U.S. Stocks Set To Open Lower As Virus Worries Return Again

A New Virus Record In The U.S.

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

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

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

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

Gold Rallies Towards $1800

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

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

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

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

ADP Employment Change Report Is Worse Than Expected

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

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

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

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

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

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

GBP/USD Video 01.07.20.

The Test Of The Key Support Level Was Unsuccessful

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

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

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

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

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

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

Technical Analysis

gbp usd july 1 2020

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

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

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

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

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

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

USD/CAD Video 30.06.20.

Canadian Dollar Gains Ground As Demand For Riskier Currencies Increases

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

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

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

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

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

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

Technical Analysis

usd cad june 30 2020

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

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

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

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

Oil Loses Ground As Traders Take Profits Under The $40 Level

Oil Video 30.06.20.

Oil Still Lacks Catalysts To Settle Above The $40 Level

Oil is under some pressure today. While there are no material catalysts for this weakness, it looks like oil does not have enough catalysts to get above the key $40 level so some traders are taking their profits.

Also, traders are waiting for Wednesday which will be full of catalysts. First, traders will digest a number of U.S. economic reports. Second, the market will take a look at the new data regarding U.S. inventories and domestic oil production.

Without this important data, traders are reluctant to become too bullish on oil since negative news could lead to a sell-off.

I’d note that the current trend in the oil market is certainly bullish since oil has managed to ignore all the recent bad news on the coronavirus front as well as the recent increase in U.S. domestic oil production.

However, the $40 level is a very serious resistance level for oil so the market will likely need more catalysts to continue the upside move.

Royal Dutch Shell Is Set To Write Down Up To $22 Billion Of Assets

It is always interesting to see what oil majors think about longer-term oil price trends. Due to the impact of the coronavirus pandemic, Shell decided to change its commodity price outlook which will lead to post-tax impairment charges of $15 billion – $22 billion.

Shell believes that Brent oil price will average $35 per barrel in 2020, $40 in 2021, $50 in 2022 and $60 in 2023. The long-term price assumption is $60 per barrel.

This outlook is based on rather conservative expectations for the recovery of oil demand. Currently, the front-month Brent contract is trading above $40 so Shell’s forecast calls for additional softness in Brent.

Facing an unprecedented shock, oil companies will likely be very conservative with their forecasts so oil traders may have a more optimistic view on future oil prices.

However, the forecasts of majors should not be discounted since they have access to the best data in the industry and generally know what they are talking about. Shell’s forecast implies a gradual recovery of the oil market which looks realistic. It’s important to note that Shell’s forecast includes average prices, and oil will likely remain very volatile in the upcoming months and years.

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

Silver Price Daily Forecast – Silver Stays Below $18.00

Silver Video 30.06.20.

Silver Tries To Get Additional Upside Momentum

Silver continued its unsuccessful attempts to get above the resistance at $18.00 as the U.S. dollar gained ground against a broad basket of currencies while gold was mostly flat.

A stronger U.S. dollar is bearish for precious metals since it makes them more expensive for investors who have other currencies. Currently, the U.S. Dollar Index is making a serious attempt to settle above the key resistance level at 97.5.

If this attempt is successful, the U.S. dollar will likely gain additional upside momentum which will be a headwind for silver.

Meanwhile, gold stays above the $1750 level and maintains its strength as traders bet on additional upside. The coronavirus pandemic continues to progress in the world, supporting demand for safe haven assets.

Gold/silver ratio has settled below the 20 EMA at 99.30. Recently, gold/silver ratio tried to develop upside momentum above 100 but failed and returned back below this level.

Recent economic data shows that the recovery is progressing faster than analysts expected which is good for silver which is dependent on industrial demand. However, fears about the second wave of coronavirus put some pressure on silver and do not allow the downside trend in gold/silver ratio to resume.

Technical Analysis

 

silver june 30 2020

Silver continues to trade near $18.00 but fails to get above this resistance level. I’d note that while silver has actively traded between $17.50 and $18.00 in the previous week, the trading range is getting tighter which means that chances for a breakout are increasing.

