WTI crude oil remained strong on Wednesday (November 25), rising to an eight-and-a-half-month high of US$46.24 for six consecutive days; EIA crude oil inventories unexpectedly dropped; OPEC+ is still expected to announce its decision to postpone production increase at the next week’s meeting; the market’s meeting with the Fed The response of the minutes was flat; how to judge the oil price outlook?
EIA crude oil inventories unexpectedly dropped, and oil prices rose above US$45.0 for six consecutive years!
On Wednesday (November 25) WTI crude oil stabilized at US$45.0 and further climbed to an intraday high of US$46.24, setting a new eight-and-a-half-month high since March 6, and is expected to record four consecutive weeks of rising. Although the market has become more optimistic about the medium-term oil price market, after the oil price has risen continuously, the market has been divided on the short-term trend of oil prices.
The changes in EIA crude oil inventories announced on Wednesday (November 25) for the week ending November 20 unexpectedly fell by 754,000 barrels to 488.7 million barrels, a decrease of 0.2%. It is expected to increase by 225,000 barrels from the previous value of 769,000 barrels. Although the beautiful performance of EIA crude oil inventories offset the 3.8 million barrel increase in API crude oil inventories announced earlier, EIA gasoline inventories actually announced an increase of 2.18 million barrels, marking the second consecutive week of growth. WTI crude oil rose slightly after the data was released.
It is worth noting that with the continued promotion of vaccines, the market has begun to bet that the global economy is expected to gradually recover in the next 2-3 years. In addition to the good market risk sentiment in the recent period, oil prices have started a round of rising prices. . However, it should be noted that the number of infections in Europe and the United States has not yet seen a clear peak. On Wednesday (November 25), German Chancellor Angela Merkel stated that Germany will extend some of the blockade measures to December 20. At the same time, financial assistance measures will also be extended to December; European Commission President Von der Lein warned that loosening control measures too quickly and too much may lead to a third wave of epidemics.
In addition, the mixed economic data overnight in the United States also reflects that its economy is still facing downward pressure from further blockades. Among them, the number of initial claims for unemployment benefits in the United States increased by 778,000 as of November 21, which exceeded expectations by 730,000, indicating that the surge in confirmed cases of new coronary pneumonia and commercial restrictions are driving layoffs and undermining the recovery of the labor market.
OPEC+ may still not change its decision to postpone production increase! The short-term trend of oil prices ushered in divergence?
In view of the fact that the impact of the vaccine cannot transform the epidemic in the short term, the International Energy Information Agency (IEA) also lowered its crude oil demand forecast in its monthly report published earlier, and lowered its 2020 global crude oil demand forecast by 400,000 barrels per day; 2021 Will increase slightly by 200,000 barrels per day. In this case, the OPEC+ ministerial meeting to be held from November 30 to December 1 next week is particularly important.
According to news on Wednesday (November 25), OPEC+ is still inclined to extend the current production cut plan for three to six months at the next meeting, and the market generally believes that the best option is to extend it for another three months. However, the author reminds that what decision OPEC+ makes still needs to be reserved. On the one hand, the UAE has previously stated that it will withdraw from OPEC+, implying that member states are dissatisfied with the delayed increase in production, which is detrimental to OPEC+'s long-term delay in increasing production and even further measures to reduce production. On the other hand, once oil prices climb too fast and return to above US$50.0, the U.S. shale oil production may rebound rapidly, which is not conducive to balancing the oil market.
From Wednesday (November 25) to November 27, the total number of oil rigs in the United States increased to 241, an increase of 10 from the previous value of 231. The U.S. drilling company increased oil and gas drilling for the fourth consecutive month. Once OPEC+'s efforts to restrict supply are not as strong as market expectations, oil prices may fall under pressure.
Investors can pay attention to the ECB's announcement of the minutes of its October monetary policy meeting. In addition, because the New York Stock Exchange is closed for one day during the Thanksgiving holiday, and the trading of energy contracts will also end ahead of schedule at 02:00 on November 27, Beijing time, we need to be wary of the possibility that the decline in liquidity will increase the volatility of oil prices.
WTI Crude Oil: The short-term trend is facing callback pressure, but the overall upward trend is difficult to change
WTI crude oil daily chart:
The daily chart shows that the mid-term uptrend of oil prices is continuing, which marks that the November 2nd hitting $34.09 has become a staged bottom. From the current situation, the reversal since $34.09 is still far from over. At that time, the medium-term prospects for oil prices tended to be optimistic.
However, the RSI falling into overbought and rising above 70 needs to attract investors' attention, which may cause the short-term trend of WTI crude oil to turn into high shocks. The market outlook can focus on the support of the 43.0-44.0 USD area. Once the above area is effectively stabilized, the medium-term upward challenge is still expected 46.0 US dollars or even 50.0 US dollars level.
On Tuesday (November 24), WTI crude oil broke through US$45.0 to an intraday high of US$45.19, a new high in eight and a half months; Biden officially started the transfer of power and the vaccine is favorable to push oil prices higher; the medium-term upward trend has been established! However, RSI oversold implies that the short-term needs to focus on resistance in this area!
Biden started the transfer of power & vaccines are positive, WTI crude oil hit a new high in eight months!
On Tuesday (November 24), WTI crude oil surged by more than 4% to an intraday high of $45.19, setting a new eight-and-a-half-month high since March 6. It is worth noting that WTI crude oil has now recorded a five-day rise, indicating that the market's willingness to do more is further strengthening. Not only that, WTI crude oil launched a retaliatory rebound in November after experiencing the impact of the European and American epidemics. So far, the rebound rate has reached 33%!
The reason for this is that the positive and continuous fermentation of vaccines since this month has led the market to believe that global oil demand will gradually resume in 2021. At the same time, the stability of the US political situation has further increased market risk appetite. European and US stock markets both closed up sharply overnight, and generally rose more than 1%! According to a report by the US "Capitol Hill", the U.S. Senate Republican Leader Advisor stated that "there is no sign" that voting violations have reached a level sufficient to change the results of the U.S. presidential election. "The window for legal challenges and recounts is rapidly closing." .
The Office of the Director of National Intelligence (ODNI) stated that the White House approved the provision of a presidential daily briefing to the "President-elect" Biden team "as part of supporting the transition."
Near the Thanksgiving holiday, oil prices still have short-term variables
Although Biden's approach to the official election of the US president has created strong market risk sentiment, I still need to remind oil prices that there are still certain variables in the short term, especially Thursday (November 26) falls on Thanksgiving holiday and market liquidity declines. under.
The American Petroleum Institute (API) data released in the early morning of Wednesday (November 25) showed that API crude oil inventories in the United States increased by 3.8 million barrels to about 490 million barrels for the week ending November 20, which was far more than expected and decreased by 333,000 barrels; gasoline inventories Increased by 1.3 million barrels; refined oil inventory decreased by 1.8 million barrels. Obviously, U.S. crude oil demand is still affected by the current increase in the number of epidemics and the suppression of more blockade measures. Investors can focus on the changes in U.S. EIA crude oil inventories (10,000 barrels) in the week as of November 20. Once the increase in EIA crude oil inventories exceeds expectations , Is expected to put pressure on oil prices.
At the same time, U.S. economic data seems to be the focus of the current market. Although on Monday (November 23), the Markit manufacturing and service industry PMI performed well in the United States in November, the market expects high GDP growth in the fourth quarter and the first half of next year. At the trend level, but on Tuesday (November 24), the US November Consultative Council Consumer Confidence Index fell to 96.1, which was less than expected 97.9. The US November Richmond Fed Manufacturing Index fell to 15, which was less than expected 20. It implies that the widespread surge in confirmed cases of the epidemic and related commercial restrictions may still overwhelm the benefits of related vaccines at the moment.
Under this circumstance, investors should focus on the Fed’s monetary policy and the US government’s fiscal stimulus plan. On Tuesday (November 24), St. Louis Fed Chairman James Bullard said that if needed, the expiring emergency plan may be It will restart, but some people still "criticize" it. At present, the market generally believes that the Fed’s overall easing tone is difficult to change in the short term, and it is expected that the Federal Open Market Committee (FOMC) is likely to extend the QE deadline on December 16, but if more evidence shows that the vaccine is expected to be marketed in the short term In this case, we need to be alert to the adjustment of the Fed's monetary policy, which may stimulate a rebound in the US dollar index, which in turn will put pressure on crude oil priced in US dollars.
Investors can focus on the October durable goods orders in the United States, the PCE price index in October in the United States, the final value of the University of Michigan consumer confidence index in November in the United States, the monthly rate of personal expenditure in the United States in October, and the annualized quarterly rate of actual GDP in the third quarter of the United States. A series of US data such as the revised value and the number of people claiming unemployment benefits in the week as of November 21 (10,000) are expected to provide investors with more clues and affect market fluctuations.
In addition, in the early morning of Thursday (November 26), the Federal Reserve will announce the minutes of its November monetary policy meeting.
WTI Crude Oil: The medium-term upward trend remains good, but RSI oversold may indicate that oil prices are facing challenges in the short term
WTI crude oil 4-hour chart:
The 4-hour chart shows that the oil price breakthrough of US$45.0 undoubtedly confirmed the start of the mid-term uptrend of oil prices. This marked the beginning of a periodical bottom when the oil price reached US$34.09 on November 2. Therefore, the medium-term outlook for oil prices remains optimistic.
However, the oversold RSI seems to imply that oil prices are under short-term pressure. In particular, US$45.0 is also the Fibonacci 61.8% retracement level since September 16. WTI crude oil may fall into high volatility in the short term, and the market outlook may focus on 42.0-43.0 The US dollar supports the region. Once it effectively stabilizes the above region, it is still expected to challenge the US$46.0 or even the US$50.0 level in the medium term.
Yesterday, the price of gold fell sharply, due to the beautiful PMI data of the United States and the strong performance of the US dollar. The price of gold hit a four-month low. However, in the long run, the price of gold is still strong, and trading is currently in a falling wedge shape.
The soaring trend of gold prices that started this summer now feels a bit distant.
The price of gold fell below the key support, and the price of gold hit a 4-month low
Driven by the strong PMI data released by the United States, the price of gold fell sharply during the US session. PMI data pushed the U.S. dollar higher, and the price of gold also fell to a four-month low.
Compared to the drop in gold prices yesterday, in my opinion, the most interesting thing is where the price of gold fell. Since the beginning of August, the price of gold has been testing the agreed support range. The key support range of 1859-1871 contains multiple Fibonacci levels and has been tested several times in the past few months until it finally broke below yesterday.
Gold price trend daily chart
Although yesterday’s decline seems simple, investors who are bearish on gold should still be very careful in view of its long-term background.
Let us look back at the overall situation of gold: the long-term bull market cycle still exists. Yesterday's sell-off brought the lowest price of gold to near the 38.2% Fibonacci retracement level of this year's March-August wave of gains at 1836.87.
On August 7th, the price of gold set a record high in 2075, but it constructed a bearish engulfing candle chart, which opened the door to a bearish period for the next period of time. Subsequently, the price of gold fell sharply to $200 to test the key support range of 1859-1871, and the support range has been in effect for the next four months until it broke below yesterday.
Gold price trend weekly chart
However, the declining wedge pattern constructed since the August high is still valid, giving gold prices still have bullish potential. But given that the price of gold has just fallen below the key support zone, the long-term bullish tendency may require a period of time to wait, at least for now.
There may be thousands of buying and selling signals, but the way to make big money is often to trade with the trend.
Gold price short-term trading strategy
Gold prices rebounded moderately after refreshing their four-month low. From a short-term perspective, it seems that there is room for long and short positions.
From a short selling point of view, the previous support range will be transformed into a resistance range of 1859-1871.
Gold price trend 4-hour chart
There is still hope for gold bulls
From a long perspective, the drop in gold prices yesterday may be welcomed by potential bulls.
In the past few months, gold prices have seen many false breakthroughs during the consolidation process. Every time the price of gold rises to a new high, the buying pressure stops and short positions begin to sell. This may be a sign of overbought in the summer bullish trend, as the bulls expect the price of gold to continue to rise and hold positions.
However, as the price of gold fell to a four-month low yesterday, these traders may have triggered multiple stop losses, resulting in a rather sharp initial decline in the price of gold. But this may also mean that there may now be more funds waiting for the price of gold to fall to a lower low before entering the market.
If the bulls re-enter the market to make the gold price return to above 1859, if the gold price stabilizes above this level in the market outlook, it may give people a feeling of returning to the bull market.
There is fierce competition between the two opposing factors (virus epidemic and vaccine). Gold prices are consolidating and waiting for a breakthrough.
Gold technical outlook this week: neutral
Two opposing factors (virus VS vaccine) fierce competition
Last week can generally be described as a tug of war between the two market stories. One is that hopeful vaccine research has brought us a feeling that it is about to end. The other is the fact that the number of virus cases in the United States is currently increasing rapidly, which has led to the reactivation of some restrictions. On the other hand, the trend of the gold market has no direction to some extent-the price of gold has adjusted slightly.
Since the first announcement of vaccine news (November 9), the price of gold has not been able to regain the 1900 mark; now the precious metal has once again come near the bottom of the recent price range. Gold market sentiment has also eased in recent weeks, with fund net long positions falling to the smallest level since March 2019; while gold ETF holdings have fallen, retail investors are also reducing exposure.
Institutions and retail investors lighten their gold exposure
Gold price is finishing, waiting for breakthrough
Taking a closer look at the technical situation, gold prices seem to be sorting out and waiting for a breakthrough. The support area that has been tested by multiple pullbacks has remained stable until now, but the strength of the gold price rebound is getting smaller and smaller. A downward break of $1,845 will increase the risk of the price of gold falling sharply towards the 1,800 mark in the future. However, although the short-term risks are not great, considering that the Fed reiterated that despite the recent recent developments in vaccines, the market will still be full of liquidity, and the long-term prospects may still be positive (gold). In this context, the market outlook for the gold price will largely depend on the actual yield (measured by the yield of the 10-year inflation-protected US bond).
Since the high point of the year, the price of gold has fallen by more than 10.4%. It seems that it is facing the risk of further falling and breaking. Pay close attention to the gains and losses of gold prices near 1836.
The price of gold has fallen for the second consecutive week, and the decline has expanded to 10.4% since the peak of the year. The bulls are once again facing the defense of key support levels.
Gold price weekly chart trend
Looking at the trend of the price of gold on the weekly chart, the price of gold seems to be building a downward channel. Since this week, the price of gold has been under pressure in the resistance range of 1897--1909 (the closing price of the week at the high of 2011 and the closing price of the high of 2011). After the US presidential election, the price of gold made a breakthrough: it quickly reversed after hitting 1965 last Monday, and is now close to the September low again.
The support concentration level focuses on the 38.2% Fibonacci retracement level 1836, and the lower support looks at 1795-1803. The former is the 2012 high and the latter is the 100% Fibonacci extension. The resistance level focuses on the upper channel of the channel in 1955, and only a break above the November opening high can resume the upward trend.
In summary, as the price of gold tests the Fibo support level near 1836, the author tends to cut short positions / lower the stop loss. If the weekly closing price falls below this level, it may face a greater risk of fall. From a multi-faceted perspective, the price of gold cannot regain its momentum until it breaks above the 1965 bulls.
Gold price IG customer sentiment report
The IG customer sentiment report shows that retail investors are bullish on gold prices, with a ratio of long and short positions of 5.11:1, 83.64% of retail investors are bullish on gold prices; long positions increased by 8.76% from yesterday and decreased by 2.81% from last week, and short positions were compared to yesterday A decrease of 6.28%, an increase of 5.11% from last week. As an inverse indicator, Sanhua Bullish implies that the price of gold may continue to fall. Long positions have increased from yesterday but decreased from last week, suggesting that the current retail sentiment is unclear and the indicator has limited directional effect.
The price of gold continued to fluctuate in a narrow range after rebounding from the low of 1851 in the month, and the weakness of the US dollar failed to bring much support to the price of gold. However, the low interest rate environment and rising balance sheet still make gold very attractive.
The price of gold maintains an interval arrangement
The gold price recorded its biggest one-day drop since August 11 last Monday, but it still failed to refresh the September low of 1849. Since then, the gold price has maintained an interval consolidation pattern. Before the Fed's last meeting of the year, the price of gold may continue to fluctuate within a range.
The Fed will announce its economic forecast update at its December meeting. It may provide one of the more detailed prospects, as the Fed plans to add two new charts to show how the committee assesses uncertainty and risk over time. The Federal Funds Committee may further open the door to support the economy, as Fed Chairman Powell and other officials promised to closely monitor developments and assess how asset purchases can maximize support for full employment and achieve price stability goals, as well as market operations and financial stability.
Some recent actions by other central banks around the world may put the Fed under pressure to take more actions. The Bank of Australia and the Bank of New Zealand announced that they will take more unconventional measures before 2021, but the Fed seems to be more inclined to rely on current tools to support economic development, because Chairman Powell seems more willing to extend the term of its loan facilities, and promised at least the current Increased holdings of U.S. Treasury bonds and institutional mortgage-backed securities.
However, trends in key markets may remain unchanged for the rest of the year. The low interest rate environment and the ever-expanding central bank balance sheet may continue to provide support for gold prices, while unconventional policies have also increased the attractiveness of precious metals.
The IG client sentiment report shows that retail investors maintain net long positions in USD/CHF/USD/JPY and USD/CAD, while maintaining net short positions in GBP/USD, AUD/USD, EUR/USD and New Zealand Dollar/USD. Although the Fed's balance sheet is close to historical highs, trading in the U.S. dollar is still very crowded. It remains to be seen whether the decline in the price of gold since the year’s high of 2075 is the end of the rise or the adjustment of the trend, because the price of gold has ended the trend of setting new highs every month since the beginning of the year.
Gold price trend analysis
Since the beginning of 2020, the price of gold has set new highs every month for the year. This trend came to an end after the price of gold set a record high of 2075 in August. In September, the price of gold fell below the 50-day moving average (1903), the first time since June. At the same time, the relative strength indicator RSI also fell to its lowest level since March.
However, the fall in gold prices from the all-time high of 2075 may eventually prove to be the exhaustion of the previous wave of upward momentum and does not mean that market behavior has changed. Since the price of gold failed to break below the September low of 1849, if the market outlook continues to stabilize above the support range of 1847 (100% Fibonacci extension)-1857 (61.8% Fibonacci extension), it is expected to further rise to 1907 (100% Fibonacci extension) Extension) -1920 (161.8% Fibonacci extension), the upper target looks at 1956 (23.6% Fibonacci extension)
If the price of gold finally breaks through this month's high of 1966, it is expected to open up the upside to 1971 (100% Fibonacci extension)-1985 (261.8% Fibonacci extension), 2016 (38.2% Fibonacci extension) and 2025 (78.6% Fibonacci extension) Extension).
The U.S. dollar index continues to hover near the long-term support level, and the euro/dollar maintains range fluctuations; the pound/dollar has a bullish background and is retesting key resistance levels. Can the bulls break through in one fell swoop?
Analysis of the dollar index trend: testing key support levels
The US dollar index continues to be at a key long-term support level (starting at the confluence of the long-term rising support line since the 2011 low and the Fibonacci level). Judging from the monthly chart, the current US dollar index is similar to the opening level in September. At that time, the US dollar index also stopped the 6-month continuous downward trend at the supporting confluence, and then started a slight rebound in October. As the foreign exchange market digested the election results of the US general election, the dollar immediately returned to its downward momentum and tested key support levels again.
USD index monthly chart
As the U.S. dollar index tests key supports, the euro/dollar, pound/dollar and AUD/dollar are also testing their key levels.
EUR/USD trend analysis: Euro weakness or the theme
For investors who are bullish on the U.S. dollar, the EUR/USD may be the most attractive. Regardless of whether the dollar is about to rebound gently or start to reverse, the euro/dollar has a better trading strategy. In terms of fundamentals, the ECB is expected to introduce stimulus measures again at its December meeting. Logically speaking, the European Central Bank does need to take some measures, because Europe is experiencing the second wave of COVID-19. In general, the ECB's stimulus measures will presuppose the weakness of the euro, and as the euro/dollar approaches the 1.20 mark, the ECB is more likely to take action.
EUR/USD 8-hour chart
Judging from the trend of the euro/dollar, the euro/dollar has been in a range of shocks for the past two months, with support at 1.1600 and resistance at 1.1900. As of the author's post, the euro/dollar orthogonally invested slightly above the 1.19 mark, which may open the door for short-term bearish strategies, especially as the European Central Bank's December interest rate resolution approaches, the euro may return to the range average.
GBP/USD trend analysis: retesting key resistance levels
As of the author's post, GBP/USD is currently testing the key resistance range 1.3250-1.3275, which last week restricted the GBP/USD further upward movement. However, even if the exchange rate subsequently fell, the exchange rate eventually recorded a higher low. This movement of GBP/USD has also connected the exchange rate to a short-term upward trend line at consistently higher lows, which may open the door to a potential upward breakthrough for GBP/USD.
GBP/USD 4-hour chart
From the 4-hour chart, the current trend of GBP/USD is not a perfect ascending triangle, but under the current background, the exchange rate still seems to have the potential for upward breakthrough. Once it breaks the resistance range of this level, the upper target will look towards the 1.34 level. From this perspective, for traders who are short on the US dollar, the GBP/USD may be very attractive. For traders who short the EUR/USD to offset their long exposure to the U.S. dollar, long GBP/USD may also be an attractive option for hedging the U.S. dollar.
AUD/USD trend analysis: bulls continue to advance
Commodity currencies have generally performed relatively strongly recently, including Australian dollars, New Zealand dollars and Canadian dollars. In particular, the Australian dollar has performed very well since it refused to break below the 0.70 mark in early November. However, with the return of the weak dollar to the foreign exchange market, the AUD/USD also jumped to a familiar range for a while, and is now encountering resistance at 0.7340 again.
AUD/USD 8-hour chart
Last week, after testing the resistance level, the AUD/USD fell back to 0.7185-0.7205 (the support range for the conversion of the previous resistance range), and then the exchange rate rebounded to 0.7340 again, opening the potential door for the AUD/USD upward breakthrough. The upper resistance level focuses on 0.7412 (the highest level in the past two years), which is also the high point in September this year.
On Monday, optimistic news came out of the vaccine again, and the price of gold plummeted to a key support level in the short-term. The short-term support level is still concerned about 1837/48, and a break below this range may fall to 1790/1803.
Vaccine spreads optimistic news again, gold price plummets to key support level
The fluctuation range of gold price in a single trading day last Monday covered the trading range of gold price throughout October. Yesterday there was another optimistic message from the vaccine. The price of gold plunged by US$20 in the short term, again testing key support levels.
Gold price trend daily chart
The author mentioned in the last gold price technical analysis article that if the price of gold falls below 1920, it may face a greater risk of callback. If it further falls below the September low, it may stimulate shorts to enter the market. A few trading days after the author posted, the price of gold once rose to 1965, and then fell sharply due to the news of the vaccine.
At present, the price of gold is still hovering near the opening level in November. The key support level focuses on 1837/48. The former is the 38.2% Fibonacci retracement level of the trading range this year, and the latter is the September low. If it falls below this Below the range, the key technical support level looks to the 2012 high/100% Fibonacci extension 1790/1803. It is expected that the downward movement energy may be exhausted after falling to this support range. Conversely, if the price of gold continues to stabilize and rebound at the key support level, the upper resistance level will look towards the upper rail of the descending channel since 1920 and August. Breaking the resistance line is expected to further rise to 1988/92.
Gold price trend 2-hour chart
From the 2-hour chart, the gold price is orthogonally invested in a short-term upward pitchfork channel that started from the November low. At present, the gold price is still under pressure below 1900. If it falls below the closing price of the September low, it implies that the price of gold will usher in a larger correction. The key support levels below look to 1848 and 1837. Conversely, if it breaks above the 2011 highs/61.8% Fibonacci retracement of 1920/21, it is expected to rise further.
In summary, the price of gold is currently under pressure below 1900. If it is unable to break through 1920, the road to recovery of gold prices is still facing considerable risks. A fall below 1867 may usher in a sharp correction.
Gold price IG customer sentiment report
The IG customer sentiment report shows that retail investors are net bullish on the price of gold. The ratio of long to short is 4.26:1. Long positions have decreased by 5.45% from yesterday and increased by 14.18% from last week. Short positions have increased by 18.97% from yesterday and 18.33% from last week. ; As an inverse indicator, retail investors are bullish and suggest that pricing may go further down, but the net long position is reduced compared to yesterday, suggesting that the price of gold may turn up soon.
Crude oil prices are rising cautiously, mainly due to the optimistic news from the vaccine. Under the social distancing and blockade measures brought about by the outbreak, global crude oil demand has been declining, but OPEC+ seems to be expected to postpone the increase in production, and oil prices are expected to rise further.
Oil prices fluctuated sharply last week
Crude oil prices fluctuated sharply in the trading day last Friday. Crude oil prices, which are closely related to economic activities, rose by 15% in the first two trading days of last week. Oil prices continued to fall in the next three trading days. By Friday's closing, the increase in oil prices narrowed to 8%. After the US presidential election, market sentiment has improved significantly, coupled with major positive news about the COVID-19 vaccine, which became a catalyst for the sharp rise in oil prices in the first two trading days of last week.
Crude oil price trends this week, follow JMMC meeting, epidemic and vaccine related news
However, the reappearance of tension on the demand side of crude oil may suppress the price of crude oil, a commodity later this week. The tight demand for crude oil mainly stems from the escalating epidemic lockdown measures and the resulting adverse effects on global economic growth. However, the prospect that OPEC+ may postpone production increases is expected to help oil prices regain recent declines.
But Libya's crude oil production may undermine OPEC+'s efforts to control crude oil supply. According to reports, Libyan oil production has soared to 1.2 million barrels per day in recent weeks. In addition, the number of oil rigs in the U.S. has also continued to climb. The U.S. Department of Energy's inventory data shows that U.S. crude oil inventories have increased by 4.3 million barrels.
The above-mentioned headwind factors have brought downside risks to the trend of crude oil prices. In addition, with the surge in COVID-19 cases and the re-introduction of lockdown measures, market concerns about the epidemic may resurface. Fed Chairman Powell and other officials are still reiterating that economic recovery depends largely on the spread of the virus.
As the world is struggling to deal with a new round of the epidemic, it is not surprising that OPEC will lower its crude oil demand forecast for next year and the rest of this year to 300,000 barrels per day. The International Energy Agency IEA also lowered the outlook for crude oil demand last week, but major developments in vaccines, such as Pfizer's report that its vaccine is 90% effective against the COVID-19 virus, have kept the market relatively optimistic.
This optimistic progress of the vaccine, coupled with the OPEC+ plan to postpone the increase in production, may support the increase in crude oil prices on a larger scale. However, if JMMC's meeting this week does not show the willingness of OPEC to postpone production increases, commodity traders may significantly depress crude oil prices.
The next trend of crude oil prices needs to pay attention to the VIX index, which measures market panic. Crude oil price trends and the VIX index often show negative correlations. A sudden rise in the volatility index may indicate that risk appetite is weakening, which may correspond to crude oil selling pressure. On the contrary, if the VIX index continues to fall, crude oil prices may rebound slightly, because a lower VIX index usually means improved trader sentiment.
At the beginning of this week, due to news related to elections and vaccines, US Treasury yields soared and precious metal prices fell sharply; with the surge in cases, fears about the epidemic may weaken inflation expectations and gold prices.
The long-term bullish trend of gold prices has not been eroded
The large fluctuations in the price of gold in the past two weeks have kept commodity traders on alert. Last week, the price of gold soared by 4%, which seems to have broken through the consolidation pattern of the past three months. But entering this Monday, the price of gold suddenly plummeted, erasing all the gains made last week. This reversal of the gold price trend seems to be largely triggered by the sharp rise in US Treasury yields, as the dust has settled on the US general election results and the vaccine is optimistic.
High interest rates reduce the relative attractiveness of holding gold as an investment tool, because gold as a safe-haven asset has no returns. The impact of rising U.S. Treasury yields has to some extent been offset by rising expectations for future inflation. This helps curb real yields, as higher inflation expectations are eroding interest rate increases. As shown in the figure above, the price of gold and the actual rate of return calculated based on the difference between sovereign interest rates and inflation expectations tend to move in opposite directions.
Given that current inflation expectations mainly depend on vaccine progress and continued economic recovery, and the Fed may continue to maintain extremely loose monetary policy and limit the rise in U.S. Treasury yields, Treasury yields may not rise sharply, from a broader perspective. From a perspective, the gold price trend will also continue to be supported. But if the market's optimism about vaccines overwhelms concerns about the epidemic in the short term, then gold prices may also face considerable pressure.
Gold price trend daily chart
From a technical point of view, the price of gold is approaching the key support level of the September low. If the price of gold can stabilize near 1855, the bulls may not give up easily, and may even retest 1920 (the resistance level of the previous support level conversion) . Conversely, if it falls below 1920, it may further fall to the key psychological barrier of 1800 or even slightly below the 200-day moving average.
Last week, before and after the results of the US general election, the U.S. dollar showed weakness; at the close of last week, the U.S. dollar tested the long-term trend line. So far this week, the bulls still have the upper hand.
The U.S. presidential election last week pushed the U.S. dollar into a lot of selling, which made the U.S. dollar (via the U.S. dollar index) reversed the rise since the end of October when the U.S. dollar was pushed up to the Fibonacci resistance level.
However, so far this week, the dollar's selling has temporarily stopped due to a long-term support zone that has helped keep prices low. What I'm talking about here is a potential trend line connecting the swing lows in 2011 and 2014; this potential trend line provided support for the US dollar index in early September this year. At that time, this trend line converged with some other support items to form an area of influence on the US dollar index-close to the 92.00 area. This support area stabilized at the time and played the same role in the last few repeated tests. The question now is whether the bears can once again take over the price dominance?
USD price chart (monthly frame)
Looking at the U.S. dollar in more detail, there are still several Fibonacci levels converging below this potential trend line, and they may provide follow-up support when the trend line is tested and broken. The 23.6% Fibonacci retracement level of the 2017-2018 wave and the 38.2% Fibonacci retracement level of the 2011-2017 wave are very close to the 92.00 mark. Below this mark-there is very little support before the 90.49 level.
On the other hand, in terms of (upward) resistance, first look at the 38.2% Fibonacci retracement level of the 2017-2018 wave-which is currently helping to form the November high, which had previously played a role of resistance last week. Above this price, the psychological barrier of 95.00 is worthy of attention, followed by another dense resistance area of 96.00-96.48.
The price of gold plunged over 5% on Monday, but for the bulls, fortunately, the price of gold is still stabilizing above the key support level. However, the optimistic hope of vaccines seems to continue to lower the price of gold in the short term, but the long-term impact does not seem to be so obvious.
Gold price trend analysis: the optimistic progress of vaccines will completely kill the gold bulls hope?
The price of gold at the opening this week experienced sharp fluctuations. On Monday, the price of gold fell sharply, stimulated by news of the optimistic progress of the vaccine. Risk assets generally rose, while safe-haven assets such as gold and the U.S. dollar fell. However, in the end, gold prices were still supported near 1850.
After the initial strong reaction from the market, the market has begun to calm down, and the price of gold has regained its footing, trading in the 1850 and 1920 range. Some people believe that the upcoming vaccine has completely eliminated the bullish outlook for gold prices, but is this really the case?
