalonia – an additional blow to Spain’s tourism sector.

As various countries are thinking about reimposing some of virus containment measures, the speed of oil demand recovery is under question.

Obviously, no country in the world will be able to absorb an economic hit from a second full lockdown so such scenario is impossible.

However, postponement of reopenings or introduction of additional restrictive measures is a serious obstacle on oil’s way to higher levels.

In addition, current problems with negotiations regarding the new U.S. coronavirus aid package add to traders’ worries.

Spread Between Front-Month Contract And Longer-Dated Contracts Starts To Increase

In a sign of potential glut, the spread between the front-month September 2020 contract and longer-dated contracts has started to increase for both WTI and Brent.

It looks like traders are worried that OPEC+ decision to increase production by 2 million barrels per day (bpd) comes at an unfortunate time as demand remains rather weak due to continued spread of coronavirus.

For example, the spread between the WTI September 2020 contract and the March 2021 contract is almost $2. The same difference is seen between Brent September 2020 and March 2021 contracts.

At this point, WTI oil is at important crossroads since it can stay near the $40 level or dive below the recent trading range, starting a new near-term downside trend under the weight of surging coronavirus cases.

In this situation, the upcoming trading sessions may set the tone for the whole month of August.

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

Silver Price Daily Forecast – Silver Attempts To Get Back Above $24.00

Silver Video 31.07.20.

Silver Tries To Rebound After The Recent Pullback

Silver tries to settle back above $24.00 as gold continues its upside move while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently declined below the 93 level but found support near 92.5 and is attempting to get back above 93.

U.S. dollar weakness is bullish for precious metals as it makes them cheaper for investors who have other currencies, and the major decline of American currency has certainly helped the rally in gold and silver.

However, the U.S. dollar is clearly oversold against a broad basket of currencies so there is a significant risk of a pullback which may put some pressure on precious metals.

Meanwhile, gold continues its upside move, which is bullish for silver. Gold futures have even touched the $2000 level while spot gold is yet to break above $1985.

Gold/silver ratio faced resistance below the 85 level and pulled back below 82. Gold/silver ratio’s RSI has returned back into the moderate territory so gold/silver ratio may continue the downside trend in case the right catalysts emerge.

In the near term, silver trading will likely be impacted by the outcome of coronavirus aid package negotiations in the U.S. Successful negotiations may provide material support to the American currency, which will be bearish for silver.

Technical Analysis

silver july 31 2020

Silver faced resistance near $24.50 and is pulling back. However, silver still maintains chances to settle above $24.00 and get to the test of the nearest resistance at $24.50.

In case this test is successful, silver will head towards the next resistance level at $24.95. A move above $24.95 will open the way to the recent highs at $26.20.

On the support side, the nearest support level is located at $23.25. A move below this level will likely lead to increased downside momentum, pushing silver towards the major support at $22.30.

At this point, silver is set for choppy trading action after the major upside move. For now, silver will likely stay in the range indicated by the recent wild trading day when silver touched resistance at $26.20 and support at $22.30.

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

U.S. Stocks Set To Open Higher As Big Tech Reports Strong Earnings

Big Tech Beats Earnings Estimates

Amazon, Apple, Alphabet and Facebook have recently provided their second quarter reports.

Amazon revenues were up 40% year-over-year while its earnings of $10.30 per share beat analyst estimates by $8.80.

Apple’s revenue and earnings were also higher than estimates. The company stated that the release of iPhone 12 will be postponed by several weeks and also announced a four-for-one stock split.

Alphabet’s earnings were less spectacular but the company comfortably beat estimates with revenue of $38.29 billion and earnings of $10.13 per share.

Facebook’s revenue was up almost 11% year-over-year despite the challenges brought by coronavirus pandemic while the company’s earnings of $1.80 per share easily beat analyst expectations.

Not surprisingly, all these stocks are gaining ground during the premarket trading session. The Big Tech was the main driver of the market’s upside move from the bottom reached in mid-March, so S&P 500 futures are also up in premarket trading.

Coronavirus Aid Package Negotiations Have Yielded No Deal Yet

While traders cheer the great results of big tech companies, their attention may later shift to coronavirus aid package negotiations.

At this point, there are no signs of progress. The $600 weekly unemployment benefits are about to expire, and failure to maintain the program in some form may put heavy pressure on consumer activity.

While there is always a chance of a last-minute deal, worries about the stimulus package may put some pressure on stocks later in the trading session.

Personal Income Fell By 1.1% In June

The U.S. has just provided Personal Income and Personal Spending reports for June.

Personal Income declined by 1.1% month-over-month, while analysts expected a decline of 0.5%. The pace of the decline has decreased compared to May when Personal Income fell by 0.5%.

