Asian stocks traded mixed on Tuesday after another strong rally session in the U.S.. Shares dipped in Japan while Chinese stocks continued to outshine. Nasdaq is pushed to a new high with a further rally of tech stocks. Investors realized that although the reality isn’t very optimistic, it is not as bad as people thought it would be two months back with economic data picking up faster than expected.
USD slipped on Tuesday as with S&P continuing the winning streak. Although the Covid-19 cases have been surging during the weekend investors are willing to look through the current situation to economic recovery by this year-end.
Copper prices soared higher as the supply disruption from Chile, one of the world’s largest producers of copper continues to support the upward trajectory in prices. However, from a technical perspective, we do caution a potential pullback, with prices testing a key resistance level and the bearish divergence seen on Stochastic.
Gold prices edged higher on Tuesday, hovering near an eight year high as concerns over the surge in the number of Covid-19 cases buoy demand for the safe-haven asset. In line with our fundamentals, prices are holding nicely above our trend line as well and we maintain our bullish bias on the precious metal.
Oil edged lower towards the $40 a barrel mark as US data forecasts to show that gasoline stockpiles have increased. This coupled with the still rising cases of virus infections raises fresh concerns that stricter movement controls will be extended. However the official data for the oil stockpile is due only on Wednesday and this could just be a knee jerk reaction in the markets. In line with the dip in oil prices, CAD weakened against the USD as well.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3527)
We turned bullish as price bounces off 1st support where 61% fib extension is. Price is likely to bounce further from there towards 1st resistance where the horizontal swing high resistance is.
UKOIL (Intraday bias: Bearish below 43.11)
Oil broke below ascending trendline support (now resistance). With price below moving average and MACD looking to cross below 0, a further drop below 1st resistance at 43.11 towards 1st support at 41.70 is possible.
XAUUSD (Intraday bias: Bullish above 1777.26) 
Price is approaching our first support in line with our ascending trend line, 38.2% retracement, horizontal pullback support and 127.2% fibonacci extension, where we could see a bounce above this level to our first resistance level. Ichimoku cloud is showing signs of bullish pressure in line with our bullish bias.
XCUUSD ( Intraday bias: bearish below 2.76983)
Price is facing bearish pressure from our first resistance where we remain bearish below this level and could see a further drop to our first support level, in line with our horizontal pullback support, 50% fibonacci retracement and 61.8% fibonacci extension. Stochastic is seeing a bearish divergence and facing bearish pressure from our resistance as well.
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Desmond Leong runs an award-winning research firm (The Technical Analyst finalists 2018/19/20 for Best FX and Equity Research) advising banks, brokers and hedge funds. Backed by a team of CFA, CMT, CFTe accredited traders, he takes on the market daily using a combination of technical and fundamental analysis.