Gold price 4-hour chart
In my opinion, not exactly. Although the upcoming vaccine is undoubtedly a positive development for the world, the problem is that although this vaccine is 90% effective against the new coronavirus, it still needs to be vaccinated by the majority of the population until the barriers to herd immunity can be cleared. . In addition, the distribution and supply of vaccines are also very difficult and may further delay vaccination.
In addition, the fundamental factors driving the rise of gold prices still exist. Regardless of the vaccination rate, the Fed has reiterated its willingness to maintain easing policies until 2023. Both parties in the United States have also stated that they will launch another set of stimulus plans. On the plane, the Biden administration may implement the infrastructure plan. The outlook for the dollar still seems uncertain, because the above actions will undoubtedly increase the supply of the dollar. Support the price of gold.
Therefore, the optimistic progress of vaccines did not completely stifle the bullish outlook for gold prices, but it did make gold prices suffer a lot of selling pressure this week. But in the author's opinion, even after the successful vaccination, the fundamental factors for the rise of gold prices still exist, so in the long run, the gold price still has a constructive prospect.
From a technical point of view, the bullish flag constructed by the gold price seems to be still valid, and the support level near 1850 in the gold price seems to support the rebound in the gold price. Unless the price of gold drops below 1800 and breaks the current technical pattern, I still don't want to agree that the overall trend of gold prices has changed.
The Dow Jones index rose more than 5% in early trading on Monday, and then the gains have narrowed. The long-frustrated industry stocks such as energy, aviation and theater have become the biggest winners. Back to normal, we may see the gap between the Dow Jones and Nasdaq narrow.
Dow Jones index forecast:
New crown vaccine may bring "new life" to Dow Jones
During the US stock trading session on Monday, Pfizer announced good news about its new crown virus vaccine candidate, and the Dow Jones Index rose sharply. The news made risk appetites high, and some of the more depressed industry stocks in the economy were boosted to rise. The cruise, aviation, energy, entertainment, financial and healthcare industries became the biggest winners of the day.
The biggest winners on Monday are those industries that have been hit hardest during the COVID-19 pandemic
In contrast, stocks that have benefited from the long-term shift in the lifestyle of working from home are disastrous. Zoom, Peloton and Docusign are just some of the losers (share prices plummeted). Yesterday's large technology stocks reacted rather tepidly, which caused the Nasdaq Index to the Dow Jones Index to fall sharply. In general, the availability of vaccines has accelerated the rise in the market from those stocks that previously benefited from the home office model to those stocks that are most vulnerable during the epidemic.
The biggest losers on Monday were companies that benefited during the COVID-19 pandemic
Having said that, the epidemic is still raging, with new cases rising to new highs every day. Furthermore, the so-called vaccine has not yet been approved by the FDA, and its effectiveness is 90%. In addition, there may be some members of the public who are unwilling to use this vaccine. It can be said that the epidemic is far from over. Therefore, in the author's opinion, today's market rotation may be overdone. In view of this, the industry level may usher in some changes in the coming weeks.
Dow Jones Index Price Chart: Daily Time Frame (February 2020-November 2020)
In any case, the Dow Jones index surged to a record high on Monday, albeit for a short time. During the trading hours of US stocks on Monday, the Dow Jones index subsequently corrected, and the final closing price was slightly higher than the September high-this level may provide some degree of support in the coming days. If it is broken, the secondary support may fall at the October high-close to the 28970 level.
In terms of (upward) resistance, there are very few resistances near the current level, except for the previous record high of 29570. Therefore, at this stage, the newly discovered catalyst, the new crown vaccine material, will be developed, and the possibility that the United States is expected to introduce stimulus, corporate tax increases, and the infrastructure plan may be released. Index) The medium-term outlook has become quite encouraging.
After the U.S. election, the Trump campaign has yet to admit defeat; the Fed’s monetary policy outlook may push the dollar higher; the Asia-Pacific stock index and the S&P 500 futures index are cautiously higher amid risk appetite.
The dollar index is digesting the decline of the past week. After the US general election over the weekend confirmed that the former vice president and Democratic presidential candidate Biden defeated the Republican president Trump, the price trend of the dollar seems to be relatively stable.
Biden will win the election, which has been predicted to some extent by the results of the polls, and it seems to have been priced by the market before the election day. As the counting of votes draws to a close, risk appetite has increased significantly, which seems to confirm the possibility that the results are in line with expectations, weakening the market's demand for safe-haven US dollars.
After the election results are digested, the dollar may go higher
The Fed’s monetary policy meeting last week’s expectations on the outlook for monetary policy remained unchanged. After the US general election, the market speculated that the Fed might shift from an extremely dovish monetary policy tendency, which may hopefully create conditions for the upward movement of the dollar.
Although from the current point of view, the tightening policy seems to be far away, but the federal funds futures show that next year's benchmark interest rate trend has been significantly steep, and the slope of the yield curve has also changed. This may imply that the US dollar may be supported by interest rates after the recent round of dollar selling caused by risk appetite is over.
The Australian dollar, New Zealand dollar and Canadian dollar are expected to rise with the stock market
The economic calendar on Monday was relatively light, and market trends focused on overall risk sentiment. Asia-Pacific stock indexes are rising cautiously, and the S&P 500 futures index also indicates that it will continue to rise in the day. This indicates that risk appetite may continue to benefit cyclical currencies such as the Australian dollar, New Zealand dollar and Canadian dollar, while risk-resistant currencies such as the US dollar and Japanese yen may be suppressed. However, so far, the Trump campaign team has not conceded and tried to continue to fight the election results, which may also affect risk sentiment.
The summary of opinions from the Bank of Japan's October policy meeting did not show any unexpected wording. The report repeats the familiar platitudes that investors are familiar with, emphasizing the suitability of stimulus portfolios and long-term negative price growth to be vigilant, but it provides almost no news for market transactions.
The trend of the euro/dollar in the last three months looks like a consolidation. The EUR/USD may rise to its 2018 high (above 1.2500) in the next one to three months.
EUR/USD: Or soon a new wave of bull market will start
The euro has been flat in the past three months, but this situation may end soon, as prices may soon break the congestion pattern. Price movements not only show a bullish trend, they are also making progress near an important long-term trend line.
In the monthly chart below, there is a downward trend line that extends from the 2008 high and connects to the annual highs recorded thereafter. But the current situation is a bit tricky, because generally speaking, the situation of the trend line depends on how the price is above one change of the trend line and below another change.
The trend line changes from some high points (connected to most extreme values, take within a reasonable range, do not cut the price trend), as shown in the figure below; EUR/USD has broken the trend line since August, which means Price increased. The points that have been pierced are all high points, namely in 2008, 2011, 2014 and 2018. If you take a more conservative approach and enlarge the angle of the line slightly, then you will skip the 2018 high, but just match the September high (meaning it is still resistance).
When this happens, you can add another layer of confirmation-observe some horizontal lines related to the trend line or important price levels that have worked recently (also applicable to channels). In this case, the September high is a level of concern, and it is also the high of the recent consolidation pattern-so logically, it seems logical to use it with the trend line.
A break of the 1.2011 level of EUR/USD will be seen as a breakthrough in the recent congestion phase and a clear break above the two different trend lines that started in 2008. If the price continues to rise and break through, it may further rise to the 2018 high-1.2555.
However, some market participants warned against this prospect: extreme positions in the futures market. Speculators hold long positions similar to those in 2018 and close to record levels. However, as of now, the difference from 2018 is that the price is stable and consolidates, and it does not look like it peaked afterwards. The point is that as long as price movements do not indicate a reversal, extreme positions may become more extreme.
In general, the euro/dollar seems to have a sprint in the next one to three months, but we may need to wait patiently for a price breakthrough before the price rises too much. Even though holding for a long time may not be the preferred approach, the trend tendency of a larger time frame can promote the development of short-term trading to the dominant trend path.
The market is still digesting the ongoing US general election, and the price of gold has reached a 2.2% fluctuation range this week. The resistance level pays attention to 1935. If it breaks above this level, the upper target looks to 1988/92; the support level pays attention to 1879 and 1867.
Gold price trend analysis: long and short competition for 1900
Since October, the price of gold has been under pressure below the opening range of October, and the downward channel constructed over the past few months has remained intact. The short-term resistance level focuses on the closing price of 1920/22 at the 2011 high and October high. If it can further stabilize at 1935, the upward trend is expected to resume. Although the price of gold once touched 1931, it failed to maintain this momentum. Instead, it quickly turned down, reaching the lowest closing price of 1867, the September low.
Gold price trend daily chart
After yesterday's intense vote counting in the US general election, the price of gold seems to be recovering and is once again challenging the downward trend line that has lasted for several months. Therefore, we still need to pay close attention to the gains and losses of the gold price in 1935. If the closing price breaks this level, it is expected to rise to 1988/92. Focus on the short-term support levels of 1879 and 1867. A break below the latter may restore the downward trend since the August high.
Gold price trend 2-hour chart
From the 2-hour chart, the downward pitchfork channel constructed by the gold price since the end of August remains intact. The initial support level is concerned about 1881/84. If the daily line closes below 1867, the lower target will look at 1849 and the 38.2% Fibonacci retracement level 1837.
In summary, the price of gold has fallen into a short-term consolidation below the downtrend line. From a trading perspective, the price of gold is still at risk of further correction below 1920, and a fall below the September low may trigger a greater degree of Fell.
Gold price IG customer sentiment report
The G customer sentiment report shows that retail investors are net bullish on gold prices, with a long to short ratio of 4.27:1, and 80.01% of retail investors are bullish on gold prices. Long positions decreased by 6.44% from yesterday and 11.13% from last week; short positions decreased by 7.94% from yesterday and 11.23% from last week. As an inverse indicator, retail investors' bullishness suggests that gold prices may continue to fall.
According to the latest vote statistics, Biden leads Trump with 119 to 93 electoral votes, but the advantage has shrunk. Gold once fell sharply to around 1880, but then rebounded sharply. With the further release of votes, the price of gold is expected to fluctuate drastically!
The vote count for the general election begins, Biden leads, and the golden shock!
According to the latest statistics, Biden won New York State (29 electoral votes) and currently leads Trump by 119 to 93 electoral votes, but his advantage has shrunk. Trump had previously won Arkansas.
According to reports, the Trump campaign and Nevada Republicans filed an urgent motion to restrict the processing of mailed votes in Las Vegas.
Prior to this, McConnell, the leader of the Republican Party in the US Senate, won re-election in Kentucky. In addition, the results of the Florida primary (the biggest swing state) showed that Trump lags behind the 2016 vote share.
Affected by the election, gold fluctuated violently, falling sharply from around US$20 around 1900 to the line of 1880, and then rapidly rising, regaining all previous losses. With the further announcement of the number of votes, gold is expected to still face a huge shock
Judging from the hourly chart of gold, the price of gold retreated to the 0.618 golden section and rose sharply, or it may not be ruled out to test the earlier high of 1916 again!
Only less than a day before the official election, the polls show a new trend; Biden is still ahead of Trump, but compared to his 7% advantage that he maintained for several months, it has declined; crude oil prices are critical The support level of 36.45 rebounded, and the future trend is expected to reverse.
The U.S. election is only one day away. In the next less than 24 hours, the U.S. will officially start the election. Polls continue to show that the Democratic nominee Biden is ahead of the current President Trump. In other words, recent poll data show that the former Vice President Biden leads only about 6.8%, slightly lower than the 7% lead he maintained in the previous months. 2020 U.S. election
According to data predicted by Politico, Nevada, Minnesota, Wisconsin, Michigan, New Hampshire, Pennsylvania, etc. tend to prefer Biden. The results of other states are still to be announced, but Texas is a stronghold of the Republican Party. Although partisanship tends to turn purple, it still leans toward Trump. Swing states may become the highlight of the US election. Uncertainty may push up the dollar, which is related to safe-haven, while Brent crude oil will fall. Crude oil outlook Crude oil prices may begin to rebound above the shock resistance or support at 36.45. The next major obstacle may appear in the pre-OPEC plunge. This obstacle may be near the 45.51 line, while Brent crude oil has been avoiding attempts to break through the early August levels. As the US election approaches, given the depth of its sphere of influence, crude oil may soar and approach key resistance.
With less than a day left before the US election, Biden’s approval rating in the polls continues to lead the incumbent President Trump. On the eve of the US election, the Australian dollar bulls retreated, and the AUD/USD tested key support at 0.7018.
U.S. election countdown
With only one day left before the high-profile U.S. election, polls still show that the approval rate of former U.S. Vice President and Democratic presidential candidate Biden continues to lead the incumbent President Trump, and his lead is still around 7 points. Average of the past few months.
With real growth still sluggish and valuations soaring, managing risk exposure is very important.
However, on election day, the current President Trump’s votes may surge because, statistically, Republican voters are more likely to vote in person than Democratic voters who tend to post. If Trump’s vote suddenly surges, it may reproduce the scene of 2016, when Trump unexpectedly declared victory. This result brought unusually high volatility, as traders readjusted their positions for an unexpected political environment.
AUD/USD trend analysis: bulls retreat?
The AUD/USD rebounded after a short break below the 0.70 mark in the Asian market in early trading on Monday, and is still hovering near the key support point of 0.7018 (December 2019 high). AUD/USD continues to trade within the narrow range of the downtrend line that started from the high point of the year and the key support line. If the key support level is broken, it may open up downside to retest the July low of 0.6829.
Gold price weekly technical analysis update. Gold/USD encountered falling resistance and fell back. Under the 1932 level, the price of gold may usher in a more substantial correction.
Gold trend analysis:
The price of gold was trading at the 1871 level in early trading during the New York session on Thursday, and the price of gold has fallen more than 3.2% since the fall at the October high. The price of gold falling below the monthly trading range this week may encounter a more substantial sell-off, and the bears are aiming towards the September lows.
Gold Price Chart-Gold/USD Weekly
The author mentioned in the previous Golden Weekly Price Outlook that gold/dollar "has rebounded from the channel support, the price has resumed upwards and is approaching falling resistance-pay attention to the reaction of the price of gold to test the 1932 level of inflection point to seek further guidance... Be careful When the price of gold is approaching the resistance of the channel, there may be a weak rise, and the price may still fall." A few days later, the price of gold hit a high of 1933, and then turned lower. This week, the price once again fell below the inflection point range 1897-1909.
Weekly support targets continue to be maintained at the 1836 level (the 38.2% Fibonacci retracement of the annual range) and the 1795-1803 range (2012 high/100% Fibonacci extension). Resistance is currently looking back towards the 1909 level (the 2011 high corresponds to the closing price); the bearish failure level is now reduced to the 1932 level (the August weekly price reversal corresponds to the closing price).
In general, the current gold price has met resistance from the downtrend resistance density, but the gold/dollar is still in the broader September trading range. From an operational perspective, October trading is nearing its end. If the gold price falls below the October opening trading range, the market outlook will usher in more violent selling, and the initial support target is receiving attention. In addition, the market outlook will usher in the risk of heavy events, and the US presidential election will usher in next week. In order to invalidate the downward trend that has lasted for several months, the price of gold needs to break above the resistance of the pattern/weekly closing price. If the price of gold ushered in a deeper correction, it may test the level near 1800-pay attention to the reaction of the price of gold at this price.
Gold Trader Sentiment-Gold/USD Price Chart
The gold retail investor sentiment report shows that currently nearly 82.82% of positions are long. The ratio of long and short positions is 4.82:1. Long positions increased by 3.93% from yesterday and 9.62% from last week. Short positions decreased by 8.15% from yesterday and 15.53% from last week.
We usually hold the opposite view on retail investor sentiment. The majority of retail investor positions are long and suggest that gold prices may continue to fall. Net long positions have increased compared to yesterday and last week. Combined with current positions and recent changes in positions, retail sentiment provides us with a stronger bearish guide signal for gold.
Biden’s and Trump’s odds continue to show Biden’s leading position over the current president; investors should not feel complacent. There is a precedent for the laggards to win unexpectedly; the downward trend of gold prices may be below the upward trend of several weeks After acceleration.
6 days before the U.S. election
There is only less than a week left before the US election. Market volatility has begun to increase, but this does not seem to be caused by political factors, but more likely to be the result of the surge in new cases of the epidemic. The author will discuss this later. At present, the odds of the two candidates and poll data from different agencies believe that the Democratic candidate Biden will win, while the current President Trump is behind his opponent.
2020 U.S. election polls
In this regard, investors should be careful not to be overconfident in the poll data, because Trump won by accident in the 2016 election. Mail voting mainly comes from Democrats, and Democrats as a whole are more likely to adopt this method of voting than their Republican opponents. This statistical phenomenon comes from the results of the NBCLX/YouGov poll.
Therefore, polls may give the market a false sense of certainty, and may potentially increase volatility on the day of the actual vote. Republicans may come to the scene to vote in person, which may mean that polls on the day of voting may show that Trump’s approval rating is growing rapidly. A brief burst of approval ratings may not necessarily mean Trump’s victory, but the signs that he still has a chance of winning may lead to increased volatility and a stronger dollar.
The outbreak of new COVID-19 cases undermines previously projected growth prospects
New cases of COVID-19 have broken out globally, especially in the United States. This is usually referred to as the second wave of epidemics, and investors and policymakers have expressed fears about it. France and the United Kingdom have implemented stringent lockdown measures, which in turn threaten to derail the already precarious recovery process, but public health may be improved as a result.
In the United States, from a market perspective, the blockade measures have been re-implemented or extended, but there has been no meaningful progress in the fiscal stimulus dialogue, which may stimulate the flow of funds to safe-haven assets. In such an environment, the U.S. dollar may rise as usual in the previous trading days, especially against currencies related to the economic cycle (Australian and New Zealand dollars).
The price of gold recorded its biggest one-day drop since October 6, and it also broke the upward trend line for several weeks. If the decisive failure of the gold price's upward trend, it may mark the beginning of a further correction. Investors have switched from relatively poorly liquid gold to the US dollar.
AUD/USD has strong support at the 0.7000 level. The GBP/USD channel is setting the trading trend. Silver prices are testing an important support line that started in March.
AUD/USD trend forecast
The AUD/USD volatility has weakened recently, and the 0.7000 level is an important support. The price initially acted as resistance in January and June, but then turned into support at the end of September and last week. The wedge-shaped price chart pattern extending from the September 1 high indicates that we may see a price breakout soon. Considering that the support is clearly visible, a price break below 0.7000 is expected to take the smoothest (downward) path; however, we cannot rule out the possibility that the price (upward) breaks through the downward trend line that forms the wedge. No matter which direction we are in, we should be able to see the price breakthrough soon.
GBP/USD trend forecast
GBP/USD currently maintains trading within a (rising) channel extending from last month's low. As long as the price stays above the lower boundary of the structure, trading tendencies are still feasible. On the upside, the price needs to break above the 1.3176 level before it is possible to set the upside target to the September 1 high-near the 1.3500 level. Conversely, a break below the lower boundary of the channel may shift the focus of attention to a lower level, and selling forces may push the price down to the 200-day moving average-the 1.2700 level.
Silver price movements are currently worthy of attention, because the importance of a trend line continues to be verified. This uptrend line started at a low in March and has received a lot of attention in the past month. In addition, the price of silver is also constrained by the descending resistance line since the August high, and we are now at a critical moment of success or failure.
If the surge in Covid-19 cases triggers demand for safe-haven U.S. dollars, the price of gold may fall. U.S. polls show that the Democratic candidate Biden continues to lead Trump with an average gap of 7 percentage points. The price trend of gold/dollar has become more pessimistic, and its upward trend will be broken?
8 days countdown to U.S. presidential election
Now almost a week before election day, poll data continue to show that the Democratic candidate Biden is expected to enter the White House. According to RealClearPolitics, former Vice President Biden leads incumbent President Donald Trump by nearly 8 percentage points. This figure is roughly in line with Biden’s average lead of 7 percentage points over the past few months, except for several brief periods. Convergence.
2020 U.S. election polls
A surge in infections hurts mood
The rapid increase in the number of new crown cases in the United States and around the world has given rise to the terrible premonition that a second wave of epidemics will break out globally in the fall. Due to the deadlock between the two parties in the US Congress and the lack of progress in the negotiation of the fiscal stimulus package, this has weakened the market's confidence in the stable development of the economy and also frustrated risk appetite.
In the past few days, the stock market has plummeted and demand for the safe-haven currency, the US dollar, has risen sharply. Here, as expectations for future inflation have fallen, the attractiveness of anti-statutory hedging tools such as gold has declined. Looking ahead, the prospect of restarting lockdown measures and stricter restrictions may be variables that investors must deal with during the election.
Gold price outlook:
The price of gold is currently on the verge of falling below the upward trend that has lasted for several weeks. As the number of new crown cases continues to surge, risk aversion has increased and this has pushed the dollar higher; this in turn made the relatively less liquid gold lower, the precious metal had previously shown signs of stabilization in the economy and boosted by optimistic inflation expectations.
Gold price daily chart
If this upward trend is broken, short-term support may be found at the 1875.70 level, and selling pressure may be temporarily relieved when the price drops. But if this support is also broken, then the next test level or the inflection point 1810.33 level.
The strong earnings performance of US stock companies may drag down the safe-haven currency, the dollar. Delays in US fiscal stimulus negotiations may trigger risk aversion, prompting funds to flock to the safe-haven end. The US GDP data in the third quarter may achieve good performance, but the fourth quarter may face a more difficult situation.
US third quarter corporate earnings
The third-quarter financial reports from technology, industrial, energy and pharmaceutical giants are expected to be closely watched by investors. Some of the famous companies include Facebook, Apple, Alphabet, Twitter, Pfizer, Gilead, Chevron, ExxonMobil, Petrobras, Royal Dutch Shell, Credit Suisse, Visa, Deutsche Bank, General Electric, Airbus, Boeing, Ford, Caterpillar, etc.
Last week, Tesla's earnings performance was much better than market expectations, and its stock price soared by 5% in one day. Although the military giant Lockheed Martin (Lockheed Martin) has also achieved optimistic financial results, its forward-looking expectations for 2021 are average, and its share price has fallen due to this. The mixed performance of corporate earnings did not boost the S&P 500 index, and the ongoing fiscal stimulus negotiations in the United States also damped market sentiment and weakened risk appetite, and finally closed down on Friday.
The same situation may repeat itself this week, which may cause the stock index and other stock indexes to continue to fall this week. The decline in these growth-linked benchmarks may in turn prompt the dollar to rise, but if the US fiscal negotiations progress on the basis of strong earnings data, this situation may be reversed.
This week will usher in the initial value of the third quarter GDP annualized quarterly rate of the United States. Following the 31.4% economic contraction in the previous quarter, the market predicts that the third quarter annualized rate of GDP will be 32.0%. The strong economic rebound may be the result of strong fiscal and monetary stimulus, but the effect may not be so obvious in the fourth quarter data. If there are stronger readings then the dollar may be suppressed.
COVID-19 case count may threaten fragile economic recovery
Another possible threat to strong economic growth in the third quarter is related to the gradual relaxation of the epidemic blockade control measures. These measures have stabilized the economy to a certain extent. However, now that the number of Covid-19 cases around the world has surged again, investors are worried that epidemic control measures may be restarted. The premonition of a slowdown in economic growth and the political turmoil triggered by the U.S. election may ease the decline of the dollar if it encourages investors to flock to safety.
The third presidential debate is approaching. What are the topics and the new rules? Biden's approval rating is still 7 percentage points ahead of Trump, but the gap is narrowing. If increased volatility pushes the dollar higher, gold prices are expected to break the upward trend.
There are 12 days before the U.S. presidential election
Although the approval rating of former US Vice President Joe Biden (Joe Biden) continues to lead the current President Trump (Donald Trump) by about 7 percentage points (on average), there is a gap between the two according to recent polls. Narrowed. After the first presidential debate, the number of bets that the Democratic candidates will win has increased sharply, but there have been signs of convergence (the two lines in the figure below have begun to converge). What caused the initial gap to widen?
2020 U.S. election polls
Polls after the aforementioned debate show that the audience generally have a more favorable opinion of Biden, his approval rate has also risen, while Trump's approval rate has dropped. After the first debate, Trump was diagnosed with the new crown and stayed in the hospital for a few days. The combination of these factors reduced Trump's approval rating. With the coming of the final debate, if he repeats the same mistakes this time, this momentum is expected to expand.
The third presidential debate
The third and final US presidential election debate will be held at Belmont University in Nashville, Tennessee, from 9:00-10:30 p.m. Eastern time. The moderator is Kirsten Welker. The topics of this discussion are: "Fighting New Coronary Pneumonia", "American Family", "American Race", "Climate Change", "National Security" and "leadership".
Market volatility is expected to be relatively low, as investors seem to be digesting expectations that Biden will win. Having said that, the market may be complacent and may believe the polls that made traders mistakenly believe that Hilary Clinton will dominate the White House. If this situation occurs again in a more fragile economic and political environment, the market is expected to usher in severe volatility and may push the dollar higher.
Gold price analysis
Since the end of September, the price of gold has formed a relatively steep upward trend, but the market outlook may soon face a correction risk. The political turmoil triggered by the U.S. election may boost demand for the safe-haven currency, the dollar, and at the same time may make it less attractive to hold gold, which is relatively liquid.
Gold/USD Daily Chart
The combined downward pressure of these two factors may lead to intensified volatility in gold/dollar. If the aforementioned upward trend fails (ie, it is broken), it may intensify bearish sentiment. In this case, when the subsequent price falls near the support level-the bottom of the violent sell-off in mid-September (mid-September low)-selling pressure may begin to weaken.
The price of gold ended the consolidation pattern of the past two and a half months. Yesterday, the closing price finally stood at the key resistance level of 1920. However, the October high of 1933 still has important resistance, and the bulls need to remain vigilant.
Gold price trend analysis: End the consolidation pattern, the bulls try to break upward?
The price of gold has been in a consolidation pattern for the past two and a half months, and it is still surprising to look at that wave of gains in early August. Since June, the price of gold has been showing a one-sided upward trend, easily overcoming several important resistance levels in the process, which is also a typical performance in cyclical markets.
After the gold price hit a record high on August 17, there was a bearish signal. At that time, the gold price formed a bearish engulfing pattern at the close of the market on Friday. The following week, the gold price retreated nearly 200 dollars.
Gold price daily chart
Although this wave of retracement finally found support, the bulls are not yet ready to continue pushing up the price of gold. In the two and a half months since then, gold prices have been in range consolidation. This consolidation pattern constitutes a falling wedge shape, and considering the previous strong rise, this pattern looks very detailed with the rising flag shape. Both the falling wedge and the rising flag are bullish patterns. After a period of digestion and consolidation, buyers may regain control of the market to continue the previous upward trend.
Of course, this is not the first long-term correction of gold prices in the recent bull market cycle: a similar situation occurred in February-May and September-December last year. Each consolidation seems to have taken several months to adjust, but after each consolidation, the bulls have regained control of the price trend.
Gold price weekly chart
The current question is whether the bulls can continue to push the price of gold up after this wave of consolidation ends. At present, the price of gold is testing the falling wedge-shaped upper track, and trading is near the key resistance level of 1920. This level is the historical high of the previous 7 years, and it is also an important resistance for the recent consolidation range. If the bulls can finally stand at this level, the level will be transformed into a support level, and the price of gold is expected to continue to rise.
Gold price 4-hour chart
If the price of gold can stand at 1920, the upper resistance level will focus on the vicinity of 1933 (October high), and if it breaks above the level, the target will look at the Fibonacci level of 1943.41. By then, the 1920 level will become an important support level.
However, in my opinion, gold bulls should remain cautious until the price of gold completely breaks through the October high. Because the price of gold returned to the consolidation range after breaking through 1920 a few weeks ago.
Yesterday, the US dollar broke through an important support range. Although this may be a trap, it is indeed worthy of attention; the AUD/USD rebounded from the support level, the GBP/USD is still building a bearish flag, and the EUR/USD test resistance gathering level.
Analysis of the dollar index trend: below important support levels
Yesterday (October 20) during the US session, it was reported that the US stalemate for several months of stimulus negotiations is expected to reach an agreement. Supported by optimistic expectations, the US dollar index fell below a key support range. However, the U.S. dollar index once fell to the 93 mark last week, and yesterday’s decline seems to lack the motivation to continue to bearish. With the stimulus policy and the upcoming US election, the break of the US dollar index yesterday looks more like a false break. In any case, the trend of the US dollar index yesterday seems to provide some trading opportunities for AUD/USD, GBP/USD and EUR/USD.
US dollar index 4-hour chart
AUD/USD trend analysis: rebound from support
While the US dollar index broke down yesterday, the AUD/USD rebounded from the support level, similar to the rebound at the end of September. For investors looking forward to the dollar's continued downward breakthrough, the AUD/USD may be one of the potential reversal long opportunities. There may be thousands of buying and selling signals, but the way to make big money is often to trade with the trend.
GBP/USD 4-hour chart
GBP/USD trend analysis: still building a bearish flag
From the perspective of long US dollars, GBP/USD may be relatively attractive. GBP/USD is currently still building a bearish flag. Pay attention to the gains and losses of the 1.2896 support level. Once it breaks this level, the lower support will look towards 1.2712.
GBP/USD 4-hour chart
EUR/USD trend analysis: testing resistance levels
The EUR/USD is another opportunity to see the USD. The EUR/USD tested the October high of 1.1831 yesterday, and the upward trend line that started from the September low also coincides with that level. It is expected that the euro/dollar may encounter resistance and fall back in the short term, and the lower support looks at 1.1794-1.1800. It is expected that the euro/dollar may rebound by then to continue the previous wave of gains.
In 2020, US polls continue to show that Biden still leads Trump by a large margin, but the betting odds show different results. The third round of the presidential debate is imminent, and the AUD/USD may accelerate downward.
2020 U.S. election betting odds and poll results diverge
As the US election on November 3 is getting closer, polls continue to show that the Democratic presidential candidate Biden is ahead of the current President Trump. However, due to what statisticians call "differential partisan non-response", the actual gap between the two parties may be smaller than the opinion polls show.
After the betting odds of the two candidates rose to the widest in history, the gap has begun to narrow recently. As in the 2016 U.S. election, even though the polls show that Biden has a great chance of winning, another black swan event is still possible. The latter is a statistically impossible result.
If Trump is re-elected, the political shock may catch the market off guard, especially if they were expecting Biden to win. In this case, the ensuing volatility may stimulate market demand for safe-haven assets such as the US dollar, thereby suppressing the risk-sensitive Australian dollar and the stock market.
Follow the third round of the presidential debate in the U.S. election
On October 22nd, GMT 01:00-02:30 (GMT+8 time 09:00-10:30) will be held at Belmont University in Nashville, Tennessee, the third round of the US presidential debate (actually the second round) ). Like the previous debate, this debate will last 90 minutes without commercial interruptions. The themes of this debate are: fighting the new crown pneumonia, American family, race, climate change, national security and leadership. The host is NBC's Christine Wilk.
