Asian stocks started August in a mixed fashion amid a resurgence in Covid-19 cases and simmering U.S.-China tension. The dollar edged higher and Treasuries slipped. On Friday, U.S. stocks extended their July rally aided by a surge in technology shares. S&P 500 is flat now and the market is watching on the stimulus plan talks in the U.S.
DXY bounced amid the simmering U.S.-China tensions. Meanwhile, Infections are picking up again in some U.S. states. A senior Federal Reserve official on Sunday urged Congress to act to support those laid off due to the pandemic and suggested a fresh lockdown. In Australia, Victoria tightened restrictions as cases jumped, while the Philippines imposed a stricter lockdown for Manila and nearby areas. Amid those uncertainties, USD could have more upside to go.
Copper prices slipped as much as 1.8% in early Asian trade session on Monday, surpassing its 3 week low as dollar recovers from its recent losses, driven by increasing fears that the Coronavirus spread could be out of control despite the positive China manufacturing data. Looking ahead, copper prices could be under further bearish pressure as the second wave of pandemic dampened hopes of a quick economic recovery.
Gold prices reached a historical record high on Monday as a softer USD and increasing fears over the global economic fallout from surgingCovid-19 pandemic lifted demand for the safe-haven metal. Looking ahead, the precious metal remains on track to continue its upward trend as it is a safe-haven asset people turn to in times of crisis, supported by the current macroeconomic landscape where low interest rates prevail.
Oil edged lower towards $40 a barrel as the market braced for more supply from OPEC and its allies, all while many regions around the world continue to battle against the ongoing virus pandemic. OPEC+ has promised to pump an additional 1.5million barrels of oil this month after having cut their production over the last two months. Market experts are saying that it is not the best time to add supply as this could lead to a glut as there does not seem to be a guarantee of oil demand coming back anytime soon. CAD traded sideways as well in line with oil prices and held its own against the USD.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3449)
Price is facing bullish pressure from our first support, in line with our 61.8% fibonacci retracement, and horizontal overlap support, where we could see a bounce towards 1st resistance where the horizontal swing high is.
UKOIL (Intraday bias: Bullish above 42.90)
Price drifted sideways yet still holding above 1st support at 42.90. With stochastics coming close to test ascending trendline support where price bounced in the past, a short term bounce reaction towards 1st resistance at 43.76 can be expected.
XAUUSD (Intraday bias: Bullish above 1965.20) 
Price is facing bullish pressure from our ascending trend line and first support, in line with our 78.6% fibonacci retracement, 100% fibonacci extension and horizontal swing low support, where we could see a bounce above this level. A break above our upside confirmation level could provide the bullish acceleration to our first resistance target. The Ichimoku cloud is showing signs of bullish pressure as well.
XCUUSD (Intraday bias: Bearish below 2.93167)
Price is facing bearish pressure from our first resistance in line with our horizontal swing high resistance, 78.6% fibonacci retracement and 78.6% fibonacci extension. A break below our downside confirmation level at 2.82960 could provide the bearish acceleration to our first support target. RSI is showing signs of bearish pressure 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.