Asian stocks rebounded after the Federal Reserve announced that it will purchase more corporate bonds in an emergency lending program on Monday night. The S&P 500 advanced after the news and closed higher on Monday. On Tuesday morning, S&P 500 futures spiked to session highs on news the Trump administration is considering $1 trillion in infrastructure spending to boost an economy suffering from the coronavirus pandemic.
The dollar extended declines and Treasuries extended Monday’s losses. The Fed detailed plans to buy individual corporate bonds, underscoring its role as a backstop. The size and the pace of Fed balance sheet expansion is the main driver for the equity market rally so far, and yet Fed is still expanding its asset purchasing program. Safe havens could go lower in such a risk-on environment.
Copper prices pared recent losses, as optimism from the Federal Reserve’s announcement to tweak its bond buying program, in a move to support a U.S. economy hit by the COVID-19 pandemic, provided a boost to the risk-on sentiment across markets. Elsewhere, weakening demand in China could limit the upside in prices as China’s copper spot prices were trading at a discount of 210 yuan a tonne to cash futures prices, which was the biggest discount since Feb 20, according to data by SMM.
Gold prices remained under pressure, as the market’s risk appetite is back once again, after the Federal Reserve announced it would buy individual corporate bonds in the secondary market to support the US economy hit by the pandemic. On a technical front, price is facing bearish pressure from its resistance as well.
Oil prices dipped further yet again as the 2nd wave of coronavirus threatens to cause another round of shutdowns in Beijing, China. This second wave of infection looks to further threaten nascent economic recovery. Further, oil giant, BP, wrote off billions of assets on concern over long-term demands. In line with the dip in oil prices, CAD weakened further against the USD.
Technical & Trade views
USDCAD (Intraday bias: bullish above 1.3485)
We turned bullish as price is approaching our 1st support where the 50% fibonacci retracement is. If price approach 1st support,, it could jump further from here. Ichimoku cloud is showing bullish momentum.
UKOIL (Intraday bias: bearish below 40.29)
Oil price coming back up and looks to be testing descending trendline resistance. A short term set back below 1st resistance at 40.29 towards 1st support at 38.56 is expected. Stochastics indicator is testing resistance as well where price reversed in the past
XAUUSD ( Intraday bias: Bearish below 1735.00) 
Price is facing bearish pressure from our intermediate resistance, in line with our descending trend line and 78.6% fibonacci retracement where we could see a further drop to our first support level, in line with our 61.8% fibonacci retracement and horizontal overlap support. Stochastic is approaching our resistance as well, where we could see a reversal below this level.
XCUUSD ( Intraday bias: bearish below 2.61678)
Price is facing bearish pressure from our intermediate resistance at 2.61678 in line with our horizontal swing high resistance and 50% fibonacci retracement, where we remain bearish below this level and could see a further drop to our first support level. Stochastic is 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.