AUD/USD trend analysis: fear of accelerating downside
US General Election: The odds of the general election and the results of the polls are divergent, and the AUD/USD may accelerate downward (Figure 3)
AUD/USD has maintained a volatile downward trend since September, and may fall into the narrow triangular range indicated in the chart in the short term. This range is made up of the 0.7018 level (key support level) and a downward trend line that started since the September high. A break above the latter is expected to usher in a wave of short and aggressive buying. Conversely, if it falls below 0.7018, it may strengthen the bearish tendency. The AUD/USD may accelerate its downward trend. The key support below looks to the end of June low of 0.6829. It is expected that the selling pressure of AUD/USD may weaken by then.
Commodities gave up gains last week, with gold falling 1% and silver falling 3%. However, despite the recent headwinds facing these precious metals, prices generally seem to be supported by upward pressure. In the absence of the necessary bullish catalyst, gold price movements may continue to fluctuate.
Gold technical outlook this week: neutral
Gold price trend forecast:
The price of gold is still fluctuating, with long and short forces competing for the price direction. In the past five trading days, the price of gold and silver have fallen by 1% and 3%, respectively. This marks the first weekly decline in the rebound of gold and silver prices since mid-September. In the context of the recent sharp volatility of the US dollar and real yields, fluctuations in the gold price are predictable.
Gold Price Chart: Daily Time Frame (May 15-October 16, 2020)
Looking at the chart, the price of gold found support at the $1865 level and the 100-day moving average, and the price rebounded higher, but this wave of rebound was blocked at the previous support (now turned into resistance). The continuous squeezing of the Bollinger Bands shown in the figure highlights that the price of gold is trading sideways among these key technical barriers. This may also be the result of gold prices fluctuating up and down within the range formed by the medium-term bearish (declining) resistance line and the short-term bullish (upward) trend line.
To be clear, the headwind factors that have been oppressing the price movements of gold and silver over the past two months may continue to depress the prices of these precious metals, but from a broader picture, the price outlook still appears to be positive. If the bears lower the price of gold and break below US$1,865 per ounce, the gold price may fall back to test the risk of the US$1,800 mark. In the absence of the necessary bullish catalyst, the likelihood of this situation becomes even higher. On the other hand, the price of gold may also resume its parabolic rebound. If the price of gold returns to above the level of US$1930/ounce, it may create the possibility for further exploration of the important psychological threshold of US$2,000 or higher.
The U.S. dollar index performed strongly in September, but the trend in October was more obscure. In the first half of October, the U.S. dollar index formed a cross star, and the trend may be more chaotic in the short term; the euro/dollar turned lower after rising to 1.1831, which is a short The downside has opened the door; the GBP/USD trend focuses on the gains and losses of the 1.2900 support level.
USD Index Trend Analysis
The current trend of the US dollar index is very obscure. There are only less than three weeks left on the polling day of the US general election. It is expected that the trend of the US dollar index may become more chaotic in the short term.
The market’s hope for more stimulus measures has provided an appeal to the bears, and technical traders are paying close attention to the long-term support trend line that came into play in September and the bullish engulfing candle chart constructed in September. But so far in October, the dollar price trend is still quite chaotic. In the first half of October, the dollar index formed a doji candlestick.
EUR/USD trend analysis
The U.S. dollar is currently hovering below the October high, while the EUR/USD refreshed its monthly low in late yesterday. The lower support level focuses on the August lows of 1.1694 and 1.70, and the upper potential resistance level focuses on the 1.1736-1.1750 range, which served as a support range last week. The euro/dollar rose to 1.1831 at that time. But since then, the situation has changed. EUR/USD has seen a series of lower lows and highs, opening the door for the bearish continuation.
GBP/USD trend analysis
The support level of GBP/USD pays attention to 1.2900, 1.2896 just below is the 50% Fibonacci level of the 2018-2020 range, and the upward trend line page connecting the September low and the October low is trading near this level. Provide support for the trend of GBP/USD and open the door to short-term rise. The upper resistance level looks towards 1.30. Conversely, if the GBP/USD falls below the support level, the bears may enter the market quickly and confirm the formation of a bearish flag. The lower target looks at 1.2712 (near the September low).
The price of gold has fallen back into the falling wedge shape again. In the short term, the price of gold may continue to consolidate, and the risk tends to fall. However, the long-term fundamental outlook for the price of gold is still very strong.
Gold prices fall after a false breakthrough, short-term risks tend to fall
Last week, the price of gold broke through the falling wedge formed since August's high and low, which is usually a bullish continuation pattern. But entering this week, the price of gold fell back into the wedge shape again after briefly hitting the highest point of 1920 (the upper rail is the downward trend line that began in August this year, and the lower rail is the trend since connecting the August low and the September low. line).
Gold price 4-hour chart
Gold price fundamentals remain bullish for a long time
At present, the price of gold rebounded after a brief fall back to the inside of the wedge. The previous resistance line turned into a support line. This indicates that the bullish pattern of the falling wedge has failed, and the price of gold may be at risk of consolidation or even further decline. The lower support looks at the wedge-shaped upper and lower rails, and the more critical support looks at the 1800 mark. Although the price of gold failed to achieve an upward breakthrough this week, the long-term prospects are still relatively optimistic, because the global central bank's monetary policy remains accommodative and a new round of large-scale stimulus plan in the United States will be sooner or later.
On the whole, the price of gold seems to be still in a relatively strong position, but it lacks the catalyst needed to move higher. Therefore, the author expects that the price of gold will consolidate for a period of time before it rises further. The consolidation range is 1920-1850. If these two levels are broken, it may substantially change the short-term technical outlook, and the gold price trend in the market outlook may continue in the direction of the breakthrough.
The price of gold had a difficult performance in September. The previous period from March to August was one of the best performing assets in the global financial market. The possibility of the United States reaching a stimulus bill has decreased, US inflation expectations have weakened, and US real yields have risen, which has caused a drag on the trend of gold prices.
U.S. inflation falls, gold prices fall
Driven by the latest round of inflation data in the United States, gold prices struggled earlier this week. The US September CPI recorded 1.7%, which was lower than market expectations of 1.8%, indicating that the US economic recovery may have stalled. Although the new round of stimulus bills are still being negotiated, the market seems to have digested a favorable result in advance. The inflation data announced yesterday directly affects the policy feedback loop. Under the North Star where the Federal Reserve is pushing short-term interest rates close to zero, lower inflation data means that the US real yield is rising. If the rise in US real yields in August and September is the reason for the difficulty of gold prices, then if the US real yields rise again, gold prices may fall again.
Gold price trend and gold price volatility
Unlike other asset classes, gold prices and gold price volatility often have a positive correlation. Other asset classes, such as bonds and stocks, do not like increased volatility-which means increased uncertainty in cash flow, dividends, coupon payments, etc.-gold tends to benefit during periods of increased volatility. Due to increased macroeconomic tensions, the uncertainty of the financial market has increased the risk-off appeal of gold.
The volatility rate of gold prices continues to remain stable, which is neither good nor bad for gold prices. The 5-day correlation coefficient between gold price and gold price volatility was -0.34, and the 20-day correlation coefficient was -076. A week ago, the correlation coefficients of the two cycles were -0.43 and -0.84, respectively.
In the current environment, falling gold volatility is not necessarily detrimental to gold prices, and rising volatility is almost always beneficial to gold prices; similarly, the positive impact of gold volatility on gold prices is greater than the negative impact of just sideways trading.
Gold price trend analysis: neutral short-term outlook
Since its August high, gold prices seem to have shown some signs of bullishness after a wedge-shaped decline that has lasted for several weeks. But entering this week, this price trend has been questioned again, as the price of gold once again fell below the bearish engulfing candle high recorded on October 6, and it also fell below the connecting August high and September high. The downward trend line.
From the perspective of kinetic energy, gold prices are currently relatively neutral. The price of gold is hovering between the 5, 8, 13 and 21-day EMA, the MACD indicator has released a neutral signal, and the rise of the slow stochastic indicator into the overbought range seems to be suspended.
Gold price trend analysis: a new wave of gains has not yet come
The author pointed out in the previous technical analysis that if the gold price falls below the August low of 1862.90, it will be a very important development because it will redefine the recent consolidation trend and make it a top instead of a continuation of a bullish trend. At present, the price of gold is still staying above the August low, but the price of gold has begun to break through the falling wedge constructed since the August high, indicating that it may be in the early stage of rising; on the contrary, if the price of gold fails to stand above the trend line , It means that the next round of rising has not yet begun.
Gold price IG customer sentiment report
The IG customer sentiment report shows that retail investors are net bullish on gold prices. The ratio of long to short is 3.28:1. Long positions increased by 2.86% from yesterday and remained unchanged from last week. Short positions decreased by 4.08% from yesterday and 8.42% from last week. , As an inverse indicator, the net bullishness of retail investors suggests that the price of gold may continue to fall.
Yesterday the global stock market rose sharply, but the safe-haven currency yen still rose; the pound was boosted by the optimistic expectations of the Brexit agreement; the Australian dollar is expected to continue to rise, and the dollar/yen may continue to fall.
U.S. stocks rose sharply, yen is not weak, Australian dollar may be supported by risk appetite
On Monday (October 12), despite the generally optimistic global financial markets, the safe-haven currency yen still rose. In the stock market, the German stock index DAX 30 closed up 0.67%, and US technology stocks led the gains. The Nasdaq composite index rose 2.56%, its best one-day performance since early September; the S&P 500 index closed up 1.64%. The stock market rose, the dollar, which is linked to risk aversion, cautiously fell
The reason why the stock market rose on Monday was largely due to investors' optimistic expectations that the world's largest economy will introduce fiscal stimulus policies. However, the best performing stocks are concentrated in large technology companies such as Apple and Amazon. Earlier, RBC Capital Markets raised Apple's price target from $111 to $132. Amazon's stock price soared on the eve of the annual "Prime Day" (Prime Day).
A large part of the yen’s strength may be due to profit-taking that has been short on the yen since September. Another currency that has performed better is the British pound. As investors bet that the UK and the EU can reach a Brexit deal, the pound may continue to be boosted. A spokesman for British Prime Minister Boris Johnson said on Monday that Britain will work hard this week to reach an agreement with the European Union before the October 15 deadline.
Stock index futures, which track the trend of the Wall Street stock market, rose cautiously during the Asia-Pacific trading session on Tuesday, which is expected to set the tone for risk appetite. The New Zealand dollar and Australian dollar, which are closely linked to risk sentiment, may be supported. The former also needs to pay close attention to Australia’s largest trading partner, China. The performance of trade data and economic data will be transmitted to the Australian dollar through a domino effect. How to trade important information and understand the basic usage of Elliott Wave
USD/JPY trend analysis: or continue the decline
The daily chart shows that the dollar/yen once again encountered resistance from the downward declining upper track and fell back and came to an important support range near 105.10-105.30. If it breaks below this range, it will open up space to test the lower triangle track 104.18-104.00. In addition, the evening star constructed on the daily chart also presupposes that the risk of USD/JPY tends to fall.
The Australian dollar once again ushered in a strong week, the AUD/USD rose for the second consecutive week and successfully won an important resistance range; the short-term AUD/USD is expected to continue its gains.
AUD/USD technical forecast: bullish
The Australian dollar has ushered in another strong week. After hitting an important psychological level of 0.7000 at the end of September, the AUD/USD has recorded gains for the second consecutive week last week. The important technical milestone of the AUD/USD trend last week was the victory of the important resistance range that has been blocking the bulls, namely 0.7185-0.7205. This range has remained high in the first four trading days of October, and last Tuesday After the decline, with the help of the RBA's interest rate decision, it seems that the bears are about to take hold and push the exchange rate to the 0.7000 mark again.
But after the sharp drop last Tuesday, the selling pressure quickly subsided. The bulls returned to the market and pushed prices up, moving towards the above-mentioned important resistance zone. Finally, last Friday, the AUD/USD overcame this resistance. Interval.
AUD/USD daily chart
From a shorter-term time frame, given the recent series of higher highs and higher lows, the AUD/USD looks likely to continue its gains. As far as short-term resistance is concerned, it is expected that when the AUD/USD touches the 0.7250 line, the rise will at least be delayed. After breaking this level, the higher resistance will focus on 0.7340 and 0.7412. If the AUD/USD can set a new high, then the currency pair still needs to fight the important psychological barrier of 0.7500, which may be considered as a long-term potential resistance.
In terms of short-term potential support, the previous resistance range is 0.7185-0.7205 or a potential level that is expected to attract bulls to enter the market and set another higher low.
Although the stock market has shaken sharply this week, the US dollar index has generally remained stable. If the US dollar index continues to strengthen, the euro/dollar will be more attractive for trading. The pound/dollar has repeatedly blocked the 1.30 mark and the downside is more likely.
USD Index Trend Analysis
Since the weekend, there have been many heavy news and events in the financial market, and some fluctuations in the global market, but the foreign exchange market has remained relatively stable, as the US dollar has entered a consolidation trend, which can also be seen in many major currency pairs.
Looking ahead to the trend of the US dollar index, the monthly chart still shows a bearish trend. Looking at the monthly chart, the US dollar index has fallen rapidly and violently since its March high, until the US dollar index fell to a key support level on September 1. Since then, this key support level has come into play, and the US dollar index tried to change direction for most of September, and finally closed with a bullish engulfing candle chart, which means that the US dollar index is expected to resume its upward trend since 2011.
From the short-term 4-hour chart, the US dollar index is also supported, which is expected to open up space for short-term rise. The author also pointed out in the previous article that if the U.S. dollar index strengthens, the pound/dollar will be more attractive to be short; conversely, if the dollar index is weak, the euro/dollar will be more attractive to be long.
EUR/USD trend analysis
In August, the euro/dollar was one of the author’s favorite currency pairs to be bullish on the dollar. At that time, it was mainly because the euro/dollar had been blocked at the 1.20 mark. This level came into play again in September, and the EUR/USD has also suffered a sharp sell-off in the past month.
However, the recent bearish trend of the EUR/USD seems to be weakening. At present, the euro/dollar seems to be trying to establish support at another higher low. This range of 1.1750/54 also served as a key support level in September. The former is the 38.2% Fibonacci retracement of the 2014-2017 range, which is expected Open the door to the short-term bullish trend of EUR/USD. The 1:1 risk-reward ratio is one of the common traps in actual trading. How do successful traders develop a trading plan?
GBP/USD trend analysis
In September, the pound/dollar is one of the currency pairs that the author pays attention to the strength of the dollar, because the pound/dollar tested the 1.30 mark several times at that time, and once it breaks the resistance level, it is expected to usher in a sharp rise.
This week GBP/USD tested the resistance again, but as in mid-September, the bulls seemed to succumb to the 1.30 mark again. The pound/dollar fell on Tuesday and rebounded slightly in the next two trading days, but whether the bulls can overcome the 1.30 mark this time is still very uncertain.
After nearly a month of range volatility, the door for the GBP/USD upward breakthrough seems to have been closed. If the US dollar strengthens, then the GBP/USD is likely to usher in a short-term downtrend. The lower support looks to the 1.2785-1.2815 range, and further A break is looking towards 1.2712 (61.8% Fibonacci retracement level).
The price of gold fell sharply from the resistance level of 1921 on Tuesday, as Trump suppressed the market’s optimistic expectations for the fiscal stimulus agreement. In the 4-hour chart, gold prices form a short-term falling wedge, with a bullish mid- to long-term outlook.
The price of gold has fluctuated greatly this week. The price of gold rose on Monday, but it fell sharply from the resistance level of 1921 on Tuesday, because US President Trump said on Tuesday that he would suspend negotiations on fiscal stimulus. Trump's remarks suppressed market risk appetite, causing gold prices to plummet along with the stock market. However, Trump once again changed his position yesterday, saying that he was willing to sign the $1,200 check bill. The three major US stock indexes recovered, but the price of gold failed to follow the rebound.
Gold price trend analysis
The price of gold on the 4-hour chart seems to be building a falling wedge. After rising to the resistance level of 1921, the price of gold suffered a sharp drop from fundamentals. The dual suppression of technical and fundamentals further weakened the outlook for gold prices.
The weak recovery of gold prices may imply that gold prices may undergo a period of consolidation before they rise again. On the whole, the upward path of the price of gold seems to be suspended, and the support below looks to near 1850. If the price of gold continues to be under pressure in the falling wedge that started from the August high in the market outlook, once it breaks this pattern, it is expected to usher in a medium- to long-term bullish outlook, but this may require more fundamental catalysts.
The price of gold continued to show an inverse relationship with the U.S. dollar. On Tuesday, the U.S. dollar rose against most major currencies. The RSI (Relative Strength Index) has continued its downward trend since August, and the market outlook for gold prices is unlikely to maintain the rebound momentum since the September low ($1849).
Trump seeks to introduce stimulus bills after the general election, and the rebound in gold prices collapses
The progress in the US on Tuesday dragged down investor confidence, and the price of gold fell from its weekly high ($1921, the high point so far this week). On Tuesday, US President Trump (Donald Trump) tweeted that “after I win, we will pass a major stimulus bill”, and fluctuations in risk appetite are expected to continue to affect the trend of gold.
Considering that the recent weakness of gold prices has shown a bullish trend since the beginning of this year, and the monthly gold price since 2020 no longer has set new annual highs, further delays in the US through a new round of fiscal stimulus may continue to suppress gold prices. However, the congressional stalemate may put pressure on the Fed. Recently, "several participants hinted that further easing may be needed", so the Fed may be forced to take further measures to support the US economy.
However, the minutes of the upcoming FOMC (Federal Open Market Committee) meeting this week may have a limited impact on the market. The latest economic forecast report (SEP) released earlier shows that long-term interest rates are expected to remain unchanged as they were in the June resolution. Moreover, the Fed also insisted that “it will increase its holdings of U.S. Treasury bonds and institutional mortgage-backed securities at least at the current rate of purchase.” The minutes may indicate that the next interest rate decision (November 5) may have more Similar situation.
The central bank's wait-and-see attitude may reduce market expectations for further easing. As of September 23, the Fed's balance sheet scale has shrunk from $7.093 trillion to $7.056 trillion. The FOMC looks to rely on current tools to support the US economy, as most central bank officials believe that "return limits and targets may provide limited benefits in the current environment."
But in any case, the FOMC may also maintain dovish forward guidance, because Fed Chairman Jerome Powell has always stated that the central bank still "commits to use our tools to the best of our ability, as long as necessary, so as to ensure that the economic recovery is as strong as possible." In addition, key market trends are likely to continue for the rest of this year, with the recurrence of the net long bias in US dollar positions in October.
The retail sentiment report continues to show us the behavior of retail investors since the beginning of this week. The retail positions of USD/CHF, USD/CAD and USD/JPY are net long, while GBP/USD, AUD/USD, EUR/USD and Retail positions in NZD/USD are net short positions.
The U.S. dollar net long bias suggests that the key market attention caused by the COVID-19 virus epidemic is expected to continue. The low interest rate environment and the expansion of the central bank's balance sheet have enhanced the attractiveness of gold as a legal tender alternative. However, it remains to be seen whether the correction of the price of gold since its historical high (2075 US dollars) is a substantial change in market behavior or the weakness of the bullish trend. Trump recently tweeted that "the stock market is preparing to break its historical high." .
In general, before the FOMC meeting minutes are released, gold prices may continue to be sorted as risk appetite diminishes. As long as the RSI continues its downward trend since August, it may be difficult for gold prices to maintain the rebound since the September low.
In the first half of 2020, the price of gold rose to a new annual high. The price increase in August of this year set a new all-time high ($2075).
However, the bullish behavior failed to appear in September. In September, the price of gold fell below the 50-day SMA ($1941) for the first time since June this year. Then, as the RSI indicator fell to its lowest level since March, the signal hidden in the wedge/triangle pattern established in August by the gold price lost its effectiveness.
The decline in the price of gold since its annual high of $2075 may evolve into a change in trend, and the current RSI continues its downward trend since August. However, if the indicator weakly enters the oversold area and breaks the (downward) trend line resistance, the bearish momentum of the gold price is expected to weaken.
But before then, the price of gold may continue to sort out. Recently, the price has tried several times to break/close higher than $1907-1920 (100% Fibonacci extension, 161.8% Fibonacci extension) and failed. This makes the gold price fall back to test the Fibonacci overlap The range of 1847-1857 USD (100% Fibonacci extension, 61.8% Fibonacci extension) is possible, and the September low (1849 USD) near this area may also be tested.
Trump returned to the White House. The latest polls in the US election show that Biden continues to lead; the market hopes that the United States is expected to achieve a fiscal stimulus plan, raising market sentiment, the stock market soared; the euro/dollar test key resistance levels.
Countdown to the US election, Trump returns to the White House
There are currently less than 30 days before the 2020 US presidential election, and polls continue to show that former Vice President and Democratic candidate Joe Biden is leading. Although U.S. President Donald Trump has been discharged from the Walter Reed National Military Medical Center, his infection with Covid-19 has hurt his poll support. Biden's current poll seems to be higher than the previous average of 7 percentage points.
The possibility of an agreement on the fiscal stimulus bill rises
The market seems to want to see Biden, a Democrat, enter the White House, perhaps because his policies may bring less uncertainty to the world, especially when it comes to trade issues. Investors expect the Democratic Party to win the election, which may open the door for the government to strengthen coordination, thereby further boosting the stock market.
If the Democratic Party comes to power, it may mean that the fiscal stimulus plan is easier to pass, whether it is introduced in the form of infrastructure spending or not, it is expected to make the economic outlook brighter, especially when more and more emphasis is placed on fiscal stimulus rather than monetary policy. . As the general election approaches, poll data may begin to affect market sentiment more obviously, but it may suppress safe-haven assets such as the US dollar and US Treasuries.
EUR/USD technical analysis: short-term bullish
The euro/dollar briefly fell below the key range 1.1698-1.1729 at the end of September and then quickly returned to the top of the range. It is expected to further rise to retest the resistance at 1.1936/65. Before traders' confidence is tested, it is expected that the euro/dollar will maintain its short-term upward trend.
Gold/USD rebounded from the recent trend support, and the bearish failure level is now at the 1935 level.
Gold price trend analysis:
Since the beginning of this week, the price of gold has risen by more than 1.8%. At the end of September, gold/dollar may be expected to start a greater rebound at the support of the downtrend.
Technical outlook: The author mentioned in the previous gold price outlook that gold/USD is facing a larger correction risk, and pointed out that “it is necessary for the price of gold to close below the 1920 level in order to turn to the downside. In this case, the price may test the August low The 1863 level and the 38.2% Fibonacci retracement level of 1837." Last week, the price of gold fell below the previous low in the trading area in September, and then the decline accelerated and finally recorded a decline of more than 3%; the price of gold fell to a new low of 1848, but afterwards It rebounded from the trend line support dense area (close to the August low).
Yesterday's gold price rebound from the low point indicates that the price outlook may usher in a more substantial rebound. The daily resistance level pays attention to the wave high of 1920 in 2011 and the 38.2% Fibonacci retracement level of 1935 that started from the annual high. The price of gold needs to break/close above this threshold to indicate this week The lows recorded have more significance or a greater rebound is in progress. Daily support targets remain stable at the 1837 level and the 100% Fibonacci extension 1803 level-both of which are areas where downward weakness may appear (if the gold price falls to test).
Looking at more details, gold/dollar rebounded higher from the lower boundary of a declining licorice fork parallel channel that started from the high point in late August. At present, the price of gold is trying to break through the middle of the track. The initial resistance focuses on the 1902 level, followed by the 1920 level and the 1935 level-a place where upward weakness may appear in the market outlook (if the gold price rises to test). Gold prices are stable above 1880, but the short-term is still expected to be bullish. On the other hand, the price of gold needs to fall below the weekly opening level of 1861 before it is possible to resume the downward trend-it may drop to the 1837 level.
All in all, the rebound in gold prices in this short-term pattern is still constructive. However, at the same time, the price of gold is still in the downward parallel channel since August (see the red parallel line in the first chart), which means that the prospect of a larger level of gold price (here is the daily chart) is still inclined to the downside. From an operational level, when the gold price tests the upper boundary of the channel, reducing long positions/upgrading stop losses may be the best policy. Below 1935, pay attention to the shock highs that this wave of gold prices may record. Note that the price of gold needs to fall below the weekly opening price to start the next round of decline. If the market outlook for the gold price really shows a more substantial correction, then there may be a good time. In addition, the price of gold needs to break the monthly range/1992 level before it is possible to turn the focus of attention at the daily level to the upside again.
Note that we are now entering September and the end of the third quarter-this is not the best environment for intraweek swing trading.
The Gold Retail Sentiment Report shows that currently nearly 82% of positions are long positions, and the ratio of long and short positions is 4.55:1. Long positions increased by 2.81% from yesterday and 9.15% from last week. Short positions decreased by 2.01% from yesterday and 9.58% from last week.
We usually hold the opposite view on retail investor sentiment. The bullishness of retail investors indicates that gold prices may continue to fall. Net long positions have increased compared to yesterday and last week. Combined with current positions and recent changes, the retail gold position report provides us with a stronger bearish gold trend guidance signal.
The price of gold stabilized after falling sharply last week. It rose by 1% this Monday, mainly due to expectations of fiscal stimulus and liquidity. As the U.S. dollar index fell in the recovery of risk appetite, the price of gold was further supported to rise.
The price of gold stabilizes and rebounds after a sharp drop
The price of gold stabilized and rebounded after falling sharply last week, rising 1% on Monday. So far this month, the price of gold has fallen nearly 5%, but the selling duck seems to be suspended near the 100-day moving average. Supported by the US Congress’s restart of fiscal stimulus negotiations, traders’ confidence has improved, which seems to have put negative pressure on the dollar. The pressure on the US dollar also pushed up the price of gold.
Gold price trend vs. dollar index trend
Generally speaking, there is a strong negative correlation between the US dollar index and the price of gold. This negative correlation has been significantly strengthened this month: the correlation coefficient between the gold price and the US dollar index fell from -0.11 on August 31 to -0.91 now. Therefore, if the direction of the US dollar index market outlook may have a greater impact on the gold price trend.
Gold price trend analysis
In the context of a sharp increase in market volatility, the US dollar is showing signs of a bullish reversal, so gold prices may continue to face headwinds. So far, the 38.2% Fibonacci retracement level and the 100-day simple moving average of the gold price this year have continued to provide support for the gold price. If market sentiment continues to improve, along with a further fall in the US dollar, it may boost the price of gold to rebound sharply.
Gold price daily chart
The resistance level above the gold price is bullish near the previous support level of 1920, and it is expected that the gold price may face selling pressure here. On the contrary, if risk sentiment deteriorates and liquidity conditions also cause traders to turn to the safe-haven currency, the dollar, then this will be a lot of pressure on the price of gold. Once it breaks below last week's low and the 100-day simple moving average, it may Will further fall to near 1790.
As the US dollar strengthens, gold prices are under pressure. However, falling U.S. Treasury yields may provide some cushion. The market focus this week turned to the US fiscal stimulus and non-agricultural employment reports.
Fundamental outlook for gold this week: neutral
Although the S&P 500 index and the Dow Jones index fell further, the price of gold still fell last week and recorded the biggest drop since August. In an environment where the US dollar is strong and risk aversion increases the liquidity premium, gold, which is the opposite of legal assets, faces a difficult situation. It is worth noting that the trend of US Treasury yields has basically stabilized, especially in terms of long-term Treasury yields.
The decline in yields may ease the selling of gold/dollar. What can explain their resilience? One of the reasons may come from some doubts about the United States reaching a new round of financial support, or that it lacks expedient measures at least. Fed Chairman Jerome Powell previously stressed the need for more fiscal stimulus in his testimony before Congress. At the same time, the market is disappointed with the urgency of implementing further quantitative easing in the near future.
Given that gold has no yield and is generally priced in US dollars, gold is very sensitive to the movements of US government bonds and the US dollar. A further strengthening of the US dollar may continue to be detrimental to gold prices, especially when risk aversion in the financial market increases. At the same time, the transfer of funds to safe-haven assets through the purchase of treasury bonds may ease the potential downward pressure on gold prices. .
In view of this, the focus this week may turn to the US House of Representatives. The Democrats in the House of Representatives are currently drafting a $2.4 trillion stimulus package, which may be passed. US President Trump recently intentionally supported a larger stimulus agreement than before. The proposal still needs to be approved by the Senate. The latter recently argued over a vacancy in the Supreme Court, which has made the two parties less time to negotiate a stimulus plan.
In addition, this week's market focus will also turn to the US non-agricultural employment report. Economic data for the world's largest economy continued to be better than economists expected, but since mid-July, the degree of data improvement has continued to shrink. Looking ahead, the threat of the timeliness of fiscal stimulus may cast a shadow on the expected rapid economic recovery, which may weaken the impact of another non-agricultural employment report that may perform strongly.
AUD/USD fluctuated by 56 points on Thursday and closed slightly lower. AUD/USD fell to a two-month low, and the bulls are looking for support. AUD/USD may further decline due to increased market volatility.
AUD/USD trend analysis:
On Thursday, the AUD/USD trend fluctuated with the rise and fall of popular stock indexes. As risk aversion rose after the opening of the New York session, this sentiment-sensitive major currency pair fell to a two-month low level, but as the trading session progressed, some key technical levels remained stable and market sentiment subsequently improved.
Subsequently, the US dollar with hedging characteristics started a correction, while the AUD/USD rebounded from the 0.7020 level. After the AUD/USD rebounded higher from the technical support area, it almost recovered most of the intraday losses at the close on Thursday. This technical support area is also supported by the 38.2% Fibonacci retracement level of the uptrend from May to August. Click to view the quarterly outlook of the Australian dollar trend
The recent selling pressure of AUD/USD may begin to weaken near the 0.7000 mark, and the AUD bulls are trying to gain a foothold in this dense area. After the price dropped to the 0.7200 level at the beginning of this week, the author emphasized that this support level was a potential downside target.
If Thursday’s recovery in risk appetite continues into Friday’s trading hours, the probability of a rebound in the Australian dollar will rise sharply. It should also be mentioned here that the re-adjustment of capital flows at the end of the month and the end of the quarter is about to come—may alleviate some of the recent selling pressure on risky assets. However, if the S&P 500 volatility index VIX (or panic index) continues to rise despite market volatility rebounding and market sentiment deteriorates, the risk-sensitive currency Australian dollar may fall again.
The US dollar fell strongly in July and August. The U.S. dollar fell into a huge area of support on September 1, and since then bulls have continued to pour in. The following will analyze the trend of USD, EUR/USD, GBP/USD and AUD/USD and provide guidance for the next few days.
The U.S. dollar began to reverse in the fourth quarter
Eventually it happened-after a summer when the dollar rose almost seldom, the dollar began its upward path. Previously affected by the US stimulus plan aimed at supporting the economy, the dollar continued to fall; at the opening of September, we saw the dollar drop to a two-year low.
At that time, a huge, long-term dense support area came into play (mentioned in the author's article on August 31). This area has two long-term Fibonacci retracements and a potential trend line-the line is connected from the 2011 and 2014 swing lows. This multiple support area eventually helped to stop the decline.
This support area is about the "third level" support area mentioned by the author in the third quarter technical forecast of the dollar. As the fourth quarter approaches, the key question now is whether this support can last long enough to reverse the trend.
This is possible from the daily chart, because the price trend has just moved up to a new high. The level of 94.23 is very critical. This is not only the 38.2% Fibonacci retracement of the 2017-2018 decline, but also a key 23.6% Fibonacci level, which played a supportive role in early September.