In this situation, a move above $18.00 should result in a significant upside momentum, and silver will quickly head towards the next resistance level below $18.50.

Silver has been mostly trading in the $17.50 – $18.00 range for a month, so it will have solid chances to get to the test of the major resistance at $19.00 in case it gets above $18.00.

On the support side, the nearest major support level is located at $17.50. However, the 20 EMA continues to rise so it may soon provide some support at higher levels.

A move below $17.50 will put the current upside trend under question, while a move below the next support level at $17.00 will signal the beginning of a new downside trend.

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

U.S. Stocks Mixed As Traders Are Undecided About The Next Move

The Market Needs Additional Catalysts

S&P 500 futures are swinging between gains and losses in the premarket trading session as the market lacks catalysts.

I’d note that traders seem to be interested in safe haven assets since the U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is gaining ground.

The U.S. Dollar Index has managed to settle above the key resistance at 97.5 and continues the upside move. While the S&P 500 futures are currently flat, the upside move of the U.S. dollar highlights the rather bearish mood of the market which is still worried about the situation on the coronavirus front.

Right now, the main risk for stocks is an additional round of virus containment measures. For example, Britain has just been forced to impose a new lockdown on the city of Leicester as coronavirus cases surged. If similar developments happen in other places, stocks will likely find themselves under increased pressure.

All Eyes On Employment Data Which Is Due To Be Published On Wednesday

It looks like the market is waiting for a new portion of economic data which is due to be published on Wednesday.

The U.S. will provide ADP Employment Change report for June which is expected to show that private employment has increased by 3 million. The report for May showed that 2.76 million workers were fired after a devastating April when 19.6 million people lost their jobs.

In addition to the ADP Employment Change report, traders will have to digest Manufacturing PMI data. Markit Manufacturing PMI is expected to increase from 39.8 in May to 49.6 in June, while ISM Manufacturing PMI is projected to grow from 43.1 to 49.5. Numbers below 50 show contraction.

Cirque Du Soleil Files For Bankruptcy Protection, Highlighting The Troubles Of The Entertainment Sector

The famous Cirque du Soleil was forced to file for bankruptcy protection as the company was not able to continue business with zero revenue since all its shows were cancelled due to the coronavirus pandemic.

Cirque du Soleil is a household name so it attracts a lot of attention but similar stories will happen across the entertainment sector this summer as businesses do not have the cushion to survive without revenue for months.

It remains to be seen whether the market will take this threat seriously, but a slower-than-expected reopening of the economy will deliver additional blow to services and result in lower GDP numbers.

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

GBP/USD Daily Forecast – British Pound Remains Under Pressure

GBP/USD Video 30.06.20.

Key Support At 1.2250 In Sight

GBP/USD continues to trend down as the U.S. dollar gains ground against a broad basket of currencies while the British pound is under pressure due to fears about increased public spending in the UK.

The U.S. Dollar Index continues its attempts to settle above the key resistance level at 97.5. The situation with coronavirus continues to get worse, and some U.S. states have already decided to close bars and paused with reopening of movie theaters and indoor dining.

Fears about the implementation of additional virus containment measures provide support to safe haven assets like the U.S. dollar.

On the other hand, the economic data continues to deliver positive suprises. Yesterday, the U.S. Pending Home Sales report showed that Pending Home Sales increased by as much as 44.3% month-over-month in May.

The UK has just reported the final reading of the first-quarter GDP Growth Rate. The report was worse than expected as GDP declined by 2.2% quarter-over-quarter compared to analyst consensus which called for a decline of 2%. Second-quarter GDP Growth Rate will be much worse.

Meanwhile, UK Prime Minister Boris Johnson wants to revive economy with an infrastructure plan but markets question Britain’s ability to pay for this investment. The prospect of more money-printing puts additional pressure on the British pound.

Technical Analysis

gbp usd june 30 2020

GBP/USD continues to trend down in a local downside channel and is testing the low end of the current trading range at 1.2250. This is a very important moment for GBP/USD as a move below the support at 1.2250 will provide a chance to establish a new downside trend and move away from 1.2250 – 1.2650 range.