Meanwhile, Personal Spending increased by 5.6% month-over-month, mostly in line with the analyst consensus which called for an increase of 5.5%.

While Personal Income is under pressure due to the negative impact of the coronavirus pandemic, Personal Spending is supported by various government aid programs.

That’s why failure to reach a deal on the new coronavirus aid package may have a significant negative impact on the market.

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

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

GBP/USD Video 31.07.20.

U.S. Dollar Remains Under Serious Pressure

GBP/USD rallied above 1.3100 as the U.S. dollar continued to lose ground against a broad basket of currencies on fears about the speed of U.S. economic recovery.

The U.S. Dollar Index continued its slide and managed to get below the 93 level.

The continued spread of coronavirus in the U.S., challenging negotiations about the next coronavirus aid package and recent Trump’s tweet suggesting a possible delay in U.S. elections were the key catalysts for the downside move.

After his tweet, U.S. President Donald Trump stated that he did not want to postpone the election but was worried about problems with mail-in ballots.

However, the damage to the U.S. dollar was already done as traders started to think about potential problems with the upcoming U.S. presidential election.

Meanwhile, Republicans and Democrats continue to negotiate the new coronavirus aid package. It’s the last day of month, and the federal jobless benefit is set to expire.

Failure to maintain the program will lead to an additional blow to the U.S. economy as consumer spending will quickly decline, putting pressure on businesses and causing job losses.

Yesterday’s employment reports showed that the job market has started to succumb to pressure from the spread of coronavirus. U.S. Initial Jobless Claims increased to 1.43 million while Continuing Jobless Claims jumped to 17 million.

Technical Analysis

gbp usd july 31 2020

GBP/USD continues to rally and is trying to settle above 1.3100. The nearest resistance for GBP/USD is located at 1.3200.

RSI is at extremely overbought levels but broad weakness of the U.S. dollar continues to push GBP/USD higher. That said, the risks of a pullback increase day by day.

On the support side, the nearest support level for GBP/USD is located at 1.3070. In case GBP/USD moves below this support level, it will head towards the next support at 1.3020.

Currently, the U.S. dollar sell-off looks like a true panic so the market may easily ignore the fact that U.S. dollar is seriously oversold. At this point, GBP/USD maintains good chances to test the nearest resistance at 1.3200.

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

USD/CAD Daily Forecast – Canadian Dollar Loses Ground As WTI Oil Dips Below $40

USD/CAD Video 30.07.20.

U.S. Dollar Tries To Develop Upside Momentum

USD/CAD returned back above 1.3400 as WTI oil dipped below the $40 level and put pressure on commodity-related currencies.

The U.S. dollar is mostly flat against a broad basket of currencies, and the U.S. Dollar Index has settled below 93.5 in a rather volatile trading session.

The recent U.S. Initial Jobless Claims report indicated that 1.43 million Americans filed for unemployment benefits in a week, mostly in line with the analyst consensus of 1.45 million.

The Continuing Jobless Claims report brought a negative surprise as it showed that Continuing Jobless Claims increased from 16.2 million to 17 million.

This increase indicates that the U.S. job market has likely taken another blow from the continued spread of the virus.

Second-quarter U.S. GDP report was horrific as GDP declined by 32.9%. However, the market was ready to hear the bad news since analysts expected a decline of 34.1%.

It remains to be seen whether the recent employment data will be able to boost safe haven buying in U.S. dollar since search for protective assets has recently shifted into the precious metals.

In addition, U.S. Treasury yields continue to decrease, making the American currency less attractive from an income point of view.

The U.S. President Donald Trump has recently added to uncertainty, raising the possibility of delaying the Presidential election due to mail-in voting because of coronavirus.

Technical Analysis

usd cad july 30 2020

USD to CAD has once again tested the resistance level at 1.3440. USD to CAD managed to get above this level but met additional resistance just below the 20 EMA level at 1.3470 and pulled back below 1.3440.

In case USD to CAD manages to settle above 1.3440, it will have good chances to get to the test of the major resistance level at 1.3500.

A move above 1.3500 will indicate that USD to CAD is ready for another attempt to establish an upside trend.

On the support side, USD to CAD has recently received support near 1.3330, just above the low of the previous downside move at 1.3315.

A move below this level will likely lead to increased downside momentum, taking USD to CAD closer to the next support level at 1.3270.

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

Oil Slides Below $40 But Quickly Finds Support

Oil Video 30.07.20.

Coronavirus In Spotlight Again

For several months, oil managed to ignore the steady increase in the number of new coronavirus cases in the world and stayed near the $40 level.