The important question now is, with the fourth quarter coming next week, which markets are most likely to be prepared for the continued strength of the dollar? Or in other words, which market is most likely to be operable under a weaker dollar scenario? under
EUR/USD: Short hair strength, prices fell below support
I want to discuss the EUR/USD first, because this currency pair may be the focus of those who want to use the USD as a strategy. This is mainly because the currency pair occupies 57.6% of the allocation weight in the US dollar index.
At the beginning of August, the author was paying attention to the EUR/USD in the bullish dollar scenario; the main reason was that the resistance of the currency pair-the 1.2000 psychological barrier resistance-remained stable. This resistance came into play on September 1st; and similar to the US dollar, the euro/dollar also began to reverse.
But-although the price has recently fallen below support and there seems to be more and more shorts, the price on the chart may be brewing a bearish trap. Even if the support is broken, the growth of the sky has slowed down in the past few days-so if the subsequent price drops to the previous resistance area to find support, a bearish strategy in this situation may be more attractive. This pivot point is located near the 1.1750 psychological barrier-the area has withstood many tests in the past two months, and prices have turned around here many times. In recent times, the area helped hold the price low on Monday, and it was not broken until Tuesday.
However, if the price pulls back to this area, it may reopen the door to a bearish currency pair, making traders pay attention to EUR/USD in a bullish dollar scenario.
AUD/USD: Reversal begins, the key to follow-up levels
The bearish trend of AUD/USD seems to be even more pronounced than the above EUR/USD. The author mentioned this situation in this week's Australian dollar forecast article.
The logic behind this setting is that a rising wedge constructed on the candlestick chart may bring a trend reversal. The author wrote before-support seems strong near 0.7185, but now it has been broken. The next important question is what will happen next-an important level that appears on the candlestick chart at this moment is 0.7000. When this level is concerned, an important question is whether the price trend at this time is oversold.
Or traders can choose to wait patiently and see if previous support will become future resistance. This hub is located at 0.7185-0.7205.
GBP/USD: a sharp drop, finally found support
For the UK, this week is a difficult week; for the British pound, September is a difficult month. After the rally peaked slightly below the 1.3500 mark, the GBP/USD bears made a big effort-the negative originated from the double attack of Brexit and coronavirus headlines.
It is worth noting that the above Euro/USD and AUD/USD are still in full-scale selling, while the GBP/USD has obviously gained some support. The support is about 1.2712, which is the 61.8% Fibonacci retracement level from the high in December last year to the low in March this year. So far, this level has helped stop the decline. This makes price corrections possible, especially in the context of a weaker dollar.
The price of gold fell below the 50-SMA for the first time since June. Is it an exhaustion of bullish momentum or a change in trend? These important levels deserve attention.
Gold price trend forecast: the price of gold fell below the 50-SMA for the first time since June
Although Fed Chairman Jerome Powell delivered a dovish stance in front of US lawmakers, the price of gold still fell below the 50-SMA (simple moving average, which is near 1941 as of the time of writing) for the first time since June. However, as the Federal Reserve (FED) continues to promise to use the Fed’s tools to do everything possible to ensure that the recovery is as strong as possible, the decline in the price of gold from the historical high of 2075 will eventually prove to be a change in trend or the exhaustion of bull market momentum. to be observed.
As the Fed plans to achieve 2% average inflation over time, the price movements after the Federal Open Market Committee (FOMC) interest rate resolution suggest that market participants expect more dovish forward guidance, and the FOMC seems to be dependent on current Tools to support the Fed’s economy, as shown in its September Summary of Economic Forecasts (SEP), long-term interest rate expectations remain the same as expected at the June meeting.
Powell’s recent remarks suggest that while adjusting the Main Street plan to provide more support to small and medium-sized companies and non-profit institutions, the FOMC is not in a hurry to change the path of monetary policy, and the Fed may continue to rely on adjusting lending convenience instead of introducing more Many unconventional instruments, because the bank promised to increase its holdings of government bonds and institutional mortgage-backed securities at least at the current rate.
As Fed officials insist that the recovery is progressing faster than generally expected, the continued weakening of expectations for additional currency support may continue to dampen risk appetite, but the crowding behavior of the US dollar is likely to continue, even if retail investors turn into net long GBP/USD.
The IG sentiment indicator (position report) shows that retail investors hold net long positions in USD/CHF, USD/CAD and USD/JPY, and continue to hold net short positions in AUD/USD, EUR/USD and New Zealand Dollar/USD. The GBP/USD position reversed for the second time in a month, with 50.72% of the positions being net long, but the overall market trend may remain unchanged for the rest of the month, as the Fed’s balance sheet remained stable at over 7 trillion in September The level of the dollar.
Having said that, the Fed’s dovish forward guidance may continue to highlight the charm of gold as an alternative to legal tender, and the bull market of gold may continue to coincide with the crowded behavior of the US dollar, as the macroeconomic outlook remains largely unchanged after the Federal Reserve’s interest rate decision.
However, the technical outlook for gold is mixed. The price of gold fell below the 50-SMA for the first time since June, although the moving average is still following the upward trend since the beginning of this year. At the same time, the RSI indicator (Relative Strength Index) is near its lowest level since March, and may continue to signal bullish kinetic energy failure.
Gold price trend daily chart
Up to now in 2020, the price of gold will refresh its annual high every month, and this is also true in August, when the price of gold hit a new historical high of 2075 that month.
Even if the RSI indicator failed to maintain the upward trend since June, the indicator recorded a new extreme level during the year (88) and entered the overbought range for the third time in the year. Therefore, the gold price still successfully cleared the September 2011 record The record high is 1911.
However, gold failed to achieve a bull market in September, and the price of gold fell below the 50-SMA for the first time since June. The RSI indicator also negated the wedge/triangular pattern constructed in August and is currently at the lowest level since March.
If the weakness stays above 1907-1920, the price of gold may fall back to the August low of 1863, which is slightly above the Fibonacci overlap level of 1847-1857. If it breaks, the interval worthy of attention is 1816-1822.
At the same time, if it fails to break below the August low of 1863, it may create conditions for the range consolidation, but it will need to break above/close at the Fibonacci overlap range from 1971 to 1985 before suggesting that it will resume the upward trend.
With the strengthening of the US dollar with safe-haven features, the AUD/USD fell on Monday. The Australian dollar bulls held a key technical support level close to the 0.7200 mark. A sharp rise in the VIX index may indicate that market sentiment is still sluggish.
The Australian dollar was under pressure on Monday, as the market fell sharply or risk aversion rose. The sentimentally sensitive AUD/USD plunged by about 120 points from last Friday’s closing price. However, the major currency pair has since recovered nearly a quarter of its losses. The AUD bulls have held key support-about 0.72 mark.
AUD/USD Price Chart: Daily Time Frame (May 26 to September 21, 2020)
Although prices rebounded sharply from this level in the late trading hours, the AUD/USD closed below the 50-day moving average. This may increase the possibility of prices retesting the 0.72 mark (supported by some lows since this month). If prices fall below this key technical barrier and follow up further, it will increase the possibility that the medium-term trend will reverse from bullish to bearish. A break below the intraday low on September 8 may cause the AUD/USD to accelerate its decline, and the price may further fall to the channel support; then the 0.7000 level may become another potential downside target.
The AUD/USD price graph overlays the VIX index: daily time frame (December 2019 to September 2020)
If the VIX index (or panic index) continues to rise as market sentiment further deteriorates, the risk-sensitive Australian dollar may also face stronger selling pressure. However, Fed Chairman Powell's speech later this week may depress the dollar's trend-there may be more currency interventions. On the other hand, if the upcoming global PMI data is disappointing, risk aversion is likely to heat up again and push the AUD/USD lower.
Last week, WTI crude oil rebounded by more than 12%. The long and short sides are currently competing fiercely at the key level of 41.30 US dollars. The gains and losses of this level are expected to affect the short-term trend of oil prices. The future trend of oil prices needs to focus on one major point and two aspects. Road materials will still be tortuous.
Oil prices compete again at the level of $41.30! Market outlook research and judgment: one major point, two major aspects
Last Friday (September 18) WTI crude oil once recovered the level of US$41.30 to an intraday high of US$41.48, setting a new two-week high since September 4. In fact, oil prices rebounded by more than 12% from the low of 36.82 dollars last week, which changed the weak momentum of the previous two weeks and set the biggest weekly increase since mid-June! At present, the long and short sides are fighting for a key level of 41.30 US dollars. The gains and losses of this level are expected to affect the short-term trend of oil prices.
The author believes that the research and judgment of the future trend of oil prices requires a major focus and two aspects. Among them, the progress of the global epidemic has become the top priority of the research and judgment of oil prices. On this basis, the monetary policy of the Federal Reserve and the OPEC+ member states headed by Saudi Arabia are related Measures have become the two major aspects that influence oil prices.
Regarding the epidemic situation, apart from the relatively optimistic situation in China, the epidemic situation in major European and American economies has resumed since mid-July. This has become the root cause of the stagnation of global risk assets including US stocks in recent times.
The Nasdaq index has retreated more than 13% to 10763.8 points since it hit a record high of 12466.3 points on September 2.
It is worth noting that last Friday (September 18) the World Health Organization (WHO) stated at a press conference that the cumulative number of confirmed cases of the global epidemic has exceeded 30 million, despite improvements in treatment and a large number of tests that have found more mild symptoms The death rate of cases and COVID-19 has decreased, but the pandemic is still expected to continue for a long time.
According to statistics from Johns Hopkins University in the United States last Friday (September 18), the United States is still the most severely affected country in the world, with 6,762,361 confirmed cases; and British Prime Minister Boris Johnson (Boris Johnson) Johnson) said that the second wave of the new crown epidemic in the United Kingdom was “inevitable”; France recorded 13,215 the highest single-day confirmed case since the outbreak.
There is no doubt that the impact of the epidemic on the real economy is direct. Due to the globalization and specialization of labor in the past few decades, the industrial chain cannot form a closed loop in most countries. The result is that resumption of work is not completely equivalent to resumption of production. The impact on the demand side is particularly huge, so the current market compares the epidemic with the 2008 global financial crisis.
It is worth noting that crude oil is called "the blood of industry", and its refined products have penetrated into all aspects of people's lives, and have a very wide range of roles and functions in social and economic development. The sharp decline in demand for crude oil has become oil prices. The fundamentals cannot be ignored.
According to the monthly report released by OPEC last Monday (September 14), factors such as weakening demand and recovery of shale gas have weakened the outlook for oil. The 2020 global crude oil demand forecast is lowered by 400,000 barrels/day to 9.5 million barrels/day ; The IEA monthly report released last Tuesday (September 15) also predicts that the recovery of oil demand will slow down significantly in the second half of 2020.
WTI crude oil 4-hour chart:
Interestingly, WTI crude oil is currently competing at the level of US$41.30, which is the level of oil prices before the outbreak of the "price war" in Saudi Arabia and Russia in early March. Once oil prices further regain the level of 41.30 US dollars, the market outlook is expected to rebound to challenge the above 42.50 US dollars or even the August 5 high of 43.50 level.
According to data released by the US Commodity Futures Trading Commission (CFTC), as of the week of September 15, speculators increased their net long positions in WTI crude oil by 30,970 contracts to 308,522 contracts, indicating that the market’s willingness to bullish oil prices has increased.
Two aspects: what do the Fed and OPEC+ say? How to do it again?
As the two major aspects that affect the medium-term trend of oil prices, the Fed and OPEC+ both released their views and opinions on the future last week.
Among them, the Fed announced in its September interest rate resolution to maintain interest rates unchanged at 0%-0.25%, and raised the 2020 economic growth forecast (from -6.5% to -3.7%, which may be caused by too pessimistic expectations in June). Incorporating the average inflation target into the forward guidance, the dot plot reveals that the Fed may still maintain low interest rates before the end of 2023.
Obviously, the Fed has assumed a dovish look, but in fact it did not mention specific content, such as increasing QE, purchasing TIPS, and introducing yield curve control (YCC). In this case, we need to be wary of the mid-term dollar index. Revised the market’s rebound, and given that crude oil is priced in US dollars, oil prices are expected to be under pressure by then.
Daily chart of the US dollar index:
OPEC+ is similar to the Fed, with a clear attitude, but lack of action! At the OPEC+ ministerial meeting held last week, Saudi Energy Minister Abdul Aziz warned that the crude oil was empty. He said that those who "gamble" in the crude oil market will feel very distressed and OPEC+ can "actively" adjust 2021. The annual production quota is reduced without having to wait until the next meeting (the next meeting will be held on October 15).
However, in terms of action, the meeting only decided to extend the compensation period for excess production in OPEC+ member countries to the end of December, emphasizing that all compensation for excess production should be completed by the end of the year, and strive for a high level of implementation rate of production reductions. The goal has not changed.
It is worth noting that the rise in oil prices last week was mainly due to Saudi Arabia’s tough remarks. The market seems to believe that Saudi Arabia will lead OPEC+ to take further actions to reduce production once the situation worsens. However, Saudi Arabia has actually lowered its oil prices twice in a row recently. This choice is similar to Saudi Arabia’s choice in March, and even the oil price level is similar to around 41 dollars.
It is worth pondering that, in the same situation, if OPEC+ members cannot fully comply with the production reduction agreement, the possibility of Saudi Arabia's further initiative to reduce production may be minimal.
Oil prices rose after the latest OPEC+ Energy Ministers Meeting. Oil prices have risen by 10% this week, but prices are still trending downward so far this month. At present, oil prices are back-testing the 50-day moving average again. If a dead cross occurs at the moving average, it may weaken the rebound of oil prices.
Analysis of crude oil price trends:
Crude oil prices have recovered their recent declines in the past three trading days. So far this week, oil prices have risen by nearly 10%, but from the trend so far this month, oil prices are still trending lower. The resurgence of market sentiment-as can be seen from the stagnant selling pressure in the major stock indexes-may have helped boost oil prices.
Speculation surrounding the content of OPEC+'s latest meeting may also push up oil prices. Energy ministers from various countries gathered at the JMMC meeting to discuss the latest oil market prospects and review compliance with production quotas. In view of the stagnation of the global economic recovery and the decline in demand, there have been comments that "further necessary measures may be needed"; oil prices rose after the news.
Crude oil price chart: four-hour time frame (from August 25 to September 17, 2020)
Saudi prince Abdulaziz said that "it will make this market turbulent", and his remarks have repeatedly mentioned afterwards, which may panic the crude oil shorts. In addition, the JMMC meeting proposed that OPEC officials extend the compensation period for overproduction until the end of the year, which may encourage OPEC to further comply and promote market stability.
However, oil prices may face difficulties in further rebound, because oil prices have come to a key technical resistance area-about 41.00 mark. There is also a 61.8% Fibonacci retracement level from last month's high to this month's low in this dense resistance area. In addition, the RSI indicator (Relative Strength Index) is also on the verge of "overbought".
Crude oil price chart: Daily time frame (April 23 to September 17, 2020)
Not to mention that moving averages may usher in a "death cross" (bearish signal), which may put pressure on oil prices. The return of oil prices to above the 200-day moving average may be an exciting technical development for crude oil bulls, but if oil prices test the 50-day moving average again, there may be a risk that further upward steps may be blocked.
Crude oil price chart and VIX index chart: daily time frame
In spite of this, oil prices may still "reflect" the expected market volatility indicator (measured by the trend of the VIX index, also known as the panic indicator). The trends of crude oil prices and the VIX index are often opposite. The above chart shows that there is a general negative correlation between the two. A higher VIX index implies stronger risk aversion, and traders will seek downside protection, which may be related to the decline in overall market sentiment and economic conditions. This may correspond to the bearish risk faced by oil prices, but if the VIX index falls again, oil prices may rise to the August high-about 43.00.
After the Fed’s September interest rate decision and Fed Chairman Powell’s press conference, the dollar rebounded. Risk aversion remained stable, the VIX index rose slightly and the stock market fell. GBP/USD gave up gains; AUD/USD fell into the correction zone.
After the Fed's decision at the end of the U.S. market on Wednesday, the dollar finally closed up. The U.S. dollar experienced a roller coaster-like market overnight, with prices rising one after another and causing some major currency pairs to fall into a see-saw. Yesterday the Asian market opened, the US dollar was basically strong, but soon the price gave up the gains recorded during the transaction. Before the Fed issued a resolution statement, the US dollar stopped near the 92.80 level.
USD price chart and VIX index chart: 5-minute time frame (intraday market on September 16, 2020)
This technical support area was mentioned by the author in yesterday's Fed resolution. And we have also noticed that as the market begins to digest the Fed’s latest remarks, the dollar may be following the trend of the VIX index (or panic index). Perhaps Fed officials’ upward adjustments to economic expectations — covering US GDP, unemployment, and inflation — helped boost the price of the U.S. dollar against other currencies.
Fed Chairman Powell's subsequent speech at the press conference may have accelerated the buying of the dollar near the close. Powell mentioned that economic activity has picked up in recent months, but the improvement in high-frequency indicators has begun to slow. For example, he mentioned that some measures of consumer spending and employment growth have slowed down since mid-June.
The Fed may disappoint the market’s dovish expectations. The resolution statement shows that the central bank is “closely monitoring the situation” rather than taking more action now. Powell's speech also avoided providing more monetary support now, and fiscal policy efforts may better help the economy to return to the level before the outbreak. But in any case, the Fed has expressed its intention to work hard—it will continue to purchase assets at least at the current rate of purchase.
GBP/USD price chart: one-hour chart (September 9 to September 16, 2020)
GBP/USD remained stable above the previous day's closing price yesterday, but the price has fallen sharply; GBP/USD fell by about 43 points from the 1.3000 area. The price may continue to fall from the intraday high, and the market outlook may fall to trend support-close to the 1.2900 level. As the uncertainty of Brexit increases, if the pound/dollar falls below the technical support area, the market outlook may again test the lows so far this month.
AUD/USD Price Chart: Daily Time Frame (May 27 to September 16, 2020)
Under the influence of the Fed’s September interest rate decision and Powell’s press conference, the AUD/USD also fell from the intraday high. The risk-sensitive currency, the Australian dollar, has encountered selling pressure against the US dollar, which may be due to the deteriorating market sentiment leading to increased demand for safe-haven currencies such as the US dollar. If risk aversion continues and the expected volatility indicators continue to rise, the AUD/USD may continue to fall towards the 0.7200 mark-about the 50-day moving average.
On Tuesday, the Australian dollar was boosted by optimistic data from its largest trading partner, and the AUD/USD rose. The AUD/USD is currently stabilizing at the 20-day moving average. The trend of the U.S. dollar may be mainly based on the upcoming Fed interest rate decision.
On Tuesday, as of now (at the time of the author's writing) the Australian dollar/dollar rose, and the intraday price rose by about 0.2%. Boosted by the optimistic data from the second largest economy, the Australian dollar has strengthened overall, which may encourage the Bank of Australia to adopt a wait-and-see policy.
AUD/USD Price Chart: Daily Time Frame (May 20 to September 15, 2020)
Last week, the AUD/USD rebounded higher at the 0.7200 level. This wave of gains highlighted that this dense area has transformed from resistance to support. In addition, the AUD/USD basically continued to remain stable at the 20-day moving average (the moving average is trending upward)-or it may help maintain its overall bullish trend. This may help AUD/USD to test technical resistance upward again-the August 31 volatility high of 0.7400 is expected to become the focus of attention.
AUD/USD and VIX Index Price Chart: Daily Time Frame (December 2019 to September 2020)
As long as traders' risk appetite remains unchanged and expected market volatility remains at a relatively low level, the Australian dollar against the dollar is expected to continue to rise. However, if market sentiment deteriorates and the VIX index (which measures the volatility of the S&P 500 index) rises sharply, the AUD/USD may face headwind resistance.
But in any case, the next move of the AUD/USD may depend on the upcoming Fed interest rate decision. The FOMC (Federal Open Market Committee) will hold an interest rate meeting at 18:00 GMT on Wednesday, and will also announce the latest economic forecast report (SEP), followed by Fed Chairman Jerome Powell (Jerome Powell) will hold a press conference.
The price of gold rose slightly at the beginning of the week, and the Fed's decision will come soon. With the weakening of the dollar and the fall in yields, gold/dollar has found upward momentum. If FOMC (Federal Open Market Committee) officials say to pressure the market, precious metals such as gold may fall.
Gold price trend analysis
This week will usher in the Fed's interest rate decision, and gold prices will rise. The latest rise in gold prices seems to be expected to boost the upside of the commodity to break through the recent consolidation pattern.
If FOMC officials emphasize their dovish stance and promise to maintain a loose financial market environment, they may continue to support the rise in gold prices. In addition, new remarks about implementing an average inflation target may also boost gold prices.
Gold price, U.S. dollar index, 10-year U.S. Treasury yield trend chart: daily time frame (December 2019 to September 2020)
Having said that, if the Fed decides to suppress the market—perhaps by emphasizing the downside risks facing the economy, and the increasing differentiation between Wall Street and Main Street people in the United States, the price of gold may face further headwinds. This is because a pessimistic Fed may trigger risk aversion; as investors' potential demand for safe-haven currencies rises, the US dollar may be supported by buying, and gold/US dollar may fall.
Gold Price Chart: Daily Chart Time Frame (April 29, 2020 to September 14, 2020)
However, in any case, the path of least resistance in the gold price market still seems to be upward. Technical support falls at approximately $1920 per ounce. This level seems strong and is expected to provide bottom support for the potential decline in gold prices. In addition, the 50-day moving average with an upward trend in this support area is worthy of attention.
The price of gold above the closing price on August 18 (approximately $2010 per ounce) may encourage gold bulls to set their sights on record highs. But on the other hand, if the price of gold falls below the symmetrical triangle formation, that is, if it closes below the $1920 level, it may indicate more turbulence in the price outlook.
The latest polls show that in the U.S. election, Biden continues to lead Trump in key states; the continuous upgrading of international trade relations may continue to drag down technology stocks, and the two-party foreign policy has become the focus of market attention; the euro/dollar test is key Support level, rebound or fall?
US election: Biden-Trump's lead shrinks
Former US Vice President and Democratic presidential candidate Biden continues to lead the current President Trump in polls, but the lead gap has narrowed in the past few trading days. According to a Fox News poll, Biden leads Trump by 5 percentage points, which is slightly lower than the 7 to 8 percentage point lead maintained in the past few weeks.
According to the New York Times polls on September 8-11, Biden's approval ratings in Minnesota, Nevada, New Hampshire and Wisconsin are ahead of Trump. His approval ratings in these key states are even significantly better than the performance of former Secretary of State Hillary Clinton in the 2016 election.
Even so, the 2016 U.S. election market witnessed a black swan. Polls show that Hillary Clinton has always been ahead of Trump, but the actual result is not the case. Therefore, excessive reliance on poll results may be misleading. Before and after the first presidential debate to be held on September 29, political statistics will be particularly important and may have a more practical impact on the market.
Foreign policy is the focus
International trade tensions have always been a feature of the Trump administration's relatively hawkish foreign policy, as well as a campaign strategy of his. Therefore, the different foreign policies of the two parties will also be the focus of this election. From a market perspective, additional geopolitical pressures, especially the recent fall of the technology sector that soared during the virus pandemic, may trigger significant market volatility. If the bilateral friction between the world's two largest economies in the field of science and technology further intensifies, which in turn affects economic policy, the recent correction of the Nasdaq index may further deepen.
EUR/USD trend analysis
The euro/dollar is currently placed orthogonally near the upward trend line since the end of July and the upward trend line since March. After falling below the former, the EUR/USD rebounded slightly from the latter. The gains and losses of the exchange rate near this technical point may determine the trend of the market outlook.
If it successfully rebounds from the trend line since March, it is expected to test the important resistance level 1.2014; on the contrary, if it falls below the trend line, the bullish sentiment may be weakened, but the selling pressure is expected to be in the support range 1.1720- 1.1689 was relieved.
Polls show that in the US general election, Biden still leads Trump in key states. The failure of the Republican stimulus bill to pass may further increase the approval rate of Democratic presidential candidates; technically, the prospects for silver prices seem to be bad.
Only 54 days before the US election, polls show that Biden continues to lead Trump
Only 54 days before the US election, polls show that the former vice president and Democratic presidential candidate Biden continues to lead Trump. In addition, Biden's approval rating in key states also surpasses Trump. Nevertheless, before the upcoming presidential debate on the 29th, investors should still be cautious when evaluating the results of the general election.
There was news on Thursday that the Republican bailout bill was vetoed by all Democrats and one Republican in the Senate. According to reports. The Democrats expressed dissatisfaction with the reduced economic stimulus bill, which cut unemployment benefits from $600 a week to $300.
According to the bill announced by the Republican Party, the bill includes new small business loans, additional funds for schools, direct investment in virus treatment, vaccines and testing, etc., but does not include a check for the first round of the economic stimulus bill for $1,200. In addition, the Democrats are also dissatisfied that the bill does not include provisions for local and state governments.
Senate Majority Leader McConnell accused Democrats of blocking the bill's passage for partisan reasons. If another bailout bill drafted by the Republican Party is passed, it may make the poll data before the key election day more favorable. Political frictions in the coming months may further expand and further delay the implementation of more fiscal stimulus policies.
Silver price technical analysis daily chart
After a brief period of consolidation in late July, the price of silver rose sharply in August and once set a seven-year high of 29.8. Since then, the price of silver has fallen into consolidation again. In the short-term, if the silver price can continue to stand firmly above 26.41, it is expected to rise from the test year's high of 29.8.
Conversely, if the price of silver falls below the support level converted from the resistance level in early August, it may usher in a sharp correction. However, the silver price seems to be building a symmetrical triangle, which is usually a continuation of the previous trend, suggesting that the silver price is expected to resume the previous upward trend after a period of consolidation. However, the monthly chart shows that silver prices seem to be facing considerable risks.
Silver price monthly chart
Looking at the monthly silver price chart, the silver price seems to show familiar signs of topping, which is very similar to the 28.20 high recorded in early 2013. At that time, the price of silver hovered around the high point from early February to early April before falling, and then turned into a significant decline. Therefore, in the short term, silver seems to be facing familiar downside risks.
The U.S. dollar index fell slightly on Wednesday after six consecutive days of rising, and the euro/dollar rose slightly before the ECB meeting; the AUD/dollar fell from the official beach of 0.7200, and the VIX index fell.
The US dollar index closed slightly lower on Wednesday, the first decline since September. As market sentiment has improved after the recent decline in major stock indexes, the dollar bulls seem to have begun to stop and the dollar price trend has begun to decline. As the world's major reserve currency, the US dollar is generally regarded as the top safe-haven asset and will rise during periods of risk aversion.
USD Index Trend Analysis
Yesterday, traders' risk appetite clearly rebounded, putting pressure on the US dollar index. The rebound of the US dollar index in the past few trading days may also make it difficult to maintain momentum. Technically, the resistance of the 94 mark and the downtrend in the medium term may limit the further rebound of the dollar index.
EUR/USD trend analysis
The euro/dollar rose slightly on Wednesday, mainly driven by the weakness of the dollar. Before the European Central Bank meeting tonight, the euro/dollar rebounded from the 50-day moving average, and there were reports that ECB officials were optimistic about the EU’s economic prospects. This may have triggered market speculation that the ECB will introduce more monetary stimulus measures later this year. The possibility is reduced.
AUD/USD trend analysis
Boosted by risk appetite, the AUD/USD, which is sensitive to risk sentiment, also rebounded slightly on Wednesday. The VIX index, which measures market panic sentiment, has also fallen, and the index usually has an anti-correlation relationship with the AUD/USD trend. If risk aversion breaks out again, the AUD/USD may fall. On the contrary, if the VIX continues to decline, the AUD/USD is expected to continue to rebound.
Yesterday, market volatility rose sharply and pushed up the safe-haven currency, the US dollar, while other currencies in the foreign exchange market suffered declines. In the US general election, polls showed that the leading gap between Biden and Trump has further widened, and the Australian dollar/dollar tested key support levels .
US election: Biden-Trump's lead expands
With less than two months to go before the 2020 US general election, the results of the polls to be announced in the next few weeks seem to have an increasing impact on the market. The latest data shows that the Democratic presidential candidate and former Vice President Biden has a higher approval rating than the current President Trump. However, the two sides are evenly matched in the key swing state Florida.
RealClearPolitics also allowed speculators to bet on election results online with a significant difference in average betting odds, which had previously narrowed to the lowest level since June. Although the impact of this implied result is not yet clear, as the September 29 presidential election debate approaches, such data may begin to shake the market.
Increasingly obvious election uncertainty may boost market demand for safe-haven currencies such as the U.S. dollar, and the U.S. dollar has begun to rebound in the context of recent market volatility. Risk-oriented assets such as the Australian dollar and New Zealand dollar and other commodities-related currencies have been suppressed.
AUD/USD technical analysis: coming to the edge of danger
AUD/USD has fallen back from the interim high of 0.7393 in December 2018, and is currently in the key support range of 0.7206-0.7181. If it breaks below this range, it may usher in a greater degree of downside.
To quote Robert Schiller, the Nobel Prize winner in economics, if various expressions show a new bearish tendency, concerns about the trend of this currency pair may amplify the decline of the AUD/USD.
Although Japanese Prime Minister Shinzo Abe suddenly announced his resignation, it seems that the Bank of Japan’s ultra-loose monetary policy will continue. The Australian dollar/yen has seen a multi-year high and the dollar/yen is at risk of falling.
The Bank of Japan may continue to push down the yen
Although the era of Japanese Prime Minister Shinzo Abe is coming to an end, the multi-pronged "Abenomics" he launched where he came to power seems to be maintained for the foreseeable future. Abe's possible successor, the current Chief Cabinet Secretary Yoshihide Suga, expressed his desire to "inherit the current policy framework" and "highly appreciate the current monetary policy of the Bank of Japan."
The deputy governor of the Bank of Japan emphasized that “due to the high degree of uncertainty about the impact of the epidemic on the economy and prices, the central bank will closely monitor its impact and will not hesitate to take further easing measures if necessary”, this statement may help ease Investor concerns have suppressed the yen, which is linked to risk aversion. In addition, he also pointed out that in order to improve monetary policy, it is necessary to continue in-depth discussions, and emphasized that the Fed’s use of the average inflation target as an adjustment is an important means to improve the effectiveness of monetary policy.
Therefore, Japan’s July inflation was only 0.3%, and the Bank of Japan is increasingly wary of the risk of downward inflation. It is expected that the Bank’s loose monetary policy will continue.
USD/JPY trend analysis: Tendency to the downside
USD/JPY is about to face downside risks after 7 days of moderate gains, because the exchange rate failed to break through the 50-day moving average and the downward channel remains intact.
The RSI will also fall back from the downtrend line that started from the June high, and it seems unable to maintain above 50, suggesting that the USD/JPY upward momentum is declining. In addition, in the past few trading days, USD/JPY has recorded a Doji candle chart several times, which also implies that the upward momentum may be exhausted. If it falls below the 21-day moving average (currently at 106.14), it may increase selling pressure .
If it continues to fall below the May low of 105.99, the lower target looks at the 61.8% Fibonacci level at 105.20 and the upward trend line that began in March. Conversely, if the closing breaks through the May 29 high of 107.08, it is expected to stimulate more buying. The upper target looks at the 200-day moving average of 107.45 and the upper track of the descending triangle.