In this scenario, GBP/USD will develop additional downside momentum and head towards the next support level at 1.2170. I’d note that the 20 EMA has just crossed the 50 EMA to the downside, suggesting the continuation of the current downside trend.

On the upside, the nearest resistance level is located at 1.2350. A move above this resistance level will likely lead to increased upside momentum and take GBP/USD closer to the next resistance level at the 20 EMA at 1.2430.

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

USD/CAD Daily Forecast – Resistance At The 50 EMA Stays Strong

USD/CAD Video 29.06.20.

U.S. Dollar Continues To Get Support From Fears About The Second Wave Of Coronavirus

USD/CAD continues its attempts to get above the 50 EMA level at 1.3710. The U.S. dollar was losing ground at the beginning of the day, but a better-than-expected Pending Home Sales report provided support to the American currency.

Surprisingly, Pending Home Sales have increased by 44.3% month-over-month in May which was much better than analyst consensus which called for an increase of 18.9%.

Supported by the good report, the U.S. Dollar Index continued its attempts to settle above the key resistance at 97.5. In case U.S. Dollar Index manages to get above this level, USD/CAD will have a very good chance to develop additional upside momentum above the 50 EMA.

Canada also reported housing data today. Building Permits have increased by 20.2% month-over-month in May. Analysts expected that Building Permits will grow by 15%.

In general, the economic data shows that the rebound of the economic activity is happening faster than previously expected. Theoretically, this should provide support to riskier currencies like the Canadian dollar. However, it looks like fears of the second wave of coronavirus are providing support to safe haven assets like the U.S. dollar.

Technical Analysis

usd cad june 29 2020

USD/CAD is trying to settle above the 50 EMA at 1.3710. This is a strong resistance level, and USD/CAD will likely develop significant upside momentum in case it manages to settle above the 50 EMA.

In this scenario, USD/CAD will head towards the next major resistance level at 1.3800. Previously I expected that USD/CAD will face resistance at 1.3730, but the 50 EMA has moved lower and it’s hard to count on significant resistance at 1.3730 in case USD/CAD will manage to get above the 50 EMA at 1.3710.

On the support side, the nearest support level is located at the 20 EMA at 1.3625. A move below the 20 EMA will put USD/CAD back into the trading range between the 20 EMA and the support level at 1.3500.

Now that USD/CAD has settled above the 20 EMA, it tries to establish an upside trend. This upside trend will get significant support once USD/CAD get above the resistance at the 50 EMA at 1.3710.

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

Oil Gains Ground As Traders Shrug Off Virus Fears

Oil Video 29.06.20.

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

The recent Baker Hughes weekly survey indicated that the number of active drilling rigs in the U.S. declined by 1 to 265. The number of U.S. rigs drilling for oil also declined by 1 to 188.

The number of active rigs plummeted since the beginning of the coronavirus crisis and had a significant negative impact on U.S. domestic oil production.

However, the recent EIA Weekly Petroleum Status report has shown that U.S. oil production has increased from 10.5 million barrels per day (bpd) to 11 million bpd.

For now, this increase failed to trigger a significant sell-off as traders continue to bet that demand will recover fast. However, the recent surge in the number of new coronavirus cases around the world raises the possibility of additional lockdowns which could negatively impact the demand for oil.

At this point, the oil market is still in a very bullish mode as virus worries are only sufficient enough to trigger one-day sell-offs which are followed by immediate rebounds.

Chesapeake Energy Files For Bankruptcy

One of the leading shale players Chesapeake has just filed for bankruptcy protection in order to restructure its debt amid the unprecedented crisis.

While Chesapeake was focused on gas production, its fate is expected to be shared by many shale players this year since oil prices stay at low levels.

Chesapeake plans to cut the number of drilling rigs as part of its plan to improve its business, but traders should not expect that each bankruptcy will lead to immediate production cuts.

In a bankruptcy, the company’s lenders typically become the new shareholders while previous shareholders get wiped out or get a token recovery. This process makes the company much stronger as it get rid of the debt burden and the associated interest payments.