Today, WTI oil has moved below the $40 mark in what could be the most serious attempt to gain more downside momentum.

The virus situation continues to get worse, and some countries are reimposing virus containment measures to fight against the second wave of the disease.

Notably, UK has stated that it was worried about the second wave of coronavirus in Europe and added that it may impose quarantine measures on more countries.

At this point, Spain is the only EU country in the UK quarantine list, and UK travellers to Spain have to self-isolate for 14 days after arrival.

Such measures are a death blow to the fragile rebound in tourism – and to the related rebound in air travel.

Another source of worry is OPEC’s decision to increase oil production by 2 million barrels per day (bpd) in August. This increase may come at unfortunate time if oil demand recovery stalls due to the spread of coronavirus.

Yesterday’s inventory report provided some hopes that oil demand recovery would ultimately put pressure on inventories. However, oil traders will likely wait for a decisive downside trend in crude inventories before pushing oil prices above the recent highs at $42.50.

Despite Coronavirus Worries, Oil May Still Repeat The Pattern Seen In The Last Few Months

Following the historic meltdown in April which took WTI futures into the negative territory, oil was able to reach the $40 level in June and continued to stay near this level for 2 months.

During this time, oil made three attempts to settle below the $40 level but each attempt was met with increased buying activity.

While the continued problems on the coronavirus front may prevent oil from developing significant upside momentum, a serious move below the $40 level may demand additional negative catalysts.

The main problem for the potential bear move is that OPEC+ deal has stabilized the market situation and eliminated fears of running out of the storage space.

The timing of oil demand recovery is, of course, important for near-term oil price dynamics but the market is focused on the future, and the ultimate rebound of oil demand is inevitable. This fact may limit oil’s losses even in case the virus situation gets worse.

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

Silver Price Daily Forecast – Silver Pulls Back Below $24.00

Silver Video 30.07.20.

Silver Tests The Support At $23.25

Silver fell below the support level at $24.00 and is testing the next support level at $23.25 as gold pulled back from record highs while gold/silver ratio rebounded above 83.

Gold has declined closer to the $1950 level as some traders started to take their profits after the major rally. Yesterday’s Fed commentary put pressure on the global markets so some market participants may want to raise more cash.

Gold/silver ratio continued its rebound and is trying to settle above the 84 level. This is an important resistance level for gold/silver ratio, and a move above 84 will open the way to the test of the 20 EMA level at 88.40. This scenario will be bearish for silver.

Meanwhile, the U.S. dollar is flat against a broad basket of currencies. The U.S. Dollar Index made an attempt to settle above 93.5 but failed to gain more upside momentum and declined closer to recent lows.

Additional weakness of the U.S. dollar will be bullish for silver and other precious metals as it will make them cheaper for buyers who have other currencies.

However, I’d note that U.S. Dollar Index is in the oversold territory and the risk of a rebound is still significant.

Technical Analysis

silver july 30 2020

Silver has made an attempt to settle below the support level at $23.25 but this attempt was not successful so silver stays in the range between the previous support at $24.00 and support at $23.25.

RSI is returning to more normal levels so silver may develop additional upside momentum in case the right catalysts emerge. At this point, an additional U.S. dollar weakness may serve as a catalyst that may support silver.

In case silver settles below the support at $23.25, it will head towards the next support level at $22.30. A move below this level will signal that the current upside momentum has come to an end. In this scenario, silver will decline towards the 20 EMA at $21.30.

On the upside, silver will likely face some resistance at the previous support level at $24.00. If silver manages to get above this level, it will head towards the next resistance level at $24.95. A move above $24.95 will likely provide silver with an opportunity to test the recent highs at $26.20.

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

U.S. Stocks Set To Open Lower As Continuing Jobless Claims Jump To 17 Million

Fed Promises To Support The Economy As Long As Necessary

Yesterday, S&P 500 gained more than 1% as the Fed promised to use all available tools to support the economic recovery.

At the same time, the Fed noted that current data was pointing to a slowdown in the pace of the recovery.

The Fed also stated that the speed of the recovery depended on progress on the coronavirus front.

Unfortunately, the U.S. and the world in general have so far failed to contain the disease, and some nations that have been successful in dealing with the first wave of the virus are now struggling to contain it.

It remains to be seen whether Fed’s support will be able to push stocks higher from current levels without notable progress on the virus front.

Traders are worried that Fed’s stimulus may not be sufficient enough to take stocks to higher levels, and S&P 500 futures are losing ground in premarket trading.

U.S. GDP Declines By 32.9% In The Second Quarter

On a quarter-over-quarter basis, the U.S. GDP shrank by as much as 32.9% in the second quarter. Analysts expected that GDP will decline by 34.1%.