AUD/JPY trend analysis: or continue to set a new high
The AUD/JPY rose sharply after breaking through the resistance level of the ascending triangle on August 27. Based on the measured increase, the upper target looks at 81.032.
Although the AUD/JPY has failed to overcome the 38.2% Fibonacci level of 79.19 recently, if the exchange rate continues to stabilize above the 23.6% Fibonacci level of 76.70, the path of least resistance is still inclined to upward. If the daily line closes at the August high of 78.46, it implies that it will resume the previous upward trend. The upper target looks at the 38.2% Fibonacci levels of 79.17 and 80; on the contrary, if it falls below the 21-day moving average of 76.83, it may increase the AUD/day The selling pressure of the yuan, the lower target looks at the 200-day moving average of 73.77.
Will the gold price continue to fluctuate within a range? The U.S. Treasury bond yields diverge from the trend of the U.S. dollar, and the market outlook is worthy of attention. What are the potential downside risks of gold/USD?
Fundamental outlook for gold this week: neutral
Gold price trend analysis
This week, the price of gold may continue to fluctuate within the range. At present, the price of gold continues to contend with competing fundamental forces. In general, since the price of gold plummeted in early August, it has been difficult for gold/USD to make meaningful upward progress. This shows that the bullish trend of gold prices since March has changed.
In the past week, market volatility rebounded, and the S&P 500 index fell; the VIX index, known as the "panic indicator", rose sharply. The US ISM service industry PMI data released before this is quite disappointing. The data shows that the future development of the largest component of the US economy (service industry) may be more difficult. Affected by this, the yields of US long-term Treasury bonds, such as the 10-year and 30-year Treasury yields, have declined (due to rising demand). At the same time, the safe-haven currency, the US dollar, found support to rise.
Gold/USD is usually represented as an anti-statutory hedging tool. Holding this precious metal does not produce returns, and gold is sensitive to inflation expectations. In the global financial market, gold is basically priced in U.S. dollars, which makes gold very sensitive to fluctuations in the U.S. dollar. Therefore, when the US dollar and Treasury bond yields change in the same direction, the combination of the two is expected to have a profound impact on the price of gold.
Since mid-August, US Treasury yields have tended to deviate from the trend of the US dollar (see the chart below). In view of this, there is no need to be surprised that gold prices will fall into consolidation during the same period. The price of gold rose, driven by the lower yields of US Treasury bonds, and the price still has room for upside. However, the rise in the price of gold was cushioned by the rise of the dollar (boosted by aggressive risk aversion).
The Citi Economic Surprise Index, which tracks US economic data, recently fell to its lowest level since early July. This shows that economists’ expectations are slowly moving closer to reality, and optimistic results may become less common. For gold, a precious metal, risks still exist. Rising volatility may lead to a liquidity premium, which may affect the US dollar, just like the situation in March. However, this week's relatively weak US economic calendar may make gold prices continue to fluctuate within a range.
The price of gold closed at the Doji candlestick in August, which is very unfavorable to the trend of the opening gold price in September. At present, the price of gold is testing key support levels again.
Gold price trend: falling to a key support level, gold bulls take a break
The price of gold performed very strongly in the first week of the opening of August, but then sellers quickly entered the market after refreshing the all-time high of 2075. After that, the price of gold on the daily chart showed a bearish engulfing candle chart. Since then, the price of gold seems Has been in a state of consolidation. However, considering that the global pandemic is still continuing and the market is facing a series of uncertainties, this situation may soon change. Uncertainties have supported the rise in gold prices for a long time this year.
Gold price daily chart
Three weeks ago, the price of gold constructed a bearish engulfing candle chart on Friday. The price of gold has been falling for the next few days. Since then, the price of gold has generally remained within the range and the price of gold has narrowed in the second half of August. However, the price of gold has remained above the key support range of 1900-1920. The price of gold tested the support range again overnight and rebounded from the short-term upward trend line that began to connect the low of August 11 and the low of 26. This trend line and the upper low point formed a symmetrical triangle pattern, and the current gold price trend is constantly narrowing at the top of the triangle.
Gold price 4-hour chart
Tonight will usher in the US non-agricultural employment data for August, which is the first employment data since Powell’s speech at the annual meeting of the global central bank. At that time, Powell said that employment goals will be the top priority of the Fed’s dual mission. However, the large number of temporary workers recruited to complete this year's census may complicate the data and may further obscure the impact of the job market on the real economy.
Risk appetite continues to help boost the trend of the Australian dollar against the yen, which has now exceeded the level before the outbreak. The previous long-term resistance level has now turned into a support level.
AUD trend: AUD/JPY continues to rise
AUD/JPY broke through the key resistance level of 76.85 last week, the first time since May 2019. With the improvement of risk appetite and the continued economic recovery after the outbreak of the epidemic, the Australian dollar continued to rise, which is expected to further boost the upward trend of the Australian dollar/yen. In addition, after the AUD/JPY broke through the key technical level, the medium-term outlook for the exchange rate also tends to be bullish.
Since May 2019, 76.85 has been a key resistance for AUD/JPY. Since the beginning of June this year, the exchange rate has also been blocked at this level several times. Therefore, once it breaks above this level, it can be regarded as a very important technological development. The market outlook further rises to open the door.
In summary, there is almost no sign that the AUD/JPY will temporarily stop rising, and the possible resistance above it is at 78.68. If risk aversion suddenly swept the market, it is expected that the AUD/JPY will likely fall back from this resistance level, but below Still supported by a series of important support levels.
On the above 4-hour chart, the uptrend support channel that began in mid-June will continue to lead the AUD/JPY to rise in September, but the exchange rate briefly broke the support channel in August, so the effectiveness of this technical support may be very limited. The key support below focuses on 76.85 and the 200-period moving average. It is expected that the exchange rate will continue to rise steadily after falling to this level.
Since the beginning of this year, as central banks inject stimulus measures into the global economy, the price of gold has risen by nearly 30%; it is expected that in the future, gold prices may continue to benefit from loose monetary policies and low interest rates.
Global central banks increase stimulus, gold prices are supported
The price of gold remained highly volatile in August. However, compared with the amplitude in early August, the price of gold was relatively restrained in the last few trading days of August. However, the price of gold seems to be regaining part of the decline in August. It is currently in a favorable technical position, and the fundamentals still support the price of gold. The price of gold still has a constructive outlook
The world's major central banks continue to increase stimulus in the hope of reviving the economy that has been hit by the epidemic. In the next period of time, it is expected that global interest rates will continue to remain low and the balance sheet will continue to expand. Under this circumstance, fiat currencies may continue to fall relative to other valuable assets such as gold and silver.
Pay attention to the technical support level of gold price
Therefore, the long-term outlook for gold prices remains very optimistic. Short-term weakness may attract more longs to enter the market, because short-term weakness may index the consolidation or adjustment of gold prices before they continue to rise. Therefore, traders should now pay attention to the support level near the gold price, which may provide a favorable risk-reward ratio.
As shown in the above chart, the nearby support level for the gold price may be at the lower track of the ascending triangle that began in May (currently near 1932), and the lower Fibo level 1920 may be the second support level. If there is a bearish reversal in the price of gold, the above two support levels may limit the decline in the price of gold, and the key support below is the August low of 1863.
If the price of gold falls below 1863, the technical background may need to be reconsidered, because this will determine a series of lower lows and may mark the beginning of a greater decline. Conversely, if the gold price can continue to stabilize above the above-mentioned support level, the future prospects are still bullish, especially with the support of fundamentals, the price of gold is expected to hit a record high.
Gold prices started strongly in August, but this wave of gains failed to extend beyond the first trading week of August. A bearish engulfing (yin and yang) pattern appeared on the gold price candle chart on August 7, and the price of gold fell sharply in the following week; the price of gold fell by $200 in a few days. Since the price experienced this fluctuation in early August, the price of gold has now stabilized; a doji with a long shadow appears to be recorded on the August closing candlestick, suggesting that the market is uncertain.
Analysis of gold price trend: August closes like a doji
The last trading day in August has passed, and this year is an important year for gold. There are still 4 months left in 2020. This year's situation is unprecedented in many ways; there are many driving factors that can push the gold market to move forward.
September is the end of the third quarter; October we will usher in the fourth quarter; November will hold a thought-provoking US presidential election. Not to mention the vaccine reports or stimulus measures that are heard every day-all of which are based on the huge uncertainty brought about by a continuing new coronary pneumonia epidemic.
In general, this year's panic is quite favorable for gold prices. The bullish background of gold has already started full fire last year, and has entered the new year with full of heat. Even before the epidemic, the background of gold prices seemed to help further bullishness.
Looking at the entire month of August, the price of gold ushered in a strong start at the beginning of the month, and the price of gold rose sharply to a record high. However, on the first Friday of August, the gold price closed candlestick chart, and then the downward trend continued until Wednesday of the next week, during which the price of gold fell by more than $200. After that, the price of gold was generally in a state of digestion, and the price of gold continued to trade within the trading range delineated in the first two weeks of August.
Looking at the monthly chart, the net result of this month's price trend is a doji recorded on the candle chart. The doji indicates that the market is uncertain. When it appears at the top of a very strong trend, it may indicate that the price will pull back or reverse. However, if these possibilities are to become reality, the bears may need to make further efforts in the last month of the third quarter (this September) to help complete the evening star (the third candle line is formed).
It is worth noting that the last time the gold price on the monthly chart recorded a doji pattern, it caused price hesitation in the second month. After that, the bulls finally returned to the "driver's seat" and pushed the gold price to a record high. This situation occurred in February and March of this year, just when the new crown pneumonia virus began to be priced by the market.
At this point, given that the bullish trend is very strong, there may be many people who are still paying attention to long gold. There is a structure that may support this path, such as the series of support levels we discussed in the past few weeks, and they are still working.
The possibility of a bearish opportunity may require some driving force. A stronger dollar may help; although Fed Chairman Jerome Powell made a speech at the Jackson Hole seminar last week, some other factors may be needed to promote the potential for subsequent dollar strength. As seen in Monday morning, the US dollar is entering a major support area, which may create conditions for a reversal of the US dollar trend, which may also cause a similar reversal in the gold price trend.
But for gold, to reverse its price trend may not require a particularly large bullish response to the dollar's trend-as seen in early August. As the author said earlier, gold prices appeared in a bearish candlestick pattern on August 7th, which led to chaotic selling on Monday, Tuesday and Wednesday of the following week. Correspondingly, the U.S. dollar strengthened moderately and the price recorded a lower high.
For now, the short-term structure of gold prices in essence still seems to be bullish. Traders may want to try to follow this trend before there is more evidence that the price will reverse or pull back.
In terms of resistance in this case, close to 1979 US dollars, 2000 US dollars and the subsequent adjacent 2016 US dollars may be considered. In terms of support, close to 1943 US dollars, 1920 US dollars and lower 1900 US dollars may be considered; if you consider from the long-term framework, there is another area worth considering, that is, the 1859-1871 dollar area.
The Fed’s average inflation target may provide support for precious metal prices, and rising inflation expectations are expected to push gold prices to record highs.
Fundamental outlook for gold this week: bullish
Historically low interest rates, loose monetary policy, and extraordinary fiscal stimulus have pushed up precious metal prices, which seems to have created a good environment for the outstanding performance of non-yielding assets.
The fundamental environment that has driven gold to a record high seems to show no signs of abating. Last week, Fed Chairman Powell revealed the central bank’s latest monetary policy strategy-“In the future, it will seek to achieve an average inflation level of 2%.”
As he said at the annual Jackson Hole Economic Symposium, Powell also mentioned that "inflation continues to be lower than our long-term goal of 2%" is one of the concerns, and emphasized that "sustained low inflation may generate serious economic risks. (And) lead to an unwelcome drop in long-term inflation expectations."
Given that "anchored inflation expectations are critical for the Fed to support employment when necessary," the Fed chose to introduce "a flexible form of average inflation target."
The average inflation target basically allows the FOMC (Federal Open Market Committee) to continue to adopt loose monetary policy, allow inflation to rise after a period of time below the target level, and "allow inflation to stay moderately above 2% for a period of time."
Given that the Fed’s preference for measuring price growth has been lower than its mission target (since it was implemented 8 years ago), the current 5-year inflation expectation is slightly lower than 1.8%, and interest rates at historically low levels are expected to continue in the short term. Will keep going.
Although the Fed's tolerance for higher inflation levels is fundamentally beneficial to gold, Powell’s statement also mentioned that “if inflationary pressures are too high...we will not hesitate to take action”-this may cause the gold bulls to be worried. The remarks suggest that what the Fed can tolerate may be only a slight excess.
But when we turn our focus to the FOMC’s second mission goal-full employment, it seems that extending the stimulus measures is not only possible but also necessary. The number of people applying for unemployment benefits is still three times higher than the peak during the 2008 financial crisis. More than double, the current unemployment rate is around 10.2%.
Of course, the number of people applying for unemployment benefits has fallen sharply in the past five months, which may indicate that the labor market is recovering.
However, high-frequency (frequently published) data shows that this recovery may begin to lose momentum, because the job postings posted on the Indeed job site in the United States (which claims to be the world’s first job site) have dropped for two consecutive weeks, ending the previous three consecutive years. Month’s growth trend.
In view of this, the Fed may have to expand its quantitative easing program in the next few weeks to cope with the sharp weakness in the job market. The Fed has just maintained its balance sheet at a level slightly below 7 trillion US dollars.
The significant increase in asset purchases may push the price of gold to record highs by suppressing the upside potential of short-term bond yields and putting pressure on the liquid dollar.
AUD/USD is testing overhead resistance, and the price is trying to continue to make higher highs. At the same time, the AUD/JPY has broken through an area that has frequently acted as resistance before. If the risk appetite continues, the AUD/USD and AUD/JPY are expected to continue to rise.
AUD/USD price prediction
The Australian dollar against the US dollar and the yen has continued its upward trend this week. If the technical resistance is crossed and the risk trend remains loose, the two Australian dollar currency pairs may continue to rise. For the AUD/USD, the recent strength has helped the AUD/USD record a higher high (relative to last week), and the subsequent price is aimed at a potential resistance-the swing high recorded in early 2019 (about At 0.7287).
AUD/USD Price Chart: Daily Chart
The price break above last week's high is an exciting step, and a further break above 0.7287 may lead to more buying, because the technical barrier is broken and the bulls can target the second (higher) resistance . If the initial resistance is broken, the second line of price defense may fall at the shock high recorded in November 2018-about 0.7391.
AUD/JPY price forecast:
The AUD/JPY also ushered in a wave of rising prices. Compared with AUD/USD, the trend of AUD/JPY looks firmer. As a result, the bulls may continue to push up prices, after the resistance that had been holding the currency pair up for several months has been broken. Two weeks ago, the author mentioned that the currency pair is expected to usher in a breakthrough, but after the initial attempt, the price immediately fell below the two technical patterns; it seems that the summer downturn is restricting the price in either direction Initiate an attempt.
AUD/JPY four-hour chart
Having said that, the volatility caused by the Jackson Hole seminar may become the final factor needed to trigger the current price movement. Taking into account the resistance above and the support below, the AUD/JPY seems to be ready to continue to rise; however, since the price has experienced a false breakthrough downward, it is not entirely impossible for the market outlook to reverse downward. Therefore, appropriate risk management is critical.
On Wednesday (August 26) "Laura" turned into an extremely dangerous Category 4 super hurricane, hitting Texas, a major source of oil production and refining in the United States; EIA inventory fell more than expected; OPEC only slightly increased production by 180,000 barrels per day in August; US stocks Continued to hit historical highs, the U.S. index fell, and gold violently rebounded more than $50. How will Powell's speech affect market volatility?
"Laura" hits U.S. oil and gas production areas as a Category 4 super hurricane, and oil prices continue to hit new highs!
On Wednesday (August 26), the National Hurricane Center according to the "Hurricane Hunter" aircraft detection report showed that "Laura" has been upgraded to an extremely dangerous Category 4 hurricane (A Category 4 hurricane is approximately equivalent to a Category 17 super typhoon, accompanied by Heavy rains and wind speeds reaching a catastrophic level of 130 miles (209 kilometers) per hour). The hurricane is expected to invade the vicinity of the Texas-Louisian line this Thursday morning local time. Currently, more than 385,000 people on the southern coast of Texas have been requested Evacuate temporarily to avoid the hurricane
Given that Texas is an important oil and gas producing area in the United States, the hurricane will have a significant impact on crude oil supply and demand. Laura is likely to hit areas that account for more than 45% of the U.S. refining capacity and contribute 17% of oil production.
Chuck Watson, a disaster modeler at Enki Research, estimates that the hurricane may cause damage and economic losses of 20 to 25 billion U.S. dollars. At present, more than 80% of the oil production in the Gulf of Mexico and one-third of the refining capacity in the coastal area have ceased operations. Motiva, a major US refiner, completely shut down the largest US oil refinery before the hurricane.
Although the hurricane had a major impact on U.S. crude oil production, the closure of refineries also caused a setback on the demand side of crude oil. WTI crude oil stabilized at US$43.0 on Wednesday (August 26) and then climbed to an intraday high of US$43.77, refreshed from March 6. It is a new high in the past six months. It is worth noting that once hurricanes cause long-term damage to refineries and pipelines, the pressure on oil prices will increase in the short term.
The Fed’s easing expectations heat up, U.S. stocks continue to hit record highs, the U.S. index falls, and gold rebounds violently!
In fact, oil prices have been rising for three consecutive days since the beginning of this week. In addition to the strong performance of oil prices due to hurricane factors, the market’s expectation that the Fed will maintain easing for a longer period of time is also conducive to the recovery of the global economic outlook. Boost oil prices.
Thursday (August 20) Fed Chairman Jerome Powell will deliver a speech at the Jackson Hole Annual Symposium. There is no doubt that the current focus of the market is whether Powell will talk about adjusting the Fed's monetary policy framework or even support a temporary rise in inflation. Goldman Sachs predicts that the Fed will adopt results-oriented forward guidance, that is, it will not raise interest rates until full employment and 2% inflation are reached, and that full employment and inflation above 2% will need to wait until around 2025.
Daily chart of the US dollar index:
Affected by this, the three major U.S. stock indexes rose further overnight. The S&P 500 and Nasdaq both set record highs. The Dow Jones index rose 0.30% to 28,331.92 points. The U.S. dollar index fell back to 93.0, while gold rebounded from a low of $1,902 to over $50, $1955.9!
Other positive aspects:
The U.S. EIA inventory data released on Wednesday (August 26) showed that the U.S. commercial crude oil inventories excluding strategic reserves for the week ended August 21 decreased by 4.689 million barrels to 507.8 million barrels, a decrease of 0.9%, a drop that exceeded expectations. Recorded a decline for 5 consecutive weeks; refined oil and gasoline inventories fell more than expected, of which the gasoline inventory change value recorded a decline for 3 consecutive weeks, and hit a new low since the week of July 10 (7 weeks). Last week, US domestic crude oil production increased by 100,000 barrels to 10.8 million barrels per day.
According to data from Petro-Logistics, an oil transportation consulting company, OPEC+ only slightly increased production by 180,000 barrels per day in August, of which Saudi Arabia’s increased production was the largest among OPEC+ members, with an increase of 600,000 barrels per day, but the total output was still less than 900 The target of 10,000 barrels per day, given that OPEC+ has cut its output cut to 7.7 million barrels per day in August, compared to 9.7 million barrels per day earlier, this means that compensatory production cuts made by member states including Iraq are offsetting the increase in other member states.
On Wednesday (August 26), the initial value of July durable goods orders in the United States increased by 11.2% month-on-month, which was twice the expected increase. As demand for automobiles continued to soar, it was implied that factories would help support the economic rebound in the coming months.
Investors can focus on the revised value of the real GDP annualized quarterly rate in the second quarter of the United States, the number of initial jobless claims last week, and Powell's speech at the Jackson Hole Global Central Bank Annual Conference, which are expected to affect oil price fluctuations.
WTI crude oil trend forecast: the uptrend is still not over, the top pays attention to the 45.0 and 50.0 resistance levels
WTI crude oil hourly chart:
The hourly chart shows that the oil price set a new high overnight for nearly six months. It has confirmed that the previous US$41.30 is a stage low. However, the short-term upward trend in oil prices has not yet ended. In the short term, attention can be paid to the suppression of the upper 44.0-45.0 area resistance, and once it breaks further The resistance near the 45.0 USD can be further up to the 50.0 USD level.
It is worth noting that US$43.0 has turned into short-term support. Once the support is quickly broken down, US$41.30 may be tested again below.
The Brexit negotiations are still at a deadlock, and the pound may face liquidation pressure; the trend of the dollar is concerned about the Republican National Congress of the United States and the Jackson Hole Global Central Bank Annual Meeting; the ASEAN summit will discuss the largest trade agreement in world history.
The pound continues to be stuck in the deadlock in the Brexit negotiations
Last Friday, the EU chief Brexit negotiator Barnier said that almost no progress has been made in the Brexit negotiations and that it is unlikely to reach an agreement with the United Kingdom. Britain’s Brexit negotiator Frost also said that after the new round of Brexit negotiations with Europe fails again, the pound may face greater liquidation pressure.
The complexity of geopolitics may endanger early signs of economic stability in the UK. The initial value of the UK manufacturing and service industry PMI announced last Friday was better than market expectations. However, the deadlock in the Brexit negotiations and the rising possibility of a chaotic Brexit may make the UK's economic outlook even more bleak, which is expected to be reflected in the economic indicators to be announced later.
The key issues of fishery rights and the implementation of the "level playing field" framework to prevent British companies from undermining European companies remain the main crux of many differences. Over time, the delay in reaching a consensus before the fall deadline may put considerable downward pressure on the pound. The next round of formal negotiations will be held on September 7.
Focus on Global Central Bank Annual Meeting and Speech by Fed Chairman Powell
The biggest risk event in the financial market this week may be the Jackson Hole Global Central Bank Annual Meeting, where Fed Chairman Powell will speak on monetary policy and prospects. The Fed’s message so far is that the Fed will support financial stability and economic integrity by adjusting the size of its balance sheet and the types of assets purchased within its mandate.
This Fed policy supports global risk appetite, and if Powell continues to emphasize this message in his speech at the annual meeting of global central banks, it may prolong the selling time of the dollar. Although Powell also expressed concerns about the risks to financial stability, the uncertainty and instability of economic recovery, the market generally seems to disagree with these concerns. Before the Fed’s September meeting, Powell may not reveal much information about the path of monetary policy.
The US election is coming, pay attention to Trump’s speech at the Republican National Congress
The U.S. Republican National Congress enters its second day, and the dollar’s decline may be reversed this week. After the Democratic National Convention on August 17-20, the net approval rate of the former US vice president and current presidential candidate Biden increased, which widened his lead over Trump.
Out of this sense of urgency for the lead, US President Trump may be bolder than ever on certain policies in order to win more support and attract public appeal. If Trump is re-elected as President of the United States, the uncertainty in the implementation of these measures he proposed may make the market feel uneasy, especially if polls start to tilt in his favor. This may prompt investors to flee to the dollar linked to risk aversion.
ASEAN Summit is coming soon
The ASEAN summit will be held this week. Vietnam is the rotating chairman of the online summit. The meeting will last until August 30. One of the topics discussed at this conference is the upcoming global economic partnership agreement RCEP. However, the geopolitical complexity in the region has caused India to withdraw from the agreement.
Although India is unlikely to change its mind before the meeting, progress in regional cooperation will boost India in any case. The stabilization of the global economy and the loose policies of central banks have helped boost risk appetite and further boost the demand for emerging market assets. Therefore, if there are more signs of political progress, it may further increase risk appetite and push up the ASEAN foreign exchange rate.
Gold prices entered August with very strong upward momentum, setting new historical highs several times, but since then, the bulls seem to have retreated significantly. At present, the price of gold has fallen back to the key support range, whether the bulls are still confident to push the price of gold further.
The price of gold fell to the key support range, can the bulls continue to take orders?
The rising momentum of gold prices in August is very strong, and the price of gold has soared all the way, setting new historical highs several times. But this kind of strength did not last long. At the close of the first week (Friday), the price of gold fell and constructed a bearish engulfing candle chart.
Bearish engulfing candles, coupled with the overbought trend began to be digested by the market, the market outlook usually triggers a callback. Entering the second week of August, the price of gold fell by about 10%. Although it seemed quite drastic, the sell-off did not last long. The price of gold seemed to have found support near the trend line.
1 hour chart of gold price trend
However, since then, the gold price trend has been relatively stable. From the hourly chart, the 1920-1941 range seems to provide a lot of support for the gold price, and the resistance range focuses on 1987-2009.
The issue of gold price trends and timing trends
At present, gold investors are most concerned about whether the bulls will enter the market again to accept them, or whether they will continue to wait until the gold price pulls back in depth before entering the market. This kind of problem often occurs in the overbought market. The previous upward trend in the price of gold is very clear, and the market is actively bullish, and whether this trend will continue may depend on the overall driving factors of the market. And this week's annual meeting of global central banks is undoubtedly the most concerned by the market, when central bank leaders will discuss the global economic situation and monetary policy at the meeting.
Gold price trend 4-hour chart
Therefore, if the global central bank will stimulate the gold price to rebound again in the current support range every year, once it breaks through 2009, the oil may continue to show higher highs and lows in the gold price trend, because the buyer power will re-enter the market.
Since the gold price hit a record high (2075 US dollars) in August, it has been in order. However, the macroeconomic environment may continue to support the gold trend. The Fed's next interest rate decision (September 16) seems to maintain the current policy.
Fundamental outlook for gold this week: bullish
The rebound in gold prices since the monthly low ($1863) is difficult to gain momentum. This may be due to the potential shift in the outlook for monetary policy in the minutes of the Federal Open Market Committee (FOMC) meeting. Fed officials discussed results-based policy development methods and calendar-based (data/event risk) forward-looking guidance. At the same time, “some participants mentioned that at some point a clearer target region for the federal funds rate may be or is appropriate. of".
However, the FOMC does not seem to be in a hurry to reduce its emergency measures. The minutes show that the committee voted unanimously to postpone the “U.S. dollar temporary liquidity swap matter until March 31, 2021,” and previously extended its loan plan to the end of this year. . In view of this, the upcoming U.S. data may not change the central bank’s monetary policy path. The FOMC also voted to “at least increase the holdings of U.S. Treasury bonds, institutional housing and commercial mortgage-backed securities at the current purchase rate.”
In view of "commissioners agree that the Fed will use all tools to support the U.S. economy in a challenging period," the market outlook focuses on whether Fed Chairman Jerome Powell and other Fed officials will discuss the Kansas Fed’s 2020 Jackson Hole economy The seminar brought some new information. The meeting is scheduled to be held from August 27th to 28th. This federal seminar may hide more of the same information as the September meeting; in addition, current market conditions may continue to support the price of gold, and it seems that the behavior of US dollar retail investors will continue this month.
The retail sentiment report shows that since the beginning of this year, the U.S. dollar position has been biased towards net long positions. The latest data shows that it is retail traders who are still net long positions in USD/CHF, USD/CAD and USD/JPY, while in AUD/JPY. There are still net short positions on the US dollar, New Zealand dollar/US dollar, British pound/US dollar and Euro/US dollar.
Even if a bearish flag continued pattern is constructed on the dollar index candlestick chart in August, the net long exposure to the dollar is expected to continue. The continued behavior of US dollar retail investors may be accompanied by higher gold prices. The current low interest rate environment and expanding central bank balance sheets may enhance the attractiveness of gold as an alternative to legal tender.
In summary, current market conditions may continue to support gold prices, and the Fed may maintain the status quo in September. On the other hand, the technical outlook for gold is still expected to be bullish, because the price of gold has been hitting new annual highs every month since 2020.
So far this week, the price of gold has fluctuated up to 4.7%, but the actual price has not changed much. This also means that the consolidation of gold prices below historical highs may face the risk of a short-term deep fall.
Gold price trend analysis: the rise of gold price is suspended below the historical high?
The author mentioned in the golden weekly technical analysis article last month that after the breakthrough in the upward trend of the gold price, the target is to target the 200% Fibonacci extension of 2033. Entering August, the gold price reached a maximum of 2075 and then turned downward, and the weekly closing was recorded. 2035, further highlights the importance of resistance in this interval.
The RSI of the gold price on the weekly chart has fallen below the overbought range, indicating that the downward momentum is strengthening. If the gold price cannot return to above 2022/35 in the market outlook, it may face a greater risk of falling back.
The support level on the weekly chart focuses on the 1897-1909 range. The former is the closing price of the high point in 2011, and the latter is the closing price of the week of the high point in 2011. If it falls below this range, it means that the price of gold may usher in a greater risk of falling back. , The lower target looks to the 38.2% Fibonacci retracement of the year's range at 1836 and the 2012 interim high of 1795. If it falls to these two levels, the downward movement of gold prices may come to an end. Conversely, if the price of gold continues to rise and break through 2033/35, the upper target will look to 2105 and 2179. Basic and advanced trading guide, covering technical and fundamental aspects, there is always a suitable trading for you
The IG customer sentiment report shows that retail investors are still bullish on gold prices, with the ratio of long to short at 3.63:1, which means that 78.4% of retail investors are net bullish on gold prices. Long positions increased by 2.48% from yesterday and 11.62% from last week; short positions decreased by 4.76% from yesterday and increased by 1.74% from last week; as an inverse indicator, retail investors’ bullishness implies that the price of gold may continue to fall. The number of retail investors increased further than yesterday and last week, indicating that the price of gold is more likely to fall.
On Wednesday (August 20), the most important OPEC+ meeting and Fed meeting minutes of this week ended, and the market finally changed. US stocks fell from historical highs, the US index rebounded to recover 93, and gold fell more than US$80 and fell below 1930; WTI crude oil rebounded again How to judge the market outlook if the 43.0 level is blocked?
WTI crude oil rushed higher and lost 43.0, but the key breakthrough was hindered by the US dollar index!
On Wednesday (August 20) the American market ushered in the OPEC+ Joint Ministerial Supervisory Committee (JMMC) meeting. OPEC+ affirmed the success of the production reduction agreement. Crude oil demand is expected to return to 97% before the epidemic in the fourth quarter. Crude oil in July The momentum of inventory growth will reverse.
However, OPEC+ Secretary General Barkin emphasized that the situation in the crude oil market is showing signs of improvement, but the recovery rate is slower than the expected severe impact of the epidemic on energy producers and consumers, and economic growth is expected to shrink in 2020.
In detail, the OPEC+ agreement has not produced major changes, and the main contents of the OPEC+ meeting are:
OPEC+ production reduction agreement is expected to be further extended to April 2022;
OPEC+ affirmed that the model of reducing production scale in stages is correct;
OPEC+ agreed to implement compensatory cuts in August and September (compensatory cuts of 2.3 million barrels per day are required).
OPEC+ said that the implementation rate of production cuts in July was 95%.
OPEC+ plans to hold the next Joint Ministerial Oversight Committee (JMMC) meeting on September 17.