Thus, a company becomes more competitive and has more funds to invest in its business. Failure to understand the U.S. bankruptcy process has already cost billions of dollars to Saudi Arabia when it tried to destroy the U.S. shale industry back in 2014 – 2016.

Saudi Arabia won’t be making the same mistakes twice but traders should keep in mind that shale oil bankruptcies will not automatically lead to major production cuts.

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

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

Silver Video 29.06.20.

Silver Continues To Trade Above The 20 EMA At $17.55

Silver has firmly settled in the range between the support level at $17.50 and the resistance level at $18.00 and continues its attempts to get to higher levels.

The U.S. dollar is providing support to silver today as the U.S. Dollar Index is under pressure. A weaker U.S. dollar is bullish for silver as it makes it cheaper for buyers who have other currencies.

The U.S. Dollar Index has made several attempts to settle above the resistance at 97.5 but failed to get upside momentum which is a good development for silver bulls.

Meanwhile, gold is mostly flat but stays above the key $1750 level. The demand for gold remains high as traders want to protect themselves against a potential global market sell-off which may be caused by problems on the coronavirus front.

Gold/silver ratio stays near the 20 EMA at 99.35. Recently, gold/silver ratio tried to develop upside momentum above 100. A continuation of this move would have been bearish for silver, but gold/silver ratio returned back below 100.

It remains to be seen whether gold/silver ratio will be able to resume the downside move in the near term, but a potential return to pre-crisis levels below 90 remains an important part of the bullish thesis for silver.

Technical Analysis

silver june 29 2020

The technical situation has not changed much since my previous article on silver was published. Silver continues to trade in a range between $17.50 and $18.00 while trying to get to higher levels.

If this happens, silver will likely get solid upside momentum and head towards the test of the next material resistance level below $18.50.

On the support side, a move below the 20 EMA could be a major problem for silver bulls as it will likely trigger many protective stops and lead to a fast sell-off.

In this scenario, silver could quickly test the 50 EMA level at $17.00. A move below the 50 EMA will be a major victory for silver bears as it will signal the beginning of a new downside trend.

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

U.S. Stocks Set To Open Higher As Traders Buy Stocks After The Recent Pullback

Coronavirus Continues To Spread Actively Across The World

According to data from Johns Hopkins University, more than 10 million coronavirus cases have been registered in the world since the beginning of the pandemic. The U.S. is at the top of the list with more than 2.5 million cases.

Lately, the increase in the number of new cases has pushed Texas, Florida and California to close bars which are believed to play a big role in the spread of the virus. As reopenings lead to the increase in the number of new cases in some parts of the world, the pace of additional reopenings is unclear.

Nevertheless, S&P 500 futures were able to shrug off virus worries during the premarket trading session and are pointing to a higher open as traders rush to buy stocks after the recent pullback.

Facebook In Spotlight As More Advertisers Join The Boycott Campaign

Shares of Facebook have suffered an 8% loss on Friday as the company found itself under pressure due to a boycott campaign aimed at improving the moderation process and removing hate speech from the platform.

Many companies have already joined this campaign and refused to buy ads from Facebook, and new names are added every day. According to a FOX Business Network report, Pepsi has joined the campaign over the weekend.

Facebook shares have already fully recovered from the losses they incurred during the acute phase of the coronavirus crisis and are up 5% year-to-date even after the recent sell-off.

However, the stock looks set to continue the current downside move as it is already losing ground in the premarket trading session.

Traders Await Key Employment Reports

On Wednesday, the U.S. will provide ADP Employment Change report for June. On Thursday, the market will have to digest new data on Initial Jobless Claims, Continuing Jobless Claims and Non Farm Payrolls.

These reports will likely have a major impact on market sentiment. At this point, the market is worried about the spread of coronavirus but these worries are offset by optimism about the economic recovery.

Currently, global markets are undecided about future direction. The U.S. dollar, which serves as the safe haven asset of last resort, is losing ground, while the other safe haven asset, gold, continues its upside move.

The release of the employment reports should provide traders with more data on the health of the economy and set the trend for the next few weeks.

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

 

GBP/USD Daily Forecast – Support At 1.2350 Stays Strong

GBP/USD Video 29.06.20.