The GDP report was a bit better than expected but still highlighted a huge blow to the U.S. economy which is not surprising since economic activity was hit hard by coronavirus-related restrictions.

The second-quarter economic data was generally better than expected, and it is possible that traders believed that the decline of GDP will be less than 30% so the current GDP Growth Rate report may be viewed as a disappointment.

Continuing Jobless Claims Increase To 17 Million

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

The Initial Jobless Claims report showed that 1.43 million Americans filed for unemployment benefits in a week. Analysts expected that Initial Jobless Claims would total 1.45 million.

Meanwhile, Continuing Jobless Claims were 17 million while the analyst consensus called for Continuing Jobless Claims of 16.2 million.

The sudden increase in Continuing Jobless Claims shows that more people who have lost their jobs failed to find new ones. This is a worrisome development that may put additional pressure on the market.

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

GBP/USD Daily Forecast – British Pound Pulls Back After Major Upside Move

GBP/USD Video 30.07.20.

U.S. GDP Growth Rate In Focus

GBP/USD faced resistance at 1.3020 and declined below 1.3000 as the U.S. dollar started to rebound against a broad basket of currencies.

The U.S. Dollar Index fell as low as 93.18 immediately after yesterday’s Fed Interest Rate Decision but then managed to get more support and is currently trying to settle above 93.5.

The Fed acknowledged that the speed of economic recovery depended on the progress on the coronavirus front and also stated that the recent surge in the number of new cases was hurting economic prospects.

The Fed also promised to support the economy as long as necessary but did not announce any new measures. Most likely, any new decisions will be made in the fall.

Today, the U.S. will release the second quarter GDP Growth Rate report. Analysts expect that GDP has contracted by 34.1% quarter-over-quarter as coronavirus-related restrictions dealt a heavy blow to the economy.

Meanwhile, the Initial Jobless Claims report is projected to show that 1.45 million Americans filed for unemployment benefits in a week, compared to 1.42 million in the previous week. Continuing Jobless Claims are expected to stay flat at 16.2 million.

Any negative surprise on the employment front could put pressure on riskier assets. At the same time, it remains to be seen whether the U.S. dollar will be able to benefit from safe haven buying as demand for safe haven assets has shifted to precious metals.

Technical Analysis

gbp usd july 30 2020

GBP/USD is pulling back after the major upside move. The nearest support for GBP/USD is located at 1.2900.

In case GBP/USD declines below this support level, it will head towards the next support level which is located at the high of the previous upside move at 1.2815.

On the upside, GBP/USD faced resistance at 1.3020. If GBP/USD manages to settle above this level, it will head to the next resistance level at 1.3070.

The current pullback is not suprising since RSI was in the overbought territory. At this point, the upside trend in GBP/USD remains intact, and the U.S. dollar will likely need strong positive catalysts to break the current trend.

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

USD/CAD Daily Forecast – Waiting For Signals From The Fed

USD/CAD Video 29.07.20.

U.S. Dollar Remains Under Some Pressure Ahead Of Fed Interest Rate Decison

USD/CAD continues to trade near 1.3360 as traders await the Fed Interest Rate Decision and subsequent commentary from Jerome Powell.

U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is trying to settle below the key support level at 93.5.

Currently, the U.S. Dollar Index is losing ground and has decent chances to settle below the support at 93.5 and gain additional downside momentum.

However, everything can change in a second if the Fed does not sound as dovish as the market wants it to be.

In this case, the U.S. dollar may experience a significant rebound, helped by the fact that the U.S. Dollar Index is clearly oversold.

Meanwhile, oil has settled above the $41 level, supported by a significant decrease in crude oil inventories. Oil’s relative strength provides some support to commodity-related currencies including the Canadian dollar.

Traders should expect that trading in USD/CAD will be rather calm ahead of the Fed Interest Rate Decision, with some attempts to move in either direction just ahead of the rate announcement.

However, the bigger move may happen when Jerome Powell will speak during the Fed Press Conference, half an hour after the rate announcement.

Technical Analysis

usd cad july 29 2020

USD to CAD stays near 1.3360 after an unsuccessful attempt to get to the test of the support level at 1.3315. At this point, it looks like USD to CAD will need more U.S. dollar weakness to get to the test of this level.

In case USD to CAD settles below 1.3315, it will head towards the next support level at 1.3270.

On the upside, the nearest material resistance for USD to CAD is located at 1.3440, although it looks like USD to CAD faces some resistance near 1.3400.

In case USD to CAD manages to get above 1.3440, it will head towards the major resistance level at 1.3500. Along the way, USD to CAD could face resistance at the 20 EMA, which has declined to 1.3475.

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