In general, the OPEC+ statement is positive for oil prices, especially referring to the further extension of the production reduction agreement and compensatory production cuts to boost market confidence. In addition, the earlier announcement of EIA crude oil inventories decreased by 1.632 million barrels to 512.5 million barrels, a decrease of 0.3 %. Although the reduction was less than the expected 3.08 million barrels, it still recorded a decline for 4 consecutive weeks. In addition, gasoline inventories fell sharply, and EIA gasoline inventories fell by 3.22 million barrels, which was much better than the expected reduction of 99.9 million barrels.
Under the stimulus of OPEC+ and EIA inventory data, oil prices rose sharply by 1.5% from a low of 42.55 US dollars and once broke through 43.0 US dollars to an intraday high of 43.21 US dollars. But unfortunately, affected by the rebound in the US dollar index and the fall in market risk sentiment, oil prices eventually reversed their intraday gains and returned to consolidation below 43.0.
Looking ahead, regarding the U.S.-Iran situation and whether the U.S. dollar rebound will continue to affect the outlook for oil prices, US President Donald Trump said on Wednesday (August 20) that the U.S. intends to resume sanctions on Iran. According to the latest news, the US Secretary of State Mike Pompeo will go to the United Nations on the issue of Iran sanctions from August 20 to 21, and will impose sanctions on Iran again 30 days after notifying the UN Security Council. The content will include prohibitions. Carrying out uranium enrichment activities and extending the arms embargo period for another 13 years.
On the other hand, the latest news about the Sino-US trade talks seems to have caused market optimism to fade, and the follow-up needs to focus on the performance of the US dollar index, which is expected to affect the oil price trend.
The 4-hour chart shows that oil prices are currently consolidating below US$43.0, indicating that the bulls still have a certain advantage. The trimming of the triangle implies that oil prices are still expected to rise further in the short term, but we need to be wary of the final rise before mid-term adjustments.
However, once oil prices are blocked by the 44.0-45.0 regional resistance and fall below US$41.30 in the market outlook, it is necessary to be wary of the further downside of oil prices to test the level of US$40.0 or even US$37.50.
Only knowing the cessation can the mind be calm, and the mind can be quiet. Let us return to the fundamentals and seek inner peace.
The minutes of the Fed meeting lead to market volatility: U.S. stocks, gold fell, and U.S. bond yields rose
The minutes of the Fed’s July meeting were announced in the early morning of Thursday (August 20). Despite the mediocre minutes of the meeting, it unexpectedly caused significant market volatility when the market continued to be lost. The three major U.S. stock indexes fell and gold plummeted by more than 80. The U.S. dollar fell below the 2,000 U.S. dollar mark and fell below 1930 U.S. dollars. The U.S. index and U.S. bond yields rebounded!
After the announcement of the minutes of the meeting, gold plunged more than US$80. Looking ahead, the medium-term decline of gold has not yet been declared over. After falling below the US$2,000 mark, the price of gold may enter the 1900-2000 US dollar range. It is expected that the gold price will go through a month After the trimming is over, it will once again test the support of the $1800 or even the $1760 level.
There is no doubt that the minutes of the meeting have caused significant market volatility, and it may also be a trend change. The reason is that Fed officials seem to have changed their previous attitudes about providing clearer guidance on the interest rate path in the future. Many participants believed that it is appropriate to provide clearer guidance on the target range of the federal funds rate at some point in the future. However, the minutes of the meeting did not mention anything about the imminent relaxation of forward-looking guidance and QE, and the market judged that the possibility of the Fed's imminent (or even in the mid-term) implementation of Yield Curve Control (YCC) has dropped significantly.
On the other hand, the Fed’s assessment of the economy was more pessimistic than many people expected. The committee members assumed another situation, that is, the accelerated outbreak of the new crown virus will cause more serious damage to economic activities, which will lead to a decline in real GDP and inflation. This increases the possibility that the US government will introduce a new round of economic stimulus bills. Fitch, one of the three major rating agencies, also adjusted the rating outlook of municipal bonds related to the US sovereign rating to negative.
Investors can focus on changes in the trade situation in the market outlook. Once the trade conflict escalates, risk aversion is expected to push the dollar index to rebound further.
Outlook for the dollar index:
The 4-hour chart shows that the outlook for the US dollar index has experienced a sharp decline. If it hits a new low in the short term and effectively stabilizes at 92.0, it is expected to usher in a mid-term rebound. In fact, as long as the U.S. Index rebounds to regain 93.0 and effectively stabilizes, the mid-term rebound can also start smoothly. Therefore, investors who are bearish on the U.S. Index should be extra careful.
The selling pressure of the US dollar continues, and the S&P 500 and Nasdaq index set new record highs; the Australian dollar against the US dollar is expected to take a ride on the risk appetite to retest the highs last January, but the bearish deviation of the RSI indicator is worthy of vigilance.
U.S. stocks are beautiful, dollar selling pressure continues, pound and New Zealand dollar rise
Most Wall Street stocks closed higher, with the S&P 500 and Nasdaq closing up 0.23% and 0.73% respectively. And one after another set a record high in the intraday. The Nasdaq Index hit a new high and helped strengthen the claim that the technology sector outperformed other sectors in this pandemic. At the same time, the Dow Jones Index, which is dominated by industrial stocks, closed down 0.24%, with energy stocks leading the decline.
In the foreign exchange market, the oil-linked Norwegian krone and the safe-haven-linked US dollar closed down. At the same time, the Brexit-sensitive pound and the growth-related New Zealand dollar were the winners in the same period. The rise in the pound was partly due to the optimism of the EU-UK negotiations, and the pound/dollar was also driven by the surge in selling pressure on the dollar.
The exact catalyst behind the stock market's rise on Tuesday (August 19) is not clear, but one of the factors may be that even with a series of geopolitical deadlocks, the market as a whole remains optimistic. The beautiful performance of the July housing starts and construction permit data in the United States may have contributed to the initial gains in the stock market to a certain extent, especially considering the far-reaching impact of such data on the US economy.
Strong risk appetite, the dollar may continue to fall, the Australian dollar against the dollar is expected to take a ride
Strong risk appetite may amplify market volatility during Wall Street trading hours, which may pave the way for another round of declines in the U.S. dollar. The Australian dollar against the U.S. dollar is expected to take a ride before it reaches a key technical level. The New Zealand dollar is expected to rise following the rise in commodity prices. Credit default swap spreads on sub-investment grade corporate bonds are expected to narrow and amplify market risk appetite.
Forecast of AUD against USD
The Australian dollar against the US dollar has been working hard to "overweight" the more than 20% rally recorded since its bottoming in March. It is expected that it will continue to explore the shock high of 0.7295 recorded in January last year. If it breaks above this level, it is expected to be further The door was opened at 0.7393 at the top of the probe for several months. Having said that, signs of bearish divergence on the RSI indicator suggest that the upward movement is slowing down, which is worthy of vigilance.
At the beginning of this week, the U.S. dollar fell almost across the board, and the U.S. dollar index was approaching a two-year low; focusing on the minutes of the Fed’s meeting; volatility regained or pushed the dollar to reverse.
The U.S. dollar is weak, focusing on the minutes of the Fed meeting
At the beginning of the week, the US dollar seemed to be weak across the board, and the US dollar index was close to a two-year low. The U.S. dollar rose following the rise in U.S. bond yields and returned to the defensive state after a short respite. The sharp rise in U.S. bond yields seems to have helped boost the dollar, but as sovereign bond yields began to fall, the U.S. 10-year Treasury bond yield fell below 70 points, and the U.S. dollar also returned to pressure.
The dollar index trend VS the US 10-year Treasury bond yield trend 2-hour chart
In addition, the fall in the US dollar may also be echoed by foreign exchange investors' preparations for the minutes of the Federal Reserve meeting to be announced at 02:00 AM GMT+8 on Thursday (August 20). After the Fed’s July monetary policy meeting, considering the Fed’s commitment to maintaining a loose financial market environment and its decision to extend the US dollar swap mechanism, it is clear that the US dollar’s weakness is expected to linger.
One week implied volatility and trading range of the US dollar currency pair
According to the COT position report, the US dollar short position has reached its highest level in the past 9 years. However, there may be controversy that short-dollar transactions are becoming more crowded, and therefore the reverse bullish tone is becoming stronger. Based on this, volatility once again rises or serves as one of the potential catalysts for the dollar to reverse higher.
In any case, as the euro/dollar builds a range, the US dollar index may continue to maintain its momentum of shock. The implied trading range of options is based on 1 standard deviation, that is, the statistical probability of trading within the implied trading range within a specific time frame is 68%.
Last week, gold prices recorded a more volatile trading range. At present, the price of gold is stable near short-term support and long-term support.
Last week was a violent volatility week for precious metals, and the price of gold recorded the largest fluctuation range (in absolute value) on record. The weekly volatility of gold prices over US$186 occurred in March, August and September 2011. Overall, considering the recent trend in gold prices, this is not entirely shocking.
But what does this volatility mean?
For now, the price of gold may be able to use some horizontal positions as price resets to resolve excessive bullish and overbought conditions. This may be the most ideal development path. The price of gold is currently stabilizing above the highest point in 2011 (1920). The 1920 level was briefly broken last week, but overall prices stabilized above. The continued maintenance of gold prices above this level for a longer period of time in the future will help lay a solid foundation for the subsequent potential rise in gold prices.
However, if the price of gold falls below the trend line since the March low and the low of 1863 recorded last Wednesday, the market outlook may fall further-the price of gold may fall further to the 1800 area, which is another key point in 2011 Bit. If this happens, it will weaken some of the bullish reasons, but it will not completely discourage the bullishness.
In general, the outlook for the current gold price may look a bit fragile, but this will not be the first time that a strong bull market shows signs of potential peaking (due to short-term price movements) and then turns into a one-off event. , With the help of a period of price consolidation, the situation can continue to rise. What may be worrying is that the price of gold may fall further, rebound and then fall. However, it is expected that these situations will not be solved within a week, maybe four weeks.
In summary, from the perspective of absolute trends, the price of gold may not continue to bring many exciting trends this week, but considering its high volatility, it may still bring some volatility opportunities to short-term traders.
The price of gold fluctuated sharply, and silver followed the pace. After a sharp rise in July, it suffered a sharp drop; short-term silver seems to be blocked by the resistance zone constructed by the Fibonacci retracement level, but the bulls did not give up their efforts. The lower highs mean that the silver price will eventually Break the current resistance, and then look at the 30 line.
The price of gold fluctuates sharply, and silver is "not to be outdone"
July is really a very important month for the price of gold. Perhaps traders have known about this because most economic institutions are paying attention to the price of precious metals. The price of gold rose by 18% that month. From this point of view, it is reasonable for gold to gain public attention. However, in July, silver prices performed even more strongly, with a cumulative increase of 68%, which was once the highest level in nearly 7 years. Gold plummeted after its skyrocketing, and now temporarily stabilized, how to adjust the market outlook strategy?
Silver prices entered an important resistance zone last week, and since then, the silver bulls have been in trouble. This important resistance is located at 29.14, which is 50% of the overall trend of silver prices after the financial crisis. Last Friday and this Monday, the silver price briefly exceeded this level. However, the silver price plummeted this Tuesday, and it was below the 61.8% Fibonacci retracement level of the overall trend of silver after the financial crisis. At that time, the silver price found support at a low level.
The 38.2% Fibonacci retracement level 26.23, from the 2011 high to the 2020 low, is another relevant price level that plays a role, which played a role of resistance in Wednesday's trading.
Silver trading strategy
Looking at the shorter-term price trend, we can see that the recent efforts of the silver bulls to try to recover are very obvious. In addition, the 50% Fibonacci retracement level 26.40, which plunged this week, adds some additional value to the current resistance, which forms a price convergence range with the long-term 38.2% Fibonacci retracement level 26.23.
It is also worth noting that the impact of this resistance zone seems to be diminishing, as can be seen from the establishment of higher lows in recent price movements. This is similar to the logic of the bullish triangle pattern, that is, the influence of the exposure of horizontal resistance becomes weaker and weaker until the bulls finally successfully break through the resistance.
This is expected to open the door for a bullish breakthrough for silver. However, if the bulls fail to break through this important resistance pooling zone, there may be more downside for silver prices, because the extremely overbought theme in July may require more than that before the bulls are ready to brew a longer-term trend. It takes a day to pull back, and in the context of greater volatility, it is expected that the price of silver will eventually rise above the 30 line.
On Wednesday (August 12), gold and other precious metals ushered in a rebound after continuous sharp declines. U.S. stocks closed up and the U.S. dollar index fell. Oil prices benefited from this rebound again and hit $43.0. However, OPEC+ monthly report lowered its crude oil demand forecast for this year and next. Oil prices are still expected to challenge high levels in the short term. How to judge the market outlook?
WTI crude oil rebounds with gold and other precious metals, OPEC monthly report and EIA crude oil inventory provide clues
On Wednesday (August 12) WTI crude oil once again found support at US$42.0. Oil prices hit a low of US$41.93 and stabilized and then rebounded continuously to recover the two levels of US$42.0 and US$43.0 to the intraday high of 43.16, closing up 2.01%, refreshing from August 5. Five-day high since the beginning.
In fact, the rebound of precious metals such as gold and silver overnight was more pronounced than that of oil prices. Gold hit a three-week low of $1,862 and rebounded sharply by more than 4% in intraday trading, almost recovering all the intraday losses; silver rebounded more than 11% from its low Above 26.0; the US dollar index fell to around 93.43 for correction; the 10-year US Treasury yield further climbed to a five-week high of 0.688%.
U.S. 10-year Treasury bond yield:
It is true that it is difficult to rule out the relationship between the overnight increase in oil prices and the sharp rebound in precious metals, especially when the US dollar has fallen. However, the weak rebound in oil prices at the same time also shows that the global economic outlook is still uncertain. , Crude oil demand will continue to limit oil prices.
It is worth noting that the unadjusted core consumer price index (CPI) of the United States for July released on Wednesday (August 12) increased by 1.6% year-on-year, better than expected 1.1%. Although the CPI performed well, the market generally believed that this was not It does not mean that inflation has begun to pick up, but just to catch up from the decline this spring, and it is expected that weak demand will curb inflation in the coming months.
On Wednesday (August 12), San Francisco Federal Reserve Bank Chairman Mary Daly also stated that the Fed is facing significant pressure to achieve the 2% inflation target and the United States will not achieve a V-shaped recovery.
OPEC's monthly report lowered demand expectations, EIA crude oil inventories fell sharply, but market response was flat
In fact, the sharp slowdown in demand for crude oil originated from the outbreak. Therefore, the recent benefits of vaccines from the United States, Russia, and China are still stimulating a rebound in oil prices to a certain extent, but it is true that the market has not seen a significant acceleration in the recovery of crude oil demand Before the momentum, oil prices have roughly digested the benefits of vaccines in advance.
OPEC+ member states have cut production cuts to 7.7 million barrels per day since August (the news was announced as early as mid-July), and will hold a meeting of the Joint Ministerial Supervisory Committee (JMMC) from August 17 to 18. The market generally believes that OPEC+ still has unresolved conditions and a large amount of idle capacity, which further reduces the support OPEC+ can provide to oil prices on the supply side. Therefore, oil prices have been difficult to get out of the $40.0-43.0 area since mid-July.
Therefore, changes in future crude oil demand are still the preferred factor leading oil prices, and the OPEC+ monthly crude oil report released on Wednesday (August 12). The report shows that although China’s crude oil imports hit a record high in June, slightly below 13 million barrels per day, China’s economic recovery supports oil prices, but considering the possibility of the second wave of the epidemic and the increase in global inventories, OPEC+ still expects the next year of 2020. Oil prices for six months will continue to be affected.
OPEC+ lowered the OPEC crude oil demand forecast for the fourth quarter by 1.29 million barrels per day, the 2020 global crude oil demand forecast by 400,000 barrels per day, and 2021 by 500,000 barrels per day; the 2020 global crude oil demand growth rate is expected to be reduced from- 8.95 million barrels/day adjusted to -9.06 million barrels/day.
On the other hand, the EIA report released on Wednesday (August 12) showed that commercial crude oil inventories excluding strategic reserves decreased by 4.512 million barrels to 514.1 million barrels, a decrease of 0.9%, of which the US EIA refined oil inventory for the week ended August 7 Actually announced a decrease of 2,232,200 barrels, and an expected increase of 552,000 barrels. The change in refined oil inventories in the United States recorded an increase for three consecutive weeks and then recorded a decline this week, and hit a new low since the week of March 20 (21 weeks), but the data is released The lack of response to oil prices showed that the market believed that this was not enough to boost oil prices.
Regarding the new round of US economic stimulus plan is still in trouble, U.S. Treasury Secretary Nu said that the Speaker of the U.S. House of Representatives, Nancy Pelosi (Nancy Pelosi) made it clear that unless the White House first agrees to her $2 trillion proposal, she will not Willing to continue negotiations. The two parties in the United States seem to be fighting over the specific amount of the stimulus package, and it is expected that it will still be difficult to reach a consensus in the short term.
In addition, the latest news about European and American trade. On Wednesday (August 12), the Office of the United States Trade Representative (USTR) stated that the size of EU products affected by the countermeasures will remain unchanged at US$7.5 billion, and the tax rate on EU products will remain at 25 The% remains unchanged, and the aircraft tariff is 15%. On the Airbus side, the table search regrets the decision of the United States to retain tariffs and believes that the EU will take appropriate measures to maintain its rights.
Considering that there are still a lot of uncertainties in oil prices, this will hinder the bulls from further bullish oil prices. Once the oil price challenges the 44.0-45.0 area above the resistance and it is expected that oil prices will still fall under pressure, investors can focus on the IEA's monthly crude oil market report. , Is expected to affect oil price fluctuations.
WTI crude oil trend forecast: high level consolidation pattern, still need to pay attention to 44.0-45.0 regional resistance
WTI crude oil 4-hour chart:
The 4-hour chart shows that oil prices have repeatedly maintained a correction of US$43.0. However, considering that the upper side faces resistance from the 44.0-45.0 area, the willingness of the bulls to further attack is weakened. In this case, once the oil price falls below 42.0 (the lower rail support of the 4-hour rising channel), Need to be alert to further downside test of 40.0 or even 37.50 US dollars level.
On Tuesday (August 11), the yields of U.S. dollar and U.S. Treasury both went up, U.S. stocks fell, and gold hit the biggest decline in 7 years! It is worth noting that during the continuous rebound of the US dollar, commodities priced in US dollars continue to be under pressure, and oil prices have technically been warning signs. How to judge the market outlook?
The U.S. dollar and U.S. bond yields rose, gold hit the biggest one-day decline in 7 years, and silver fell 17%!
On Tuesday (August 11), WTI crude oil showed a trend of rising and falling. Oil prices once rebounded and hit an intraday high of US$43.14. However, the upside was weak and fell back to below US$42.0 for consolidation, closing down 1.39%.
It is worth noting that on Tuesday (August 11), gold, which is also priced in US dollars as crude oil, has become the focus of the market. Among them, gold fell more than 6% overnight from a high of US$2035 to an intraday low of US$1,901, refreshing the half since July 27. This is a new monthly low, the biggest drop in 7 years, the most since the Lehman crisis!
To be more precise, precious metals have fallen completely. Except for gold, spot palladium fell 6.5% on Tuesday (August 11), approaching the low of 2079 since July 30; spot silver fell 6.7% from the high of 2928, and fell further during the period. To 2437, the cumulative decline was as high as 17%!
Spot silver daily chart:
The reason is that the US dollar and U.S. bond yields have both risen as an important factor affecting the price of gold. The market is betting that the United States will issue a record US$112 billion in Treasury bonds this week, and a large number of corporate bonds will be issued, including 10-year Treasury bonds. The yield rose by 8 basis points to 0.65%, the largest increase since June 5; the 30-year yield rose by 8 basis points, the largest increase in eight weeks.
U.S. 10-year Treasury bond yield:
API crude oil inventories exceeded expectations, vaccines, and EIA's short-term energy outlook report raised oil price expectations, but it is difficult for oil prices to rise?
In terms of oil prices, although there has not been a sharp decline in the market like precious metals, it should be noted that there is no shortage of factors that stimulate oil prices. However, oil prices have been unable to effectively break through the two-month range consolidation trend.
In terms of data: The US API crude oil inventory for the week ending August 7 announced in the early morning of Wednesday (August 12) decreased by 4.011 million barrels, which is expected to decrease by 3.2 million barrels. This is the third consecutive week of decline, and gasoline inventories decreased by 1.31 million barrels; Refined oil inventories fell by 2.949 million barrels.
The EIA short-term energy outlook report released on Tuesday (August 11) shows that the 2020 global crude oil demand growth rate is raised by 40,000 barrels/day to -8.11 million barrels/day; the global crude oil demand growth rate is expected to be raised by 30,000 barrels/day in 2021 Barrel/day to 7.02 million barrels/day, and the WTI crude oil price is expected to be US$38.50/barrel in 2020, compared with the previous estimate of US$37.55/barrel.
In addition, related to the continued fermentation of vaccines, US President Donald Trump and the biopharmaceutical company Moderna reached an agreement on the purchase of 100 million doses of vaccines on Tuesday (August 11). The agreement is as high as US$1.525 billion and said that these vaccines The third phase of the test is in progress. And Dmitriev, director of the RDIF of Russia's sovereign wealth fund, said that Russia will produce 10 million doses of vaccines per month by December.
However, the current market seems to be more worried about changes in the trade situation and the strengthening of the US dollar. In addition, the Joint Ministerial Supervisory Committee (JMMC) meeting was held from August 17 to 18. TD Securities’ global commodity strategy judged that “there is still an unresolved situation within OPEC+, and there is still a large amount of idle capacity.” These factors seem to be in the near future. Continue to put pressure on oil prices, and once oil prices break down, it is expected to trigger more selling. Investors can focus on OPEC's monthly crude oil market report, which is expected to affect oil price fluctuations.
WTI crude oil trend forecast: once again blocked by the level of US$43.0, downside risks will further increase!
WTI crude oil 4-hour chart:
The 4-hour chart shows that oil prices rebounded again blocked by US$43.0, indicating that the upper resistance is large and the bulls’ willingness to further attack is weakened. In this case, once the oil price falls below 41.5 (supported by the lower rail of the 4-hour rising channel), we need to be vigilant for further downside tests. 40.0 USD or even 37.50 USD level.
On Monday (August 10), China’s positive data, vaccines, and the United States’ economic stimulus bill showed hopes to become a driving force for oil prices to regain US$42.0. Despite this, oil prices are still stuck in a range for the past month. Saudi Arabia has regained instability. The market outlook is still difficult to be optimistic?
Three positive stimuli, WTI crude oil recovered US$42.0, and gold was once again blocked by the key resistance of 2050!
On Monday (August 10), WTI crude oil rebounded from a low of 41.77 US dollars to recover 42.0 US dollars to an intraday high of 42.53 US dollars, closing up 0.67% slightly, ending the previous two consecutive days of decline.
The reason is that the Chinese data released during the Asian session performed well. Among them, the Consumer Price Index (CPI) rose by 2.7% year-on-year in July, which was better than expected a year-on-year rise of 2.6%; July Producer Price Index (PPI) fell year-on-year 2.4%, better than expected, a 2.5% year-on-year decline; it is worth noting that Saudi Aramco CEO Amin Nasser (Amin Nasser) said last weekend that there was a “partial recovery” in oil demand, emphasizing China The demand for gasoline and diesel in China has returned to pre-epidemic levels.
In terms of other data, the Sentix Investor Confidence Index in the Eurozone fell by 13.4 in August, a better-than-expected decline of 16 and recorded an increase for the fourth consecutive month; plus the increase in the July US non-agricultural report released last Friday (August 7) It is the third highest level since records, and the optimistic economic data makes the market still hope for a rapid recovery of the global economy in the third quarter.
On the other hand, the vaccine continues to be positive. On Monday (August 10), the World Health Organization (WHO) said that it believes that safe and effective vaccines will be obtained; European Commissioner Stella Kyriakidis said that there is positive Signs indicate that the first vaccine to prevent new crown infections is expected to be available at the end of this year or early next year. Goldman Sachs said that the optimistic progress of vaccines will boost consumer spending and generate stronger GDP data and job opportunities next year.
In addition, although the two parties in the United States have not yet reached an agreement on a new round of economic stimulus bills, on Monday (August 10) U.S. President Donald Trump said that the top Democrats hope to meet to discuss the issue of economic relief from the new crown epidemic. U.S. Senate leader Chuck Schumer said that Democrats are ready to return to economic stimulus negotiations and call on both sides to step back. A series of news once again indicated that the two parties are likely to reach a consensus in the end as the United States urgently needs a new stimulus package.
The above three factors all provide upward momentum for oil prices, and European and American stock markets also generally closed up overnight. However, it is worth noting that the market seems to be gradually fading from the previous optimism. On the disk, the US dollar index has further climbed to 93.71, setting a new four-day high since August 4th. The rebound of gold has been hindered by the key resistance of US$2050 and has fallen sharply. From 30 US dollars to the low of 2019 US dollars, considering the uncertain factors related to the trade situation and the previous sharp rise in risk assets that have caused long profits to take place, investors still need to be alert to the possibility of a sharp fall in risk-sensitive products, including crude oil.
Saudi Arabia reappears instability, oil price outlook is still difficult to be optimistic?
On Friday (August 7), the energy and oil ministers of several oil-producing countries headed by Saudi Arabia issued a joint statement, stating that there are signs of stabilization in the international crude oil market demand, and the comprehensive commitment of all countries to the OPEC+ agreement will accelerate the rebalancing of the oil market.
However, the official price (OSP) of September crude oil announced by Saudi Aramco on Thursday (August 6) shows that Saudi Aramco still intends to increase its daily production to 13 million barrels. The news was released on Monday (August 6). On the 10th), it was confirmed that the CEO of Saudi Aramco said that it is advancing the process of increasing oil production capacity to 13 million barrels per day and that the increase in production capacity will not affect capital expenditures in 2021.
It is worth noting that according to data released by Platts, the implementation rate of OPEC+ crude oil production cuts in July dropped to 96%; crude oil production increased by 1.1 million barrels per day in July, and the market is worried about Saudi Arabia amidst the weak global economic recovery. , Russia and other countries will once again trigger price cuts to seize the market, which in turn will cause oil prices to fall.
Investors need to focus on the Joint Ministerial Supervisory Committee (JMMC) meeting held from August 17 to 18 and the three major crude oil reports to be announced this week, which will provide more clues to the market by then.
WTI crude oil trend forecast: pay attention to the resistance near 44.0 above, once again blocked or facing downside risks
The 4-hour chart shows that oil prices are currently operating within the rising channel. Although the trend can still be judged to be an upward trend, oil prices have shown signs of weakness in the short-term, especially the upper face is facing resistance in the US$44.0-45.0 area. Once oil prices fall below 41.0 in the market outlook, we need to be alert to further downside tests of 40.0 or even 37.50.
The July non-agricultural employment report released last Friday was better than market expectations. The dollar index rebounded, but the US Congress is still debating the stimulus plan.
The US dollar index rebounded from a 27-month low last week, but this trend seems unconvincing and may be weakened by increased political uncertainty. But as of Friday, the July non-agricultural employment report in the United States showed that more than 1.7 million new jobs were created in the United States in July, wages increased, and the unemployment rate fell. All the data were better than market expectations, but the unemployment rate still recorded 10%, much higher than the 3.5% in February. According to data from the US Department of Labor, the number of non-agricultural employment is still down by 12.9 million from the level in February.
The US Congress on the second round of the epidemic relief bill is still under debate, and so far both sides have refused to make concessions. After the $600 weekly unemployment benefit program expired at the end of July, it became more and more urgent to find a proximity program. If the new plan is finally passed, the US dollar money printing machine will work overtime again, putting downward pressure on the US dollar.
In addition, US President Trump continues to increase pressure on China, and technology companies have become new targets. If the trade relationship between the two sides escalates again, the dollar is expected to rise under the stimulus of risk aversion.
Due to the continued printing of US dollars, the yields on US Treasuries continue to record record lows. This low level of yield provides almost no support for the U.S. dollar. Considering the Fed’s commitment to maintain the current interest rate level until 2022, it is unlikely that future yields will provide support for the U.S. dollar.
From the daily chart of the US dollar index, the US dollar index rebounded sharply from the support level near 92.50 last week. If it can break above the 94 mark, especially the 20-day moving average at 94.17, it may bring some confidence to the bulls. In addition to this indicator, other indicators on the daily chart of the US dollar index still tend to be bearish, so whether the rebound last Friday can last longer requires further observation. In any case, fundamental factors will continue to dominate the dollar.
As the most valuable precious metal in the world, gold has historically acted as currency, jewelry and safe-haven assets. The gold market has been very hot recently. It hit a record high on Tuesday, and it fell quickly after being very close to the 2000 mark. So how should investors trade gold in trading?
What is gold? What is the purpose of gold?
Gold is a kind of precious precious metal. Due to its bright color, good ductility and relative scarcity, gold has been favored and sought after by mankind throughout history. In modern times, gold has great industrial applications in the fields of electronics and computing, and it has also been popular as jewelry. As a natural currency, gold also has a hedging attribute, because in times of market turmoil, gold can often maintain or even increase in value.
The history of gold as an asset class
For thousands of years, mankind has given gold a high premium. Gold has served as the currency of some of the most famous civilizations in the world, such as ancient Rome and ancient Egypt. In modern times, from the end of the 19th century to the outbreak of World War I, the value of currency has been linked to a specific amount of gold.
Since the end of World War II, the price of gold has been pegged to the U.S. dollar, and most large economies in the world have operated in a financial system based on a fixed gold price. It was only in 1971 that the United States chose to stop pegging the U.S. dollar to commodities and this situation ended.
Although gold is no longer the official legal tender, the price of gold is still a very influential factor in the financial market and the world economy.
What are the factors affecting the price of gold?
Factors affecting the price of gold include market stability, supply and demand, central bank exposure and trading volume through ETFs.
As a basic financial tool supporting global currencies, gold is considered a very safe asset. The price of gold usually rises when the market is turbulent, because the government and investors use it as a hedge against uncertainty. On the contrary, when the market is stable, gold prices tend to fall because assets with higher risks but higher profits are sought after by investors.
Supply and demand
Like most assets in the open market, the price of gold is also affected by the relationship between supply and demand. Rising demand for gold (usually the manufacture of jewellery, or the manufacture of certain medical, industrial and technical products) will push up the price of gold. Conversely, weaker demand will cause the price of gold to fall.
Central bank exposure
Most of the world's gold reserves are controlled by central banks in developed countries such as Europe and North America. Therefore, these central banks have huge pricing power in the global gold market. If these central banks suddenly increase or decrease their gold reserves, even slight fluctuations in gold prices will be amplified. Therefore, central banks fulfilled a joint commitment (albeit informally) to not unilaterally engage in large-scale gold selling that could destabilize the global market.
Although the general purpose of exchange-traded funds is to reflect the price of gold, not to influence it, most large exchange-traded funds hold large amounts of physical gold. Therefore, the inflow and outflow of funds of such ETFs can also affect the price of gold by changing the physical supply and demand in the market.
How the price of gold affects currencies
When we talk about the relationship between gold and currency, we mainly talk about the relationship between gold and the U.S. dollar, because the U.S. dollar is still the benchmark for gold pricing. Generally speaking, when the dollar appreciates, the cost of buying gold in other countries will rise.