Traders Are Focused On Virus News But Riskier Currencies Still Get Some Support

GBP/USD is rebounding from the support at 1.2350 after an unsuccessful attempt to settle below this level.

The U.S. dollar is supported by fears of the second wave of coronavirus but this support is offset by recovery hopes. As a result, the U.S. Dollar Index has repeatedly failed to settle above the key resistance level at 97.5.

According to data from Johns Hopkins University, the world has already registered more than 10 million coronavirus cases. On Sunday, the World Health Organization has recorded the maximum amount of new daily cases.

Some U.S. states have decided to close bars in an attempt to contain the spread of the disease. At this point, this move did not have a major impact on market sentiment since bars are not a big part of the economy and the economic activity continues to rebound elsewhere.

Today, the U.S. will report Pending Home Sales for May. Analysts expect that the number of Pending Home Sales has increased by 19.9% on a month-over-month basis.

Technical Analysis

gbp usd june 29 2020

GBP/USD has tested the support at 1.2350 and even managed to get below this level. However, the U.S. dollar failed to develop additional upside momentum, and GBP/USD has settled above this support level.

Nevertheless, GBP/USD continues to trend down in a local downside channel, and another test of the support at 1.2350 may be coming soon. If this test is successful, GBP/USD will head towards the low end of the current trading range at 1.2250.

I’d note that the 20 EMA is crossing the 50 EMA to the downside, indicating that the downside momentum continues to develop.

On the upside, GBP/USD will have to get above the 20 EMA and the 50 EMA near 1.2450 to break the local downside trend and have a chance to develop more upside momentum.

If this happens, GBP/USD will head towards the highs of the recent rebound near 1.2530. In case GBP/USD gets above this level, the road to the high end of the current trading range at 1.2650 will be open.

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

USD/CAD Daily Forecast – Test Of Resistance At The 50 EMA

USD/CAD Video 26.06.20.

Virus Fears Boost Demand For Safe Haven Assets

USD/CAD continues its upside move amid fears of the second wave of coronavirus and weaker oil.

The number of new daily coronavirus cases in the U.S. is at all-time high, and the markets fear that the recent surge may force authorities to restore some of the virus containment measures.

This fear drives demand for safe haven assets like the U.S. dollar, and the U.S. Dollar Index, which measures the strength of the American currency against a broad basket of currencies, is trying to settle above the resistance level at 97.5.

If this attempt is successful, the U.S. dollar may gain additional upside momentum which would be bullish for USD/CAD.

Today, the U.S. has reported that Personal Income has declined by 4.2% month-over-month in May while Personal Spending has increased by 8.2%.

The increase of Personal Spending was a bit softer than expected but still highlighted the strong recovery of consumer activity in May. However, this increase was not able to provide support for riskier assets today as traders focused their attention on virus data.

In addition, the U.S. Fed has told the banks to skip share buybacks in the third quarter and limit dividends to current levels, increasing fears that the road to full recovery would be a very long one.

Technical Analysis

usd cad june 26 2020

USD/CAD gained significant upside momentum after it managed to get above the resistance at the 20 EMA and predictably met resistance at the 50 EMA at 1.3710.

Now, USD/CAD will have to settle above the 50 EMA to gain additional momentum and continue the upside move.

I’d note that USD/CAD had no pullbacks after it managed to rebound from the support level at 1.3500 so it will need additional catalysts to get straight through the resistance at the 50 EMA.

If this happens, USD/CAD will head towards the next resistance level at 1.3800.

On the support side, the nearest support for USD/CAD is located at the 20 EMA which is currently located at 1.3610. A move below the 20 EMA will open the way to the test of the strong support level at 1.3500.

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

Oil Slides As Virus Worries Return

Oil Video 26.06.20.

The Oil Market Remains Undecided About The Threat Of The Second Wave

Yesterday, we discussed oil demand recovery as cars got back on the roads. Today, oil is losing ground due to fears that the second wave of the coronavirus pandemic will lead to new restrictions and put pressure on oil demand.

Obviously, the fundamental situation cannot change in just one day. The oil market remains very sensitive to traders’ sentiment. The sentiment is negative today since even the news about foreign mercenaries on Libya’s Sharara oilfield failed to provide support to oil prices.

