U.S. & Canadian Trade Balance Ahead!
The U.S. stocks stabilized after two losing sessions. Investors were encouraged to see that, as countries relaxed coronavirus-induced restrictions, oil prices rallied on expectations of rebounding demand. The Dow Jones Industrial Average edged up 26 points (+0.1%) to 23749, the S&P 500 added 12 points (+0.4%) to 2842, and the Nasdaq 100 rebounded 115 points (+1.3%) to 8834.
Later today, eyes will be on the Trade Balance figures from the U.S. and Canadian dollar. Besides, the ISM Non-Manufacturing PMI will also be in focus to determine price action in the U.S. dollar.
XAU/USD – Choppy Range, Wait for Breakout
The safe-haven-metal prices flashed green and started to take bids once again above the 1,700 mark, mainly due to the broad-based U.S. dollar weakness. Earlier in the morning, the gold prices were weighed down by the positive news about easing lockdown measures and restarting of economies by many countries.
On the other hand, the ongoing U.S.-China tensions about Beijing’s mishandling of the coronavirus outbreak helped to keep the yellow metal above the $1,700 mark and maintained its safe-haven demand. At the time of writing, the yellow metal prices are currently trading at 1,704.18 and are consolidating in the range between 1,696.78 and 1,704.37.
Gold futures were dropping by 0.52% at $1,704.40 by 12:37 AM ET (5:37 AM GMT) amid the announcement from Italy and some U.S. states about easing the lockdown by reopening some parts of their economies.
At the US-China front, the investor’s confidence was shaken after the rise in US-China tensions regarding Beijing’s mishandling of the coronavirus outbreak. This provided support to the gold prices as a safe-haven appeal emerged in the market, although the renewed trade war got further fueled as U.S. President Donald Trump has threatened to impose new tariffs on China.
Earlier in the morning, the gold prices failed to stop its previous session’s decline and continued to drop further and reached near a fresh daily low at 1696.82 due to the positive sign of easing global coronavirus lockdowns and restarting of economies. The lockdown measures were the reason behind the rally of gold prices in the previous month due to the increased uncertainty of the market.
XAU/USD – Daily Technical Levels
Pivot Point 1713.2
XAU/USD – Daily Trade Sentiment
Gold prices haven’t changed much during the European session as it continues to trade in between 1,708 – 1,694. A bearish breakout of this level may extend selling until the next support area of 1,681, while a bullish breakout can open further room for buying until 1,724 area. The 50 periods EMA is extending resistance around 1,700 levels right now. Later today, the release of the U.S. Trade balance may help trigger a breakout. Overall, the 50 EMA and RSI is suggesting bearish bias; hence, let’s look for selling trades today.
USD/CAD – Fibonacci Retracement In Play
The pair USD/CAD was closed at 1.40882 after placing a high of 1.41522 and a low of 1.40509. Overall the movement of the USD/CAD pair remained sideways as it closed its day near the point from where it started its day. The pair USD/CAD recovered 40-50 pips from its daily loss and remained in neutral territory afterward throughout the day. It failed to take advantage of its early positive move and was pulled back by around 100 pips during the day. The strength of the Canadian dollar caused the fall of USD/CAD in late sessions due to the upward movement of WTI Crude Oil prices.
The commodity-linked Loonie gained traction after the crude oil showed a recovery of 5% on Monday due to shut down of more oil rigs in the United States amid coronavirus pandemic. Stable CAD pulled the intraday gains of USD/CAD on Monday, and the pair started moving in a consolidated range of 1.410 and 1.406.
Meanwhile, the Senior Deputy Governor of Bank of Cadena, Carolyn Wilkins, addressed on Monday and said that BoC would help bridge the economy against coronavirus pandemic by adjusting its asset purchases in order to support a lasting recovery.
She said that the country’s debt level has risen, and the central bank was aimed to ensure the credit availability for businesses and individuals to meet the increased demand as a result of the pandemic. She said that low-interest rates would be helpful during the recovery.
On the other hand, from the United States side, the Factory Orders report showed a drop of 10.3% in March as compared to a 0.1% drop in February. This hit hard on the U.S. dollar, and hence the pair USD/CAD started to lose its early daily gains. However, the U.S. Dollar Index remained bullish on Monday and rose 0.4% to a level above 99.
The mixed sentiment of the market confused the traders and left the movement of USD/CAD bound in a closed range between 1.410 and 1.406. The employment data from Canada and the NFP data from the United States on coming Friday will be the focus of attention for Loonie traders this week.
USD/CAD- Daily Technical Levels
Pivot Point 1.4095
USD/CAD- Daily Trade Sentiment
The USD/CAD prices are exhibiting bearish bias to trade at 1.4045 level. So far, the pair has completed 38.2% Fibonacci retracement at 1.4045. A bearish breakout of 1.4049 level can trigger further selling until the next support level of 1.3993, which marks 50% Fibo level. However, the USD/CAD prices are likely to face a hard time going below 1.4039 level as the 50-period EMA will be there to extend it with support. That’s why we need to keep an eye on Canadian trade balance data during the U.S. session, as this will help us determine the further direction of the market. The RSI is still staying in the zone, as its values are holding over 50, suggesting chances of the bullish trend. Let’s look for selling trades on the breakout of 1.4039 level, elsewhere; buying should be preferred.
AUD/USD – Ascending Triangle Pattern Breakout
The pair AUD/USD was closed at 0.64256 after placing a high of 0.64346 and a low of 0.64095. Overall the movement of the AUD/USD pair remained bullish throughout the day. At 6:00 GMT, the Melbourne Institute Inflation Gauge for the month of April dropped by -0.1% against the 0.2% of March. At 6:30 GMT, the ANZ Job Advertisements for the month of April dropped by 53.1% in comparison to March’s drop of 10.0%. The jobs offered were reduced due to the shutdown of businesses during lockdown amid coronavirus pandemic.
Building Approvals from the Australian Bureau of Statistics showed that new buildings that were approved for construction during the month of March dropped by 4.0% against the expected decline by 15%.
Economic data from Australia showed that the economy was not affected by the coronavirus pandemic to the extent it was expected. And this supported the Australian dollar against the U.S. dollar and helped the AUD/USD pair to pick up the pace in the market.
The Reserve Bank of Australia will have its monetary policy meeting on Tuesday this week, and traders are expecting a possible adjustment in the asset purchasing program by the central bank. The traders will closely watch the comments of Lowe for determining the economic condition of the country.
The pair also followed the movement of the U.S. dollar in American session when the Factory orders and lending details were published. A sharp decline in factory orders of the United States by 10.3% weighed on the U.S. dollar and helped the pair AUD/USD to move in an upward direction.
AUD/USD – Technical Levels
Pivot Point 0.6496
AUD/USD – Daily Trade Sentiment
In the 4 hour timeframe, the AUD/USD pair has formed a bearish engulfing candle below 0.6440, which also marks the 38.2% Fibonacci retracement level. Continuation of a sell trade below 0.6445 level can drive further selling until 0.6375. On the upper side, resistance continues to stay around 0.6448, and violation of this may lead AUD/USD prices towards 50% or 61.% Fibonacci retracement level of 0.6471 and 0.6495, respectively. So keep a closer eye on 0.6450 level as bullish bias can be seen above, and selling trades should be preferred below this level.
All the best for the U.S. Session!
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