The increase in the cost of buying gold will eventually lead to a decline in demand, which is why gold and the U.S. dollar usually have an inverse correlation. Conversely, when the U.S. dollar began to fall that year, investors often regarded gold as the first choice for hedging, which also helped push up the price of gold.
In addition, the value of gold is also linked to a country's import and export value. When the price of gold rises, the currencies of countries that export gold or have more gold reserves will strengthen because the country’s total exports increase.
Ways to trade gold
There are many ways to trade gold, you can buy it as a physical asset, you can use futures and options to trade in the commodity market, or you can trade through an exchange-traded fund.
Reasons to trade gold
Traders may consider trading gold when the following situations occur:
In times of economic turmoil, gold is a safe haven and can often appreciate or maintain its value
Buying gold when the dollar is weak can also be used as a hedge against inflation
Add gold to investment portfolios such as commodities, stocks and bonds to maintain diversification.
Two trading days after the dollar rebounded, short positions began to return. The U.S. non-agricultural employment data on the economic calendar this week is worth paying attention to. The U.S. dollar index is approaching the 92.50 area (helping to hold last week’s low). The support stabilizes or rebounds or puts the AUD/USD at risk of reversal; if it continues to fall, around 92.00 or another potential support, when the U.S. dollar reaches here /USD is worthy of attention, and EUR/USD may test the psychological threshold of 1.2000 simultaneously.
The dollar shorts are reappearing-bringing new lows?
On Monday afternoon, the US dollar index's rebound for two trading days was blocked, and then the US dollar short position returned. This resistance is roughly close to the previous swing support of 93.75, which helped hold the price low in July and September 2018, respectively. When the U.S. dollar index fell sharply at the end of July, this level did not provide much support, but it did ease the selling pressure, although only temporarily. Then the strong bearish theme continued, as shown by the black candlesticks in the chart below, until last Friday (which is also the last day of July) bears had the upper hand. At the end of July, the US dollar index began to rebound and rebound, and then the rebound trend encountered obstacles this Monday, at the same time the shorts also began to return in a high profile.
The main question now is, what will happen at 92.50, which helped confirm the band support last week? If the bears continue to exert force, the vicinity of 92.00 will be a strong potential support because there are two Fibo levels nearby. They are the 23.6% Fibonacci retracement level of the 2017-2018 wave of decline and the 38.2% Fibonacci retracement level of the 2016-2017 wave of decline, both of which are close to 92.00. If the dollar index falls below this level, it may create conditions for the dollar reversal theme, especially considering the currency's oversold situation so far in the third quarter.
The euro/dollar shows strength-but can it break through 1.2000?
The euro/dollar started to strengthen in the third quarter and continues to this day. At the beginning of the quarter, the euro/dollar tested a key support-close to the 1.1212 Fibo level. However, this support test turned into a trampoline-like rebound. The euro/dollar rose sharply last month and began to test the resistance of a symmetrical wedge that lasted for several years.
The current major resistance facing the EUR/USD is the 1.2000 psychological barrier-a level of trading that has never occurred in the past two years. This level of testing seems to be synchronized with the US dollar index test of 92.00, which may lead to an interesting scenario: the overbought euro/dollar superimposed on the oversold US dollar may jointly push the currency pair to break through the past two years. The key psychological level of breakthrough. However, on the bullish side, the rise of the euro/dollar has recently declined; afterwards, the price found support near the former resistance and continued to rise; this allowed the euro/dollar to continue to record higher highs and higher lows. The price test of the 1.2000 mark remains possible-even in the current overbought context.
The Australian dollar continues to rise, AUD/USD refreshes its annual high
Yesterday morning, the AUD/USD broke through the resistance zone (where the previous uptrend was blocked) and set a new annual high. The Fibo level close to 0.7185 is connected to the 0.7205 level. This area has acted as resistance for the AUD/USD in the past few weeks. However, the bulls continued to buy more, which pushed the AUD/USD to break through and hit a new annual high.
The main question now is what will happen when the US dollar index tests the 92.50 area. If the US dollar does turn at the support and rebound slightly, it may open the door to the short-term reversal theme of AUD/USD, and the aforementioned breakthrough may become a false breakthrough.
On Tuesday (August 4), the price of gold closed above the 2000 mark. This is the first time in history. The low interest rate environment and the weak US dollar continue to provide support for the price of gold. Technically, if the price of gold can close above 2023, it will challenge 2093.
Since 2020, the price of gold has maintained a monthly record high trend. The RSI has continued to rise in the overbought range, and the US dollar index has fallen again. The price of gold is expected to continue its upward trend for the rest of the week.
The gold price RSI has entered the overbought range for the third time this year, because the price of gold continues to maintain a bullish trend, and as long as the indicator remains above 70, the price of gold will continue to rise.
At the same time, the IG customer sentiment report shows that retail investors continue to be bullish on the USD/CHF, USD/CAD and USD/JPY. Although the USD index has fallen for six consecutive weeks, they are shorting the AUD/USD, NZD/USD and EUR/USD. Trading in the U.S. dollar and GBP/USD is still very crowded.
Gold continues to be supported by low interest rates
From a fundamental point of view, the current market environment still provides support for gold prices, as the Federal Reserve has committed to increase purchases of US Treasury bonds and institutional MBS and institutional CMBS at least at the current rate. The Fed seems to intend to maintain the current policy framework unchanged for the rest of this year, and the weakness of the US dollar will continue to provide support for gold prices.
In summary, RSI still tends to rise in the overbought range, coupled with the extreme bullishness of the US dollar by retail investors, the low interest rate environment and the expanding central bank balance sheet may continue to support gold prices.
From a technical point of view, the price of gold will hit a new high every month in 2020, and the technical outlook is still relatively optimistic. Yesterday, the price of gold closed above the 2000 mark, the first time in history, indicating that the overall trend of gold in August is still a constructive prospect.
After the gold price broke through the historical high of 1921 in September 2011, although the RSI failed to maintain the upward trend that began in June, the indicator subsequently recorded an extreme value of 88, marking the third time this year that it entered the overbought range. . However, even though the RSI recorded an extreme value, the price of gold may continue to rise. As in February this year, as long as the RSI remains above 70, the upward trend of gold prices may continue. If the close can break through 2023 (78.6% Fibonacci extension), it will open up space to test 2092 (161.8%).
Following the sharp weakening of the U.S. dollar last month, the U.S. dollar bulls are currently trying to revive the dollar. Taking into account the risks of upcoming heavy events and data, currency volatility is expected to rise this week. The trend of AUD/USD and New Zealand dollar/USD is at a critical juncture, as the Bank of Australia interest rate decision and New Zealand employment data will follow.
The weakening of the US dollar last month has attracted considerable attention. Judging from the trend of the US dollar index, the US dollar fell sharply by 4% in July. The recent decline in the U.S. dollar has not only endangered its title as the king of the U.S. dollar, but also caused some people to question the U.S. dollar's long-term status as the world's reserve currency.
In addition, the currency volatility expectations indicator (ie, implied volatility) has begun to rise sharply in recent trading days. This technical development highlights the possibility that major currency pairs may experience greater-than-conventional volatility, and it also highlights the possibility of a broader reversal of the dollar.
Evidence that the US dollar implied volatility readings are higher can be found in the above table; the above table is the latest 1-period U.S. dollar currency pair implied volatility indicator readings. It can be seen that the 1-period implied volatility readings of the above currency pairs are all obvious Higher than the corresponding 20-day volatility average. Perhaps this week's busy economic calendar has increased the foreseeable uncertainty, leading to an increase in the implied volatility of the major currency pairs. Given that the Bank of Australia decision and New Zealand employment data will usher in the trading hours on Tuesday, the trend of AUD/USD and NZD/USD is expected to receive attention.
Based on the 10.5% implied volatility reading of the AUD/USD one week, it is expected that the AUD/USD will fluctuate within the 208-point trading range of 0.7012-0.7220 this week. Statistically speaking, this option-implicit trading interval (the interval composed of technical support and resistance) is estimated to cover 68% of the current price trend.
Based on the 10.3% implied volatility reading for the NZD/USD one week, it is expected that the NZD/USD will fluctuate within a trading range of 190 points between 0.6515-0.6705 this week. Statistically speaking, this option-implicit trading range (composed of technical support and resistance) is estimated to cover 68% of the current price trend.
Technology stocks led the gains last Friday, pushing the Nasdaq index to rise higher than the S&P 500 and the Dow Jones Index; the euro is not afraid of weak GDP and continues to be hot. On Monday, we will pay attention to the PMI data of various countries. If the data continue to highlight the stabilization of the global economy, the Australian dollar will Supported, the yen may continue to fall.
Last Friday, the Dow Jones, S&P 500 and Nasdaq Composite Index closed up 0.44%, 0.77% and 1.49% respectively. Technology stocks led the gains. Apple's stock price closed up 10% last Friday, which may also explain This explains why the Nasdaq Index is relatively stronger than the S&P 500 and Dow Jones Indices.
The rise in Apple's stock price is part of the general rise in technology stocks, as the four major FAANG members Facebook, Apple, Amazon and Google announced impressive earnings reports after the US stock market on Thursday. However, Google's parent company Alphabet is the first company to report a year-on-year decline in quarterly revenue.
However, the foreign exchange market seems to reflect a tendency toward risk aversion, and continues to show a clear risk appetite. The US dollar linked to risk aversion regained some of its lost ground on Friday due to reports that US lawmakers have not yet come close to approving another item. The stimulus bill has led investors to flee to safe assets. In addition, although the Eurozone's GDP in the second quarter hit a record low, the euro is still hot, and currencies linked to commodities such as the Australian dollar and the New Zealand dollar have been suppressed.
In addition to paying attention to international trade relations on Monday, investors should also pay close attention to PMI data from major regions. If statistics generally show that despite the increasing number of new coronary pneumonia cases, the outlook for economic growth remains bright, then the anti-risk attractiveness of the yen may weaken, while the attractiveness of growth-oriented assets such as the Australian dollar and the New Zealand dollar May rise.
AUD/JPY technical analysis
The euro is still hot without fear of a weak GDP, the yen may continue to fall, and the Australian dollar is supported (Figure 1)
AUD/JPY is trying to test the resistance range of 75.925-76.320 in the past year again. Both tests of the exchange rate in early June and mid-July ended in failure. The last test is still very close, and the bulls may even be unable to break through the lower rail of the resistance zone. If the weakness breaks above this level, it may trigger a callback, at least for the time being.
As market sentiment and economic activity rebounded from the coronavirus lockdown, crude oil prices and risk assets have risen. As global demand for crude oil quickly recovered, Saudi Arabia and Russia decided to relax their production cuts. Yesterday, the second quarter GDP data of the developed economies of the United States and Germany showed a record setback. Fed Chairman Powell only recently hinted that the recovery has stalled. Oil prices may face bearish risks in the market outlook.
Oil prices have rebounded sharply since they fell to negative values in April this year. The rise in oil prices in recent weeks seems to be largely driven by two positive and bullish fundamental drivers: the OPEC+ production cut agreement and the gratifying rebound in global energy consumption.
Measured by near-month futures contracts, WTI crude oil is currently almost at $40/barrel, but the rise has begun to stagnate, and oil prices are still 34% lower than their levels in early January. On the whole, the decline in oil prices is due to the expected decline in demand-the "sudden brake" of economic activity during the coronavirus lockdown has led to a 9% drop in global oil demand this year.
This is the main reason why OPEC (Organization of the Petroleum Exporting Countries) suddenly sees a supply-demand imbalance of 9.8 million barrels per day in the second quarter of 2020. However, this alliance of major crude oil producing countries is optimistic about the future. It expects that global oil demand will recover in the second half of 2020 and into 2021. Judging from the forecasts of the IEA and EIA's respective monthly oil reports, both of them also expect global oil demand to rise in the coming months.
OPEC and its alliance plan to reduce the scale of production cuts when demand is expected to recover
The rising demand for crude oil has accordingly prompted OPEC and its alliances to start reversing the production cuts announced at the beginning of this year-a plan to clean up excess market supply. OPEC representatives’ support for an agreement between Saudi Arabia and Russia that the organization’s crude oil output will increase by 2 million barrels per day starting next month illustrates this point.
The move seems to have eased OPEC+’s pressure on production cuts, and net production has dropped from 9.7 million barrels per day to 7.7 million barrels per day. In this case, OPEC+ plans to reduce the scale of previous production cuts and relax the regulation of long-term production quotas, which brings bearish risks to oil prices. Another significant headwind factor facing oil prices is the decline of "high liquidity" brought about by unprecedented monetary and fiscal stimulus measures, and the potential for a "V-shaped recovery" of global GDP growth may weaken.
The GDP of the United States and Germany are shrinking
Yesterday, both the United States and Germany (the largest economies in the world and the euro zone are also big crude oil consumers) announced their second-quarter GDP growth both showed a historic contraction. At that time, the global economy was paralyzed during the coronavirus lockdown, and economic activity has undoubtedly improved since then; however, there is now more and more evidence that pent-up demand has stalled, which may put oil prices at risk.
The Fed Chairman Jerome Powell’s recent speech hinted at further exacerbating this risk. Powell mentioned in a press conference after the Fed’s decision on Wednesday that leading economic indicators and high-frequency data indicate that economic recovery is losing momentum since June. . Cautious traders may also need to pay attention to two other fundamental themes-the increase in the number of initial jobless claims and the escalation of international tensions. If these negative factors also begin to exert force, oil prices are expected to fall.
The price of gold hit a record high this Monday. On Tuesday, the price of gold rose to a record high in 1981. This morning, the Federal Reserve decided that the price of gold rose again to near this new high. At present, it is the first time in history that gold prices have tried to rise to test the psychological threshold of 2000. Will this lead to a pause in the trend? Will the gold price pull back to support (close to the former resistance)?
The price of gold soared to a record high
It took only 8 years for the price of gold to finally refresh its history. The price of gold hit a record high this week and continued its upward trend since the second half of 2018. More precisely, the price of gold is not only a record high, it continues to rise; on Monday, the price of gold broke the previous record high of 1920, and the price of gold continued to rebound on Tuesday, reaching a record high in 1981.
The question now is when can the gold bulls increase their firepower and challenge the major psychological threshold of 2000 for the first time?
The bullish theme of gold has been going on for nearly two years, starting in the second half of 2018; then it really rose last year (a whole year), when the Fed turned to a more dovish stance. Immediately after entering 2020, the Fed seems to continue to favor a more accommodative monetary policy-which is why the author considers bullish gold as the "top idea of 2020" in the forward-looking report.
The Fed has become more dovish in 2020, but no one seems to be able to predict the driving factors behind this move. On a factual level, the coronavirus pandemic has disrupted the global economy; this has stimulated market expectations that loose monetary policy may last for several years; and this expectation makes the reason for bullish gold become stronger and we see gold prices There have been some of the worst overbought conditions in history. However, as the author has discussed many times recently, the question now is how important is this? It has become an obvious driving force for gold buying, and there is little reason to expect this to change.
The recent price barrier is at the 2000 level. Can the bulls speed up and push the price of gold above this critical, never-before-seen psychological level? Or will it cause the price of gold to slow down and trigger a price correction, and the price of gold may find support in the former resistance area?
There are several key points to note on this topic, the first is the previous historical high of 1920; then the psychological level of 1900. On the upside, there are opportunities for gold prices to break through and reach new highs, and the market outlook may rise to the psychological threshold of 2000. However, considering that the price of gold has made a huge breakthrough, it is just like a rubber band will bounce back, regardless of what traders hold on the above questions. Views should be cautious, because gold prices may continue to fluctuate.
Gold/U.S. dollar rose to a record high this week, and it seems that it is preparing to set an eight-week consecutive rise. The upside resistance is looking towards 1983, and the bullish bullish outlook for gold prices stabilizing above 1795 is still valid.
This week, the price of gold has soared and reached a record high. The eight-week consecutive rise seems to be imminent. At present, gold prices are trading in areas that have never been involved, and historical trends do not have these levels; however, we can pay attention to some measurement levels in terms of bullishness. The following levels are some of the targets and failure levels that are critical to the gold price trend before the Fed’s resolution and the closing of July trading.
Gold price weekly chart
The author has said that the six-week rise has pushed the price of gold into resistance for several years. The follow-up focus will be on whether the price of gold will fail before 1747 and then turn up. If the price of gold breaks through the resistance, the follow-up target or Can be placed on the high point of the historical record". Three days later, the price of gold broke through and recorded an increase of more than 13%. Earlier this week, the price of gold hit a record high.
The initial weekly resistance looks to 1983 (the 261.8% Fibonacci extension of the late 2015 wave). Note that a parallel line starting from the 2016 high is also focused on this area, which further enhances its technical importance. The price of gold needs to break above or close above this threshold to continue to be bullish. Under this scenario, the price of gold is likely to rise to the 2032 level, which is the 200% measured increase in the consolidation breakthrough from 2016 to 2019. Preliminary weekly support is located at the previous record high of 1920, followed by the weekly closing price of 1881 at the 2011 high. The failure level of the overall bullish view is now raised to the 1795 level.
The price of gold is breaking through, and the price is currently approaching the initial upward resistance target. From an operational perspective, gold prices close to the intensive resistance (close to 1983) may have the risk of upward action failure. Therefore, it is advisable to reduce long positions or raise the protective stop loss-pay attention to whether the price of gold will experience downward action failure before 1881. , If the gold price rises in the market outlook, it may reach the level of 2000 or above.
Gold retail investor sentiment
Retail sentiment shows that as of the author's writing, nearly 69.06% of the positions are currently net long, and the ratio of long and short positions is 2.23:1. Long positions decreased by 4.45% from yesterday and increased by 18.33% from last week; short positions decreased by 10.83% from yesterday and increased by 2.65% from last week.
We usually treat retail investor sentiment as an inverse indicator, and retail investors are net long (retail investors are long) suggesting that the price of gold may fall. The net long position has increased compared with yesterday and last week. Combined with the current position situation and recent changes, retail investor sentiment provides us with a stronger bearish indicator signal for gold/dollar.
The U.S. dollar continued to fall sharply on Monday, pushing up commodity prices; investors ignored the escalating international trade tensions; the euro/dollar tested the September 2018 highs. Can the upward momentum continue?
The three major Wall Street stock indexes continued to rise on Monday, with the Dow Jones, S&P 500 and Nasdaq Composite closing up 0.43%, 0.74% and 1.67% respectively. The technology sector led the gains, driving the Nasdaq Composite Index, which is dominated by technology stocks, to perform best, and FAANG closed all gains.
Gold prices hit a record high on Monday, and the attractiveness of precious metals continues to rise with expectations of high future inflation brought about by monetary and fiscal stimulus policies. Republicans in the US Senate also revealed more details about another bailout bill, including an additional $1,200 stimulus check.
The foreign exchange market continues to show a wide range of risk appetites. As safe-haven currencies, the U.S. dollar and Swiss franc have fallen the most, and the Swedish krona has the largest increase, followed by the euro. The latter’s gains seem to be on the verge of collapse in the euro zone. The EU integration is optimistic.
The coronavirus pandemic has exacerbated already tense international political tensions. The two largest economies in the world closed one of their consulates in their respective countries, but the market did not seem to care.
EUR/USD technical analysis
Recently, supported by the weakening of the US dollar, the euro/dollar has continued to rise. Since mid-May, the increase has expanded to 9% and is currently testing the September 2018 high again. If it can break through 1.1815, it is expected to further expand the gains. In September 2018, EUR/USD started a downward trend for several months after testing this level.
Oil prices set a new high in the month, and the RSI indicator reversed the decline since June and is expected to continue to rise in the future.
Oil price trend technical forecast: neutral
Last week, oil prices (US oil) broke through the June high of 41.63 and hit a maximum of US$42.49 per barrel. Although the gains were retreated later in the week, the overall gains since late April have remained intact, and the follow-up is expected Oil prices are expected to break the 200-day simple moving average (SMA), or the first time since January of this year; if they rise further, they are expected to reach the March high of $48.66/barrel.
Looking ahead, as the gap between the moving averages continues to narrow, the 50-day SMA (27.88) that has continued to rise since June seems to be about to cross the 200-day SMA (43.11). However, in the context of deviations in the trend, the intersection of the 50-day SMA and the 200-day SMA may lack the characteristics of forming a "golden cross".
In any case, entering the end of the July trading month, as the relative strength indicator (RSI indicator) reversed the downward trend line since June and released a bullish signal, it is expected that oil prices will continue their upward trend and refresh their monthly highs. However, the rise in oil prices has not been accompanied by the RSI indicator rising above 70 and entering the overbought range, so we still need to observe whether the indicator will continue to show signs of divergence from oil prices.
Daily chart of oil price trends
As far as the basis of the closing price is concerned, oil prices have covered the gap at the beginning of March and are expected to continue to regain the decline earlier this year. If they rise above the June high of 41.63, they are expected to further explore the 200-day SMA (43.11).
Further, it is necessary to successfully break/close above the 42.90-43.40 range before it is expected to open up the upside to the Fibonacci overlap range 44.60-45.10. The higher target is to focus on the highs in March this year.
The EUR/USD is testing the resistance of the Fibonacci gear that has lasted for many years. The break above focuses on the upper resistance 1.1712 and 1.1815-1.1822. However, the price of 1.1600-1.1621 needs to be alert to the possible exhaustion of kinetic energy.
The Euro weekly chart seems to be preparing for the fifth consecutive week of gains. Since the opening of this trading week, the euro/dollar has risen by more than 1.4%. This wave of gains pushed the euro/dollar to the Fibonacci level of resistance for several years; the overall outlook for the euro/dollar is still expected to be bullish, but the rise may be fragile in the short term.
EUR/USD daily chart
"The euro/dollar orthogonally cast a little above a key support pivot point (always concerned), and the market outlook is concerned about the price response at this mark." This area 1.1167-1.1187 is a Fibo level support gathering place. At the beginning of July, the price recorded a low point at 1.1185, and then rebounded to rise. The price is currently testing the resistance area 1.1595-1.1621 (from the 50% Fibonacci retracement level of a wave of decline in 2018 to the October 2018 high Point composition).
The EUR/USD needs to break/close above this range to be able to continue to bullish. Higher upside resistance targets focus on 1.1712 and 1.1815-1.1822. Preliminary daily support is currently focusing on the 1.15 level. The bullish failure level is currently raised to 1.1437-1.1445 (composed of the closing price of the March high and the opening level of 2019). The EUR/USD closing below this threshold may usher in a more substantial reversal (downward).
EUR/USD two-hour chart
From a shorter time frame, the euro/dollar orthogonally invested in an ascending licorice fork pattern, and the recent price rise has stalled at the 75% channel/key resistance. Initial support falls at the middle rail line, and then the 1.15 and 1.1437-1.1445 ranges-both of which are worthy of attention, the potential downward trend of the euro/dollar may lose momentum here.
The EUR/USD is testing the Fibonacci resistance level of 1.16 that has lasted for many years. The current price is below this level. The recent gains may be fragile. The market outlook is concerned about the closing situation. From an operational level, it is advisable to reduce long positions/upgrade the protective stop loss level at present; pay attention to the possibility of price kinetic energy failure and reduce the risk. On the other hand, the euro/dollar needs to close above 1.1621 to restore the overall upward trend.
EUR/USD retail sentiment
The retail sentiment report shows that as of the author's writing, the euro/dollar has nearly 32.11% of long positions, and the ratio of short to long positions is 2.11:1. Long positions increased by 12.80% from yesterday and 22.37% from last week. Short positions decreased by 1.21% from yesterday and 3.52% from last week.
We usually take the opposite view on retail investor sentiment, and retail investors are short-term indicating that the euro/dollar may continue to rise. From the perspective of retail investor sentiment, net short positions have decreased compared with yesterday and last week. The recent changes in positions have warned people that although most retail investors are short, the euro/dollar may soon reverse the current trend and turn down.
Important data to watch in the coming week (GMT time):
July 24th at 13:45: US manufacturing PMI in July
July 27th at 12:30: US June durable goods orders monthly rate
14:00 on July 28: Consumer Confidence Index of the US July Consultative Conference
July 29, 18:00: Fed Resolution
Wall Street stocks closed higher on Wednesday, and the Australian dollar may rise with risk-oriented assets. The price of silver continues to rise. The S&P 500 index broke through key resistance, and U.S. Treasury yields fell. The outlook for AUD/USD is bullish after breaking through a narrow range.
Wall Street stocks closed up on Wednesday. The Dow Jones, S&P 500 and Nasdaq closed up 0.62%, 0.57% and 0.24% yesterday. The benchmark S&P 500 index broke through the key inflection point of 3226.00 (the price has since met resistance to pull back) and continues to follow up, which may mark the recovery of the previous price upward trend.
The optimism of the stock market has also been transmitted to the foreign exchange market, and further suppressed the safe-haven currency dollar and the safe-haven currency yen. Cycle-sensitive currencies such as the Australian dollar, New Zealand dollar and Canadian dollar have all strengthened, while the Norwegian krone, which is linked to commodities, has suffered. Crude oil prices fell yesterday, which may be a reason for the poor performance of the oil-related currency, the Norwegian Krone.
Silver continues to rise, rising by more than 8% yesterday; silver prices have risen by more than 15% since Tuesday. The yields of US 10-year and 30-year Treasury bonds have fallen again today, and the cost of holding interest-free assets has decreased.
Although the number of Covid-19 cases continues to increase, in view of the signs of stabilization in the economy and unprecedented fiscal and monetary policies, traders may take hedging actions based on the above statements that may cause inflation to rise sharply. In this respect, precious metals may be used as a tool to hedge against substantial price increases.
Thursday Asia Pacific trading session
The economic calendar shows that the daily economic data is relatively thin, and the market focus may fall on the themes of macro fundamentals and cautious changes in market sentiment. If the situation in the previous trading session (overnight New York session) is foreshadowed by today's Asia Pacific session, the Australian dollar, New Zealand dollar and Canadian dollar may continue to rise; while the yen and the US dollar may fall. Optimism may lead to narrowing of local corporate bond credit spreads, and the anticipation that the decline in default risk may help promote Asia-Pacific stock markets higher.
Australian dollar trend analysis
AUD/USD has broken through an important barrier. Previously, the price experienced two weeks of relatively lacking sense of direction trading. This week, the price of AUD/USD rose more than 1.6% and rose further. This breakout may encourage bulls to enter the market if they interpret this upside breakout as a continuation of the previous uptrend. On the candlestick chart, the AUD/USD rebounded more than 24% since the price bottomed in March.
On Tuesday (July 21) the EU recovery fund was reached and the United States advanced a new trillion-dollar stimulus plan to boost risk sentiment. Coupled with vaccine-related benefits, oil prices broke the recent consolidation range to a four-month high of 42.6; but API crude oil inventories are large As a result, oil prices eventually fell back to below 42 and consolidated.
Want to break the 2-month consolidation range for oil prices? Euro and gold benefit most!
On Tuesday (July 21) the European Union reached an agreement on a 750 billion recovery fund and the United States' implementation of a new trillion-dollar stimulus plan has undoubtedly become the focus of the market. Coupled with vaccine-related benefits, market risk sentiment has been boosted and the US dollar index has further penetrated 95.0 to an intraday low of 94.97, refreshing a new low in more than 4 months since March 9.
Gold and the euro have become the biggest beneficiaries. Gold hit a new high of US$1847.7 in the past 9 years; the euro broke through 1.1500 to an intraday high of 1.1539, the highest in a year and a half since January 11, 2019.
WTI crude oil once broke through the 2-month range and rose to a four-and-a-half-month high of $42.60. However, the API crude oil inventory data released afterwards unexpectedly increased by 7.54 million barrels, far exceeding expectations and decreased by 1.95 million barrels. The upward momentum of oil prices was blocked. , And finally fell back to below 42.0 US dollars for consolidation.
In terms of specific circumstances, due to the EU's recovery plan agreement, European corporate debt risks have fallen to the lowest since February. The EU leaders provided 750 billion euros in the recovery fund, of which 390 billion euros were granted in the form of gifts, and the remaining 360 billion euros were loaned in the form of low-interest loans to the countries and sectors most affected by the epidemic. The importance of economy is self-evident.
On the other hand, the United States, which continues to be deeply troubled by the epidemic, also urgently needs more easing measures to stimulate. According to data from legal services company Epiq Global, as of June 30 in the first half of this year, more than 3,600 U.S. companies have filed for bankruptcy protection. A surge of 26% over the same period last year; and as the epidemic rebounded in various parts of the United States, US corporate bankruptcy filings surged by 43% over the same period last year.
In addition, the US$2.2 trillion CARES stimulus bill introduced in March will expire at the end of July. A series of factors suggest that the United States will launch a new round of trillions of stimulus plans before the end of July.
However, most of the above factors were digested in advance by the market, just as the euro/dollar even showed signs of rising and falling after the EU’s 750 billion recovery fund was announced.
The progress of the epidemic still affects the market. How big is the positive impact of the vaccine?
In fact, at present, the biggest factor supporting the market is still the good news related to vaccines. On Tuesday (July 21), European regulators said that it may approve the first new crown vaccine this year. The European Medicines Agency (EMA) anti-infection and vaccine affairs The person in charge said in an interview on Tuesday that he is preparing for this possibility so that it can be prepared in advance at the regulatory level.
On the other hand, researchers at the University of Oxford said that the vaccine developed by the University of Oxford showed a good response between antibodies and T cells; The Lancet stated that the vaccine developed by a team led by Chen Wei of the Chinese Academy of Engineering can induce an immune response.
However, judging from the performance of the US stocks overnight, the market’s positive response to vaccines seems to be weakening, as the three major US indexes rose and fell mixed overnight, of which the Nasdaq index closed down 86.70 points, or 0.81%, to 10680.36 points.
It is worth noting that on Tuesday (July 21) U.S. President Donald Trump said that there seems to be a large-scale outbreak in the southern region of the United States and may begin to spread; according to the New York Times, the CDC said, The number of new coronary pneumonia cases may be more than reported.
On Tuesday (July 21), the WHO expressed shock at the speed of the spread of the new coronavirus in Africa and warned that the rise in cases in South Africa may be a harbinger of an outbreak across the African continent. In the past month, the number of new coronavirus infections in 22 countries on the continent More than doubled, the new coronavirus is spreading in nearly two-thirds of countries.
Geopolitical risks still need to be vigilant, whether oil prices will start to rise is still in doubt
On the other hand, the factors contributing to the rise of geopolitical risks cannot be ignored, and the Sino-US trade conflicts still have no potential influencing factors. In addition, Iran’s Supreme Leader Khamenei said that Iran will retaliate equally against the Americans who killed the senior Iranian general Soleimani. Although the market generally believes that Iran’s move and the previous verbal toughness are both means to attract attention and will not have actual impact, under the conflicting willingness of the United States and Iran, small conflicts may still occur, which is expected to affect oil prices. Trend.
Investors can focus on the changes in U.S. EIA crude oil inventories during the week ending July 17. If EIA crude oil inventories are significantly higher than expected, oil prices are expected to fall under pressure.
New York crude oil technical analysis: 41.11 gap covering, but it is too early to restart the trend
30-minute chart of WTI crude oil:
The 30-minute chart shows that the overnight rally in oil prices made up for the gap that left a gap down at 41.11, suggesting that the short-term downward momentum of oil prices was terminated. However, oil prices are still consolidating below US$42.0, and the overall trend is still unclear. In this case, investors still need to wait patiently.