Libya, which has been torn by a civil war, continues to have problems with the restart of its major oilfield which is capable of producing about 300,000 barrels per day (bpd).

While nobody expects that Libya will be able to reach such production levels anytime soon since the war has put pressure on the country’s infrastructure, a gradual return of Libya’s production would be a negative development for the oil market which continues to suffer from elevated inventory levels.

However, Libya’s troubles are ignored by the market which is focused on the increasing number of coronavirus cases in certain U.S. states.

At this point, it looks like the upcoming inventory and production reports will help oil traders decide whether they should worry about the virus or not.

Will U.S. Domestic Oil Production Continue To Increase?

In my opinion, the main topic of the next week for WTI oil traders is whether the U.S. domestic production will get above 11 million bpd.

This week’s report surprised the market as U.S. domestic oil production has suddenly increased from 10.5 million bpd to 11 million bpd. This was a sign that prices close to $40 per barrel can attract new production. However, the key question is how much production will be restored if oil stays near $40.

If the upcoming reports show that the recent increase was a one-time event, oil will have solid chances to get past $40 in the near term. However, a rapid increase of production could make the $40 level a true wall for oil, especially in the light of challenging situation on the coronavirus front.

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

Silver Price Daily Forecast – Silver Stays Above The 20 EMA

Silver Video 26.06.20.

Silver Remains Range-Bound

Silver continues to trade in the range between $17.50 and $18.00 as gold loses some ground and the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index  continues its attempts to get above the resistance at 97.5 but stays mostly unchanged. The U.S. dollar has shown strength during the recent trading sessions which is bearish for silver and other precious metals as it makes them more expensive for buyers who have other currencies.

Gold is pulling back from recent highs as global markets stay undecided on whether the potential second wave of coronavirus is a real threat. The $1750 level attracted a lot of interest so the choppy trading is not surprising.

Meanwhile, gold/silver ratio continues to decline and has settled below the 20 EMA at 99.25. Recently, gold/silver ratio managed to get above 100 but immediately pulled back which is a welcome sign for silver bulls.

Before the crisis, gold/silver ratio was below 90, and a return to these levels will provide big support for silver even in case gold shows some softness.

Technical Analysis

silver june 26 2020

At this point, silver was not able to develop sufficient upside momentum and stays in the range between the support at the 20 EMA at $17.50 and the resistance near $18.00.

The support at $17.50 has already been tested many times so silver may develop strong downside momentum in case it manages to settle below this level.

In this scenario, silver will decline to the next support at $17.00 which is also projected to be a strong level. The support at $17.00 has also been tested a number of times, and the 50 EMA has risen to this level. A move below the 50 EMA will mark the end of the current upside trend.

On the upside, silver will first have to deal with the resistance at $18.00 in order to get a chance to test highs below $18.50 that were reached in early June . Currently, silver is forming a very solid base so if it is able to get above $18.00, it will have good chances to get past $18.50 and test the major resistance at $19.00.

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

U.S. Stocks Mixed Ahead Of The Weekend

Most Asset Classes Fail To Find Direction

S&P 500 futures are mostly flat in premarket trading as traders evaluate whether the recent surge in the number of new coronavirus cases will lead to a new series of lockdowns.

The U.S. dollar is flat against a broad basket of currencies, and the U.S. Dollar Index  continues its attempts to settle above the resistance at 97.5.

Gold is also flat and stays above the key $1750 level. The lack of action in the U.S. dollar and gold shows that markets are undecided about the next move.

Oil is swinging between gains and losses as demand for oil increases but fears about the second wave limit gains.

The Fed Tells Banks To Limit Dividends At Current Levels

While the economy has started to rebound after the acute phase of the crisis, the recovery will be a long process. In this light, the U.S. Federal Reserve has decided that banks will need to suspend share buybacks in the third quarter. At the same time, dividends should not exceed current levels.

The Fed has also told banks to submit updated capital plans as it prepares for a long fight against the consequences of the coronavirus disruption.

It remains to be seen whether the market will be worried about the Fed’s move, but banks like JP Morgan or Bank of America are losing ground in the premarket trading session.

Personal Spending Rises By 8.2%

The U.S. has just provided data for Personal Income and Personal Spending for the month of May.

Personal Income decreased by 4.2% month-over-month compared to analyst expectations which called for a decrease of 6%.

Personal Spending increased by 8.2% month-over-month while analysts forecasted growth of 9%.

Personal Income is volatile due to the challenging situation in the job market and various aid packages. In this light, Personal Spending is a more important metric in the near term as it shows the consumers’ desire to spend money.

While Personal Spending was worse than expected, the difference between the analyst consensus and the actual report is not big so it should not have a major impact on today’s trading dynamics.

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

GBP/USD Daily Forecast – The Local Downside Trend Remains Intact

GBP/USD Video 26.06.20.

U.S. Dollar Continues Its Attempts To Move Higher

GBP/USD stays below the 50 EMA at 1.2460 as the U.S. dollar is flat against a broad basket of currencies after several days of upside.

The U.S. Dollar Index met resistance at 97.5 but continues its attempts to move higher as traders are worried about the worsening situation on the coronavirus front.

On Thursday, the U.S. recorded almost 40,000 new coronavirus cases, which was the biggest increase since the beginning of the pandemic.

It remains to be seen whether markets will pay additional attention to virus news or focus on first signs that the economic situation is getting better.

Yesterday, the U.S. reported that Initial Jobless Claims remained high at 1.5 million but Continuing Jobless Claims dropped to 19.5 million. The decline in Continuing Jobless Claims shows that some workers have been able to find new jobs and stopped receiving unemployment benefits.

In addition, Durable Goods Orders jumped by 15.8% in May on a month-over-month basis, highlighting the rapid increase in economic activity.

Technical Analysis

gbp usd june 26 2020

GBP/USD continues to move lower in a local downside trend. All attempts to rebound have been met at the high end of this downside trend, and GBP/USD will need additional catalysts to change the trend.

Currently, GBP/USD has settled below the 50 EMA at 1.2460. The 20 EMA is in the nearby at 1.2480, and the area between 1.2460 and 1.2480 will serve as a major resistance area for GBP/USD.

If GBP/USD manages to settle above both the 50 EMA and the 20 EMA, it will likely gain upside momentum and head towards the next major resistance at 1.2650.

On the support side, the nearest support level is located at 1.2350. The 20 EMA is about to cross the 50 EMA to the downside, suggesting the continuation of the downside trend, so the test of the support at 1.2350 may be coming soon.

If this test is successful, GBP/USD will head to the major support level 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.

GBP/USD made several attempts to get out of this range but they were not successful so it will likely need significant catalysts to leave the range and develop a serious trend.

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

USD/CAD Daily Forecast – Canadian Dollar Remains Under Pressure

USD/CAD Video 25.06.20.

U.S. Dollar Is Trying To Gain More Upside Momentum

USD/CAD has finally managed to get above the 20 EMA at 1.3600 and is trying to develop upside momentum.

This move is supported by U.S. dollar strength against a broad basket of currencies. The U.S. Dollar Index has gained a lot of ground in the last few days and is currently testing the resistance at 97.5.

Today, the U.S. has provided new Initial Jobless Claims and Continuing Jobless Claims reports. The Initial Jobless Claims report was worse than expectations as 1.5 million Americans filed for unemployment benefits in a week.

At the same time, the Continuing Jobless Claims report exceeded expectations as the number of workers who continued to receive unemployment benefits has finally declined below 20 million.

Another positive news was the rapid increase in Durable Goods Orders which were up 15.8% month-over-month in May.

The economic data remains grim but there are some green shoots so riskier assets may get some support. However, coronavirus continues to spread actively around the globe which can put more pressure on markets and provide additional support to the U.S. dollar which serves as a safe haven asset of last resort.

Technical Analysis

usd cad june 25 2020

USD/CAD has managed to get above the 20 EMA at 1.3600 after it spent many trading sessions in the range between the support at 1.3500 and the 20 EMA. This is a major development which should lead for increased upside momentum for USD/CAD.

In case USD/CAD continues its upside move, it will soon find itself testing the next resistance at the 50 EMA at 1.3710. There’s also a resistance level at 1.3730 so USD/CAD will have to deal with this resistance area before it will be able to go higher.

If this attempt is successful, USD/CAD will head towards the next resistance level at 1.3800.

On the support side, the previous resistance at the 20 EMA will become the first support level for USD/CAD. In case USD/CAD manages to get below the 20 EMA, it will get back to the above-mentioned trading range between the support at 1.3500 and the 20 EMA.

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

Oil Tries To Rebound After Yesterday’s Sell-Off

Oil Video 25.06.20.

Demand For Oil Is Recovering As Cars Get Back On The Roads

According to a recent Reuters report, the road trafic in some of the world’s biggest cities has already returned to levels seen in 2019. While this increase in traffic is not happening everywhere and is dependent on the virus situation, it is a sign of continued improvement of the supply/demand balance which could provide additional support to oil prices.

Yesterday, the oil market was shocked by the sudden increase in U.S. domestic oil production which was accompanied by an increase in crude oil inventories.

The increase in the domestic oil production is a bearish catalyst for WTI oil since it means that oil prices near $40 are sufficient enough to encourage additional production.

If this trend is confirmed by the next EIA Weekly Petroleum Status Report, oil could find itself under additional pressure. Elevated inventory levels are the main problem that the market is facing right now since production cuts have mostly solved the problem of excessive supply.

A surge in domestic oil production will slow down the return to normal levels of inventories and could prevent oil prices from reaching higher levels. However, it remains to be seen whether the recent increase of domestic oil production was a one-time event or a beginning of a new upside trend.

For Now, The Bullish Trend Stays Intact

Yesterday, oil was hit by a double blow from the increase of U.S. domestic oil production and the surge in the number of coronavirus cases in some U.S. states.

However, these serious developments were only sufficient enough to cause a one-time sell-off. Today, oil is trying to recover the lost ground.

The key question is whether oil traders will stay focused on the future which should be brighter for oil as demand continues to recover or choose to pay attention to current problems.

At this point, the market is focused on future developments so the problems with the virus and the increase in domestic oil production are viewed as temporary obstacles, which is bullish for oil.

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

Silver Price Daily Forecast – Silver Rebounds From Support At The 20 EMA

Silver Video 25.06.20.

Silver Gains Ground Despite Stronger U.S. Dollar

Silver managed to stay above the support level at the 20 EMA at $17.50 despite stronger U.S. dollar as gold/silver ratio returned back below 100.

The U.S. Dollar Index is trying to settle above the resistance at 97.5 as traders remain worried about the second wave of coronavirus. While stronger U.S. dollar is bearish for silver as it makes it more expensive for buyers who have other currencies, the strength of the American currency is offset by the declining gold/silver ratio.

Yesterday, I wrote that the nearest resistance level for gold/silver ratio was located at the 50 EMA at 101.80 and that a move above this level would open the way to the next resistance at 108.

While this threat is still real, gold/silver ratio is currently trying to settle below the 100 level which is bullish for silver. In order to continue the downside move, gold/silver ratio will have to get below the 20 EMA at 99.40.

Meanwhile, gold continues to trade above $1750, which is bullish for the whole precious metal segment. In my opinion, gold has plenty of room to develop upside momentum, especially if equity markets find themselves under more pressure due to worries about the second wave of coronavirus.

Technical Analysis

silver june 25 2020

The technical picture for silver has not changed for quite some time. Silver has a very solid support at $17.50. This support level has been already tested many times and proved its strength since each attempt to get below $17.50 is met with increased buyer activity.

In case silver gets below such a strong level, it will likely gain material downside momentum as many traders who have put their protective stops below $17.50 will rush for exits.

In this scenario, silver will quickly reach the next important support level near the 50 EMA at $17.00.

On the upside, silver will need to get above the resistance at $18.00 to get to the test of the resistance near recent highs below $18.50. RSI is at very comfortable levels so silver has plenty of room to develop upside momentum in case the right catalysts emerge.

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