Asian stocks opened mixed on Wednesday as investors mulled the progress of stimulus talks in Washington and reports of a plan to review the U.S.-China trade deal.  S&P 500 contracts were little changed after the index wavered between losses and gains through Tuesday before closing modestly higher. 

The dollar weakened against major peers. Ten-year Treasury yields stayed near their lowest since March. Pressure is growing on Republicans and Democrats to resolve differences over a new U.S. virus relief package. Treasury Secretary Steven Mnuchin said the goal is to strike a deal on legislation by the end of the week. If the deal could be passed by this week, we might see some pickup in USD strength. 

Copper prices edged lower on Wednesday as increased output in top producing countries limited the upside in prices. Chilean firm Codelco, the world’s top copper producer, reported a 4.7%-rise year-on-year in January-June output, while expected labor strikes at two Chilean mines failed to take place last month. Elsewhere, the June copper output in Peru, the world’s second top producer of copper, jumped 40.8% from a month earlier as mining activities resumed. Looking ahead, the increase in output of the metal, coupled with a weaker global demand as the economy struggles to recover from the pandemic could put prices under further pressure. 

Gold prices reached a record high on Wednesday, surpassing the $2000 mark as a weaker dollar and hopes of further fiscal stimulus by central banks to cushion the impact of the economic damage caused by the pandemic buoyed demand for the safe haven metal, as it is often seen as a hedge against inflation and currency debasement. Looking ahead, the precious metal is poised for a further rally as it benefits from the low interest rate environment, rising geopolitical tensions and surging number of Covid-19 cases and dips could present an opportunity to buy the safe-haven asset to ride out the pandemic. 

Oil drifted sideways and held steady below it’s mid-term range resistance. However, market observers are now pointing to a recent violent blast that shook the country of Beirut. While authorities have trouble pointing out the cause of it, fresh concerns regarding the stability of the middle east have been raised. If anything, this could contribute to a further rise in the price of oil. However, investors should not forget that OPEC+ is still committed to raise the number of oil barrels later this month. CAD strengthened greatly against the USD this morning mostly due to a weakening of the greenback.

 

Technical & Trade views

 

USDCAD (Intraday bias: bearish below 1.3294)

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Price is facing bearish pressure from downside confirmation in line with 127% fibonacci retracement where we could see a continuing drop below this level. EMA is also suggesting further bearishness to exist.

 

UKOIL (Intraday bias: Bearish below 44.80)

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Price drifted higher holding within ascending channel range. With price reacting below channel resistance at 44.80 and stochastics testing resistance, a short term drop towards 1st support at 43.65 can be expected.

 

XAUUSD (Intraday bias: Bullish above 1999.60) 

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Price is facing bullish pressure from our ascending trend line and intermediate support, in line with our 50% fibonacci retracement where we could see a bounce above this level to our first resistance target. The Ichimoku cloud is showing signs of bullish pressure as well.

 

XCUUSD (Intraday bias: Bearish below 2.89322)

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Price is facing bearish pressure from our first resistance in line with our descending trend line, horizontal swing high resistance, 61.8% fibonacci retracement where we could see a reversal below this level. RSI is facing bearish pressure from our descending trend line as well.