Diplomacy given another chance

Canada’s April CPI rates to move the Loonie

The USD gained in today’s Asian session, after substantial losses yesterday, despite US President Trump announcing a halt of a planned attack against Iran to allow negotiations. Trump’s statements signaled that a deal with Iran about its nuclear arsenal is possible. Today we highlight the release of Canada’s CPI rates for April, which are expected to accelerate. Should the rates accelerate beyond market expectations we may see the Loonie getting some support as the release would imply wider than