If the oil price falls below the US$40.0 level in the future, it will test the low of US$37.36 on June 25, but if it breaks above US$42.50, it is expected to challenge the upper US$45.0 level.
On Monday (July 20), WTI crude oil once broke through the level of US$40.0 in intraday trading, but then it still recovered to US$41.0. The trend of narrow consolidation continued; on the news side, the European Union Recovery Fund and the new US trillion stimulus plan were affected by the market. Concerned, but geopolitical risks are heating up, how to judge the oil price outlook?
Oil prices once again failed to break through $40. The European Union Recovery Fund and the US Trillions of Stimulus Plans have attracted market attention!
On Monday (July 20), the oil price once broke through the level of US$40.0 to an intraday low of US$39.97. However, the oil price lacked further downward momentum and finally recovered to around US$41.0 for correction. At present, WTI crude oil is at US$40.0-41.0 The range seems to be inexplicably attractive to the market, although this delicate balance is expected to be broken.
Affected by the continued deterioration of the epidemic in the Americas and Africa, global crude oil demand was once again looked down on by the market. On Monday (July 20), the World Health Organization (WHO) stated that almost all Latin American countries have experienced community transmission of new crown pneumonia; Africa The epidemic is continuing to accelerate, and many African countries have seen a rapid increase in cases in the past week.
Although the continued news of positive vaccine progress has comforted the market, so far there is still no clear vaccine that is about to be born. US President Donald Trump said on Monday (July 20) that the new crown virus is a "global "The problem", even said "wearing a mask is a patriotic behavior, no one is more patriotic than me." According to the latest report from Goldman Sachs, many states in the United States have clearly suspended work or taken targeted measures to prevent the epidemic. The population of these states accounts for 80% of the American population.
It is worth mentioning that although the demand for crude oil has been rushed, the EU Recovery Fund and the US trillion stimulus plan have made the market still optimistic about the economic outlook. On Monday (July 20) the three major US stock indexes generally rose, among which Nasda The gram index closed even higher by 2.51% to 10767.09 points, which indirectly supported oil prices to stabilize above the level of 40.0 US dollars.
Monday (July 20) the EU special summit enters its fourth day, but it is gratifying that the EU recovery fund of 750 billion euros has a new compromise solution for leaders to discuss. There is news that the EU proposes to The size of the allocation in the EU Recovery Fund is set at 390 billion euros. In the case of European Council President Michel's new plan for the EU Recovery Fund, the disbursement of funds in the form of gratuitous grants is 390 billion euros, which is lower than the 500 billion euros originally planned, and another 360 billion euros will be issued in the form of low-interest loans.
European Commission President Von der Lein said that he is moving in the right direction to reach an agreement.
On the other hand, the US$2.2 trillion CARES stimulus bill introduced in March is about to expire at the end of July. The poor epidemic prevention and control has greatly increased the possibility of the US launching a new round of stimulus measures. Monday (July 20) U.S. Treasury Secretary Mnuchin said that another trillion-dollar stimulus plan is being developed, and the current market generally believes that the end of July is the initial time target for the next stimulus plan.
Geopolitical risks are likely to rise, and oil prices are still on the downside
In general, under the balance of the epidemic, vaccines, and economic stimulus measures, the current market risk sentiment can still remain optimistic, but if the rise of geopolitical risks is taken into account, the balance of oil prices seems to be broken again.
At present, the United States has imposed more frequent sanctions on Europe, including digital taxes, and this trend has emerged in Iran, Cuba, the International Criminal Court, and the recent "North Stream 2" and "Turkish Stream" projects.
Considering that the situation in the United States is not optimistic and the US election is imminent, the market generally believes that the United States will be committed to using geopolitics to shift domestic contradictions, which will be negative for oil prices. On Monday (July 20), gold further climbed to an intraday high of US$1820.53, a new high since September 2011. Spot silver rose more than 3%, setting a new high since September 2016 to US$19.919.
Investors should pay attention to the impact of NYMEX New York crude oil August futures, which are affected by the shift of positions. On Wednesday (July 22), the last trading on the floor will be completed at 2:30 am and the last trading on the electronic disk will be completed at 5:00 am. Please pay attention to the trading venue. The month-to-month announcement controls risks.
New York crude oil technical analysis: short-term lack of clear direction, concerned about the possibility of US$40.0 fall
30-minute chart of WTI crude oil:
The 30-minute chart shows that despite the failure of oil prices to break below the $40.0 level overnight, it is important to note that oil prices left a gap at 41.11. If this gap cannot be covered in the short term, it shows the emergence of short positions. Significant increase. In the case that the gap has not been filled, oil prices are still on the downside as a whole, falling below the $40.0 level to test the June 25 low of $37.36.
If oil prices finally choose to break upwards, it indicates that oil prices are still maintaining a mid-term upward trend, and the market outlook is expected to further challenge the level of US$42.50 or even US$45.0.
Gold has broken through $1,800, where will the market go? The deepening of the negative real yield in the United States provided support for gold prices. Fed officials hinted that it intends to continue to promote economic recovery.
Gold Outlook: 1800 has broken, what's next?
Last week, gold prices closed for the sixth consecutive week (see the weekly chart), the first time in nearly a year. However, the action on gold prices has slowed down, closing up only 0.5% last week. From another perspective, this can't help but ask: what will happen next after the price of gold breaks above 1800?
Last month, the author emphatically mentioned that in the progress of the gold price breaking through 1,800, the actual rate of return in the United States plays a more important role than the dollar; it is basically correct to say that gold has stabilized near its 9-year high. The current US real rate of return (TIPS) has fallen below -0.8%, very close to the 2012 low of -0.9%. Considering that gold may become the biggest beneficiary of a further decline in real yields in the negative region, this indicates that investors are unlikely to withdraw from gold.
The price of gold is supported by the actual rate of return (further down in the negative region)
Fed officials hint that they will continue to stimulate the economy
"In view of the low sensitivity of inflation to labor market tightening, the Phillips curve has not yet become steeper, so policies should not withdraw support in advance. Instead, policies should seek to achieve employment results in breadth and depth-only in the previous recovery. Appears later."
This remark came from the Fed official Brainard, the official who supports the Fed’s Yield Curve Control (YCC) further hinted that the stimulus will continue for a long time to make the economy pick up; on the other hand, this may be good for gold. sign. However, the short-term concern is the scale of the rise in gold prices since the beginning of the year.
Poor economic data and growing virus cases remain a major concern
Looking ahead this week, the impact of the EU summit may set the tone at the beginning of this week. However, the importance of economic data for most of the time before this week is relatively low, and the focus of the market may fall on July PMI data. In addition to the PMI, external factors including the increasing number of coronavirus cases in the southern region of the United States may also continue to cause concern. There is growing concern that the severity of the epidemic may trigger a statewide lockdown.
On the weekly chart, gold/dollar rose, and this week may record six consecutive gains. Upside Fibonacci resistance looks at 1821. However, the market outlook needs to be alert to potential upside failure risks.
The price of gold is trying to set a record of rising for six consecutive weeks. Yesterday, the price of gold rose by 0.38% to 1805 US dollars (as of the author's writing). This makes the price of gold not far from the next technical resistance.
Gold trend analysis
Gold/USD Weekly Chart
Technical review: The author mentioned earlier, "Before the arrival of the new trading week, the price of gold needs to close above 1765 to make the short-term bullish view continue to be effective. In the bullish scenario, the higher upward resistance target for gold prices may look toward 1795 (2012 High Point)". Last Friday, the gold price closed above this mark, and the upward pace stopped before approaching 1821 (the 88.6% Fibonacci retracement level that started from the wave of historical highs). Note that as the price of gold hits a nine-year high, weekly candle prices may vary and may continue to threaten gold prices.
The price of gold needs to break/close above the aforementioned threshold (1821) before it is possible to place the bullish target further on 1856 (the closing price of the week of the high) and 1881 (the closing price of the historical high). These two levels are worthy of attention, and the price of gold may rise and fail here. On the downside, the initial weekly support looks at the trend line since 2017 (red parallel line, now around 1780), followed by 1747 (the April high). The long-term bullish strategy failure level is now raised to 1733.
Technical summary: The price of gold has been rising for nearly six weeks, and the various increases have pushed the price of gold to a position that is slightly lower than the Fibonacci resistance that has lasted for several years. From an operational point of view, it may be appropriate to reduce long positions / increase protective stops. If the market price of gold retraces, it will focus on whether the price will decline before 1747 and then turn upwards; the price of gold will have to break upwards to see a higher upward target-the historical high.
Gold retail sentiment report
Gold/USD: The retail sentiment report shows that nearly 67.74% of current positions are long, and the ratio of long and short positions is 2.10:1. Long positions increased by 2.06% from yesterday, which was the same as last week; short positions decreased by 4.60% from yesterday and by 14.01% from last week.
We usually take the opposite view on retail sentiment, which is bullishly suggesting that gold prices may continue to fall. Net longs have increased compared with yesterday and last week. Combining current retail sentiment and recent changes, the retail sentiment report provides a stronger bearish gold signal.
It seems that oil prices will fill the previously created gap. The S&P 500 index has recently stagnated but may soon rise, and then focused on the upper gap resistance. Gold prices may continue to rise or may look up to 1920, but if you turn down and break through 1790, you need to be cautious. If you break below 1756, you will usher in a mid-term correction.
Crude oil trend analysis:
Crude oil prices are currently rising, after Saudi Arabia engaged in a price war in March, which led to a drop in oil prices and the price of the last crude oil futures contract fell to a negative value. Therefore, it is not surprising that there is a huge gap in the price chart. If the recovery of risky assets continues, oil prices seem to continue to rise unless negative geopolitical headlines appear. Although there is upside potential, note that the 2017/2018 lows and the 200-day moving average are in the top. To rise, oil prices need to overcome many resistances, but if a breakthrough is ushered in, oil prices will be expected to soar in the future.
S&P 500 Index Trend Analysis:
The S&P 500 index has recently stalled, but it looks likely to rise soon. At the end of February, the gap that would appear due to a coronavirus outbreak seems to start to be filled. This gap range is 3257-3337. The historical high 3393 is not far above this range. At present, the stock market may approach these levels.
S&P 500 index daily chart (upward attention to the gap caused by the epidemic)
Gold trend analysis:
The price of gold still tends to be bullish. Recently, the price of gold is rising. However, the price of gold needs to break through 1800 to rise above the triple high resistance set in 2011/2012 (red part, where the three band highs are located) and a higher level, namely the 2011 bull market. The recorded highs. If the gold price subsequently rises soon, the 1920 high may be reached soon. On the other hand, if the gold price falls below 1790, the near-term outlook may need to be viewed with caution; if it falls further below 1756 (July 6 low), it may mean that the gold price will enter a correction in the medium term.
As market sentiment fluctuates and risk appetite changes, AUD/USD attempts to rebound. On the candlestick, AUD/USD oscillated between key technical barriers. AUD/USD may experience breakthrough progress after finishing recently.
The Australian dollar tried to rebound this week towards a bullish zone, and the Australian dollar/dollar rebounded nearly 50 points from its intraday low. Recently, AUD/USD has encountered heavy selling pressure near the key resistance of 0.7000, but the AUD bulls still provide considerable buying support for this currency pair; therefore, a wide-volatility trading range has been formed, which is supported by key technologies. Consists of resistance. This range may continue to limit AUD/USD volatility.
AUD/USD daily chart
The contraction of the Bollinger Bands (with narrower volatility) over the past few trading days also highlights the consolidation of the AUD/USD. Similarly, the trend of the RSI indicator also highlights the ups and downs of the Australian dollar. The upward trend of the candlestick is facing a callback risk (the blue dotted line is the downward trend).
This seems to be related to a decline in trader sentiment and a deterioration in risk appetite; as coronavirus-related concerns rise again, market participants’ expectations of the economic outlook have become increasingly uncertain.
AUD/USD 2-hour chart
Contradictory fundamental drivers and technical signals continue to draw the Australian dollar back and forth. Although the current trend of AUD/USD has been strongly supported, if this resistance close to the high point so far this month has hindered the potential rise of AUD, the risk-sensitive currency pair of AUD/USD will be traded in the next Day or this week may turn lower.
On the other hand, due to the optimistic overall performance of the stock market, the Australian dollar and other risk assets such as the S&P 500 index and other recent trends have shown considerable resilience. Although some negative factors have emerged again, such as the escalation of tension in developing countries or the performance of stock financial reports may be lower than expected, but their trend is still strong.
In view of this, coupled with the recent record of a series of higher lows for AUD/USD (respectively on July 7, 10 and 13), AUD/USD may continue to rise in the future. In any case, a break of either AUD/USD technical barrier of 0.6930 or 0.6990 will be a major breakthrough (the former is a downward breakthrough, the latter is an upward breakthrough).
The US dollar index is close to the short-term support trend line. Follow the trend line gains and losses.
Dollar index trend analysis: return to near the short-term trend line support
Since the sell-off at the end of May and the beginning of June, the US Dollar Index (DXY) has continued to maintain a consolidation pattern, and limited price fluctuations have made it difficult for investors to make direction decisions. The trend line since 2018 that previously stopped the dollar's decline seems to be facing testing again, and the gains and losses of the dollar index in this trend line will be crucial.
If the US dollar index touches this trend line and rebounds again since then, it will hopefully help to consolidate the bottom and help the US dollar index start another wave of uptrend. But in view of the overall pessimistic tone since the New Corona virus panic reached its peak during March, it is not without challenges to want to rebound from self-support. If the US dollar index gains traction towards the 200-day moving average and higher, it will need to break the downward pressure lines extending from the June high of 97.8 and the March high.
Conversely, if the US dollar index falls below the support trend line since 2018, a drop below the June low of 95.72 will confirm a valid fall, but not far below the US dollar index will also face the test of an important long-term trend line since 2014. This trend line is also very close to the March low of 94.65.
Testing and holding/breaking the 2014 trend line will be more important than testing the 2018 trend line, but before this happens, our prime minister needs to pay attention to the 2018 trend line because it may determine the short-term price Biased.
The market is worried that Covid-19's newly diagnosed soaring triggers risk aversion, and the yen may be at risk; if US stocks financial reports show that the market value of companies with larger market values declines, the yen may expand its gains; if OPEC + important meetings show signs of internal political differences , The yen may also go up.
Yen Outlook: Bullish
If the number of confirmed cases of Covid-19 continues to increase (especially in the United States, the world's largest economy), it will stimulate market demand for safe-haven assets and the yen may rise. Governments around the world are working hard to slow the spread of the epidemic and re-implement or expand embargo measures that hinder economic growth, and these measures have led to a slowdown in global economic growth.
Global Covid-19 diagnosed cases map
U.S. stocks may miss expectations, OPEC+ shows disagreement, yen outlook is bullish
The confirmed cases of Covid-19 in the United States accounted for nearly 20% of the global total, among which the key regional indicators like Texas and Florida reached the warning line. Investors have been turbulent because of US geopolitical risks (ie, US elections), and medical statistics in these areas have made investors even more upset.
US stocks earnings season
US stocks' second quarter earnings report is about to be announced. If a series of companies with larger market capitalization (such as Goldman Sachs, Wells Fargo, Blackstone, etc.) are less profitable than expected, then the yen may continue to rise. Since the global stock index began to sell heavily in March, the stock market regained its vitality and began to rebound, causing asset prices that should have declined due to poor profitability to rise suspiciously.
Technology stocks are particularly resilient. Since March 16, the stock prices of Apple, Amazon and Alphabet have risen by 60%, 93% and 40% respectively. The weight of these stocks in the major US stock indexes is too high, masking the health of companies with lower market capitalizations in the worst economic recession since the Great Depression.
Japanese Yen, S&P 500 Index Daily Chart
U.S. stocks may miss expectations, OPEC+ shows disagreement, yen outlook is bullish
Therefore, a large number of stock financial reports show that poor performance may undermine the market's illusion of financial stability and may cause major stock indexes to fall. In this case, the safe-haven yen may rise against the basket of G10 group currencies, especially those of economies linked to commodities (including Swedish kronor, Norwegian krone, Australian dollar, New Zealand dollar, and Canadian dollar).
OPEC meeting may have friction, the yen may rise
On July 14, OPEC+ will hold a telephone monitoring meeting to assess the compliance of member countries with production quotas. OPEC+ internal friction has become a source of geopolitical anxiety. At the OPEC meeting on March 6, Russia and Saudi Arabia failed to reach a consensus on production cuts, crude oil prices plummeted, but other assets were not spared.
Medical data from Florida showed that the trend of the epidemic is worrying. Wall Street stocks closed lower on Thursday. The speech of Joe Biden, the US Democratic presidential candidate, has increased the risk aversion. Crude oil prices hit their biggest one-day drop in nearly a month-what do you think?
Yesterday the Wall Street stock market was hit hard, first by worrying medical data from Florida, and then by Democratic candidate Biden’s unpopular populist tendencies. US stocks closed on Thursday, the Dow Jones index and the S&P 500 index closed down 1.38% and 0.57% respectively. The Nasdaq index closed slightly higher than 0.53%.
The latter's strong performance underscores the resilience of technology stocks during the Covid-19 epidemic. The dramatic rise in these stocks seems to be largely due to home office policies, which on the other hand have generated more demand for Internet-related services. In the Dow Jones index, which is dominated by industry, the energy industry has suffered the worst, especially the oil, natural gas and consumable fuel industries.
Yesterday Florida reported a record 120 deaths from Covid-19, after which the S&P 500 fell sharply. The number previously reported was only 48. The number of new hospitalizations also reached a record 409, far higher than the 333 reported previously. These worrisome medical data have exacerbated the growing concern that the increase in coronavirus cases may force officials to implement or prolong the blockade measures that hinder economic growth.
Crude oil is a cycle-sensitive commodity and was hit hard by these worries yesterday; lower oil prices may be a reason for dragging the Norwegian krone. It is not entirely coincidental that the Norwegian krone, which is related to oil, became the worst-hit currency among the G10 currencies yesterday (worst decline). However, on the other hand, pessimism in the market has stimulated demand for risk aversion and pushed US Treasuries higher with the US dollar. The safe-haven currencies, the Japanese yen and the Swiss franc, also rose.
This situation was further amplified by Biden’s speech. In yesterday’s speech on economic policy in Pennsylvania, it was mentioned that it was time to end the “era of shareholder capitalism.” It also mentioned that “The United States is not a Wall Street banker and CEO (Chief Executive Executive Officer) established." As the November presidential election approaches, such populist tendencies may appear more frequently.
In view of today's relatively weak economic calendar, traders may focus on macro-fundamental themes, such as Covid-19 medical data. Yesterday's New York time market risk aversion sentiment may dampen today's Asia-Pacific oil prices, and may also affect currencies such as the Australian dollar, New Zealand dollar and other commodities. The safe-haven dollar and the safe-haven currencies, the Japanese yen and the Swiss franc, may rise, and US Treasuries may also rise.
Oil prices closed down more than 2.40% on Thursday, the largest one-day drop since June 24. Since the oil price fell below the upward trend channel (golden parallel channel) that started in March on the chart, Brent crude oil has been in a sideways consolidation. The lack of a clear direction indicates that the potential uncertainty is not only technical but also fundamental. Considering the current situation, the oil market outlook may continue to pull back.
On Wednesday (July 8th), EIA crude oil inventories surged 5.654 million barrels to 539.2 million barrels, but gasoline inventories fell unexpectedly. WTI crude oil stabilized at 40.0 US dollars and rebounded once to recover 41.0 US dollars. The direction of oil price choice is imminent. How to judge the market outlook?
EIA crude oil inventories increased by 5.6 million barrels, but gasoline inventories fell, WTI crude oil rose instead of falling?
Data released by the US Energy Information Administration (EIA) on Wednesday (July 8) showed that commercial crude oil inventories excluding strategic reserves increased by 5.654 million barrels to 539.2 million barrels, an increase of 1.1%, which was less than the expected decline of 3.114 million barrels; and earlier Published API crude oil inventories increased by 2.05 million barrels, less than the expected decrease of 3.4 million barrels.
At the same time, EIA data showed that the US Gulf of Mexico crude oil inventories rose to a record high last week, and refined oil inventories rose to a new high since January 1983; US crude oil exports fell by 705,000 barrels per day to 2.387 million barrels per day; Last week, US domestic crude oil production fell by 100,000 barrels to 11 million barrels per day.
Surprisingly, after the data was released, WTI crude oil did not fall sharply. Instead, it stabilized at US$40.40 and rebounded by nearly 2% to an intraday high of US$41.07. The EIA report showed that US gasoline inventories fell by 4.8 million barrels last week, and demand rose To 8.8 million barrels per day, the change in gasoline inventories hit a new low since the week of March 20 (16 weeks).
5-minute chart of WTI crude oil:
It is worth noting that the reason for the weekly decline in US gasoline supply is that in the four weeks to July 3, the average implied demand was 8.5 million barrels per day, a decrease of 12.5% from the same period last year, and the implied four-week implied demand for gasoline 15%. The signs of accelerating gas and oil demand growth make the market optimistic about the prospects of the US economy and offset the negative growth in EIA crude oil inventories.
The sovereign ratings of 40 countries are included in the negative outlook, and the epidemic has become the biggest factor limiting oil prices
On Wednesday (July 8), the World Health Organization (WHO) released its latest epidemic report showing that there were 168,957 new confirmed cases of coronary heart disease and 4147 new deaths. In this case, Fuch, director of the National Institute of Allergy and Infectious Diseases, said that he was "cautiously optimistic" about the vaccine developed by the end of the year, and the third-stage (new coronavirus) vaccine trial may begin at the end of July.
There is no doubt that the uncertainty of the epidemic makes it difficult to draw a final conclusion on how much impact it will have on the global economy, but according to a report published by Fitch on Wednesday (July 8), there were 40 countries’ sovereign ratings in the first half of the year It was included in the negative outlook, and the number of downgraded sovereign ratings exceeded that of last year, a record high, mainly concentrated in Latin America and the Middle East and Africa.
The International Monetary Fund (IMF) President Georgieva said that the epidemic will erode the economic development in recent years, and 2020-2021, the world will lose 12 trillion dollars due to the virus. The recovery will be uneven and a partial recovery is expected in 2021.
The choice of oil price direction is approaching, and more economic stimulus measures may push oil prices stronger
The current oil price fluctuates within 1% for seven consecutive trading days. Continuous narrow fluctuations indicate that investors are cautious and indicate that the direction of choice is approaching. Obviously, the current limitation on oil prices is stronger than the possibility of the outbreak of the U.S. epidemic, but the author believes that despite the continued wait-and-see market, although the number of infected people in the United States shows an increasing trend, there are no obvious signs that it will have a second impact on its economy. The impact, and with the delay of time, the possibility of a second outbreak of the epidemic should gradually decrease, and the overall oil price still tends to strengthen further.
In addition, the market also expects that the US government will launch more economic stimulus measures to help the economic recovery. On Wednesday (July 8), the US Congressional Budget Office (CBO) said that the expenditure of the salary protection plan pushed the expenditure in June to 1.1 trillion US dollars. .
James Bullard, chairman of the US Federal Reserve Bank of St. Louis, said that despite the increase in the new coronavirus infection, he is still quite optimistic about the prospects and expects most people to return to work within the next 90 days. It is expected that by the end of this year, the unemployment rate will drop to below 8%, and it is believed that lawmakers will propose new fiscal stimulus bills with sufficient resources.
Investors can focus on China’s June CPI annual rate in June, the number of US unemployment claims at the beginning of the week as of July 4, and the monthly value of the US wholesale inventory monthly rate in May, which are expected to affect oil prices.
New York crude oil technical analysis: US$40.0 support is still showing strength, the market outlook tends to rise
30-minute chart of WTI crude oil:
The 30-minute chart shows that oil prices are still consolidating above $40.0, but considering that the interval fluctuation time is too long, it means that the choice of oil price direction is near. At present, it is necessary to focus on whether the oil price can be successfully stabilized at 40.0 US dollars, and if it can stabilize the market outlook, there is a further attack on the previous high level of 41.6 US dollars or even 45.0 US dollars.
However, if it is blocked by the regional resistance of 40.0-41.0 USD, it is necessary to be alert to the drop in oil prices to test the regional support of 35.0-36.0 USD.
On Tuesday (July 7), gold reached an eight-year high and approached $1,800; US stocks closed down and the US index competed at 97.0; oil prices were blocked for two consecutive days at $41.0. The relevant World Health Organization (WHO) significantly cooled market risk sentiment and oil prices were approaching Choice of direction.
API crude oil inventory unexpectedly increased, EIA short-term energy outlook report raised oil price expectations
On Tuesday (July 7th), WTI crude oil remained generally fluctuating in the range of 40.0-41.0 US dollars, lacking a clear direction, but considering that the fluctuation range is gradually narrowing, this may mean that the direction of oil prices is approaching.
Factors affecting oil prices overnight:
The US API crude oil inventories announced on the early morning of Wednesday (July 8) as of July 3 increased by 2.05 million barrels, less than the expected decrease of 3.4 million barrels, but gasoline inventories decreased by 1.83 million barrels; refined oil inventories decreased by 847,000 barrels; finished products The drop in oil inventories offset the increase in crude oil inventories. After the data was released, the oil price rebounded slightly from the low of $40.26 to near $40.50.
In addition, Tuesday (July 7) also announced the EIA short-term energy outlook report, which is generally optimistic. It is expected that the WTI crude oil price in 2020 will be US$37.55/barrel, higher than the previous forecast of US$35.14/barrel, and will be 2020. The annual global crude oil demand growth rate is expected to increase by 190,000 barrels/day to -8.15 million barrels/day, but the global crude oil demand growth rate for 2021 is expected to be reduced by 190,000 barrels/day to 6.99 million barrels/day, showing that the epidemic continues Under the spread, the market is not optimistic about the future recovery of crude oil demand.
World Health Organization: The peak level of the pandemic has not been reached; the United States has officially announced its withdrawal
There is no doubt that the real factor affecting the market overnight is related news about the World Health Organization (WHO). On Tuesday (July 7), the United Nations Secretary-General spokesman Diyarik said that the United States has notified the United Nations Secretary-General on the 6th. Will withdraw from the World Health Organization from July 6, 2021.
It is worth noting that on Tuesday (July 7), World Health Organization Director-General Tan Desai said that the outbreak of New Coronavirus is still accelerating, and the global pandemic has not yet reached the peak level of pandemic. Among them are several US states, Central America and South America. Cases in some countries are accelerating, and the Americas report an average of more than 100,000 new cases per day, an increase of nearly 20% from last week.
On Tuesday (July 7), the cumulative number of newly diagnosed cases of New Coronary Pneumonia in Texas increased by 10028 to 210585, recording the largest single-day increase since the beginning of the pandemic; the number of hospitalizations reached a record 9268, the 9th consecutive Tian Tian hit a new high.
The market is still concerned about the progress of vaccines. US Secretary of Health and Human Services Hazard said that biotechnology company Regeneron can provide doses this fall or early next year. But until there is no substantial evidence that the vaccine can be mass produced, news about the spread of the epidemic will still suppress market confidence.
Affected by the above factors, the three major US stock indexes fell generally overnight. Among them, the Dow Jones index closed down 396.80 points, falling below the 26,000 point mark. Technology stocks, bank stocks and aviation stocks fell, down 1.51% to 25890.18 points; gold soared more than $20 to The intraday high was US$1796.6, approaching the US$1800 mark, and the US dollar index was competing for the 97.0 level.
Gold daily chart:
The crude oil supply side is making waves again, OPEC+ deepening production cuts or relaxing will break the calm situation in the oil market
Although market risk sentiment has dominated most of the price of oil prices in recent times, and the oil price fluctuation range has narrowed, it should be noted that OPEC+ is expected to relax and deepen production cuts from August, which may break the current state of relatively balanced oil prices. . The UAE Abu Dhabi National Oil Company ADNOC plans to increase August crude oil exports by 300,000 barrels per day.
On the other hand, due to the decline in exports and the impact of the epidemic, Iran’s crude oil production in June fell to a low of 1.9 million barrels/day in the past 40 years, while total Iranian crude oil inventories surged from 15 million barrels in January to 54 million barrels in April. In June, it further increased to 63 million barrels, accounting for 85% of the total storage capacity, which means that Iran will have to reduce crude oil production to a new low.
In general, there is currently no heavy news that affects the crude oil market. Investor sentiment tends to be cautious. You can focus on US EIA crude oil inventory changes and news about Brexit in the United States as of July 3, which will affect oil price fluctuations. .
New York crude oil technical analysis: direction selection approaching, 40.0 US dollars as a short-term key support
30-minute chart of WTI crude oil:
The 30-minute chart shows that oil prices are still consolidating above $40.0, but considering that the interval fluctuation time is too long, it shows that the market has no obvious direction, and it means that oil prices may have large fluctuations in the short term. At present, it is necessary to focus on whether the oil price can be successfully stabilized at 40.0 US dollars, and if it can stabilize the market outlook, there may be a further attack on the previous high of 41.6 US dollars.
However, if it is blocked by the regional resistance of 40.0-41.0 USD, it is necessary to be alert to the drop in oil prices to test the regional support of 35.0-36.0 USD.
Despite the increasing number of coronavirus infections, Wall Street stocks are still rising. The Bank of Australia's July interest rate decision will be ushered in within the day. If the outlook remains stable, the Australian dollar is expected to strengthen. AUD/USD broke above 0.6911, but the resistance at the beginning of January above may limit its rise.
The Wall Street stock market closed yesterday with Dow Jones, S&P 500 and Nasdaq closing up 1.78%, 1.59% and 2.21% respectively. The S&P 500's upward momentum stems from the rise in non-essential consumer goods component stocks—especially Internet and direct sales retail stocks. These companies include Amazon (ticker symbol AMZN), Booking Holdings (ticker symbol BKNG), eBay (ticker symbol EBAY) and Expedia Group (ticker symbol EXPE).
Market sentiment tends to take risks and hurt the dollar, the currency associated with hedging, and the yen, the safe-haven currency. Meanwhile, the currency SEK and the Norwegian krone, which are sensitive to the cycle, rose. The Australian dollar and New Zealand dollar were mixed; the Canadian dollar and the politically sensitive currency, the British pound, closed down yesterday. Despite the increasing number of coronavirus infections, the optimism surrounding economic stability has penetrated into various asset classes.
Risk appetite may continue into the Asia-Pacific market and push up the Asia-Pacific stock market; and safe-haven assets such as the yen and the dollar may suffer losses. The RBA's July interest rate decision was the most important event risk during the Asia-Pacific period, and the Australian dollar may become the market focus. The market currently expects RBA officials not to change the overnight cash rate (OCR), but if the RBA's comments suggest that the economy is showing signs of stabilization, this may stimulate the Australian dollar to rise.
AUD/USD broke the lower limit of the 0.6911-0.7018 range and traded slightly below the upper limit of the range. Earlier in June, AUD/USD climbed to the upper limit of the range but eventually fell back. The price seems to be preparing to launch an upward challenge. If the second attempt of AUD/USD still fails to break through the high point of early January (that is, the upper limit of the aforementioned range), the price “yielding” to the resistance may indicate a lack of confidence in the recent upside potential of AUD/USD, which may promote the market outlook Substantial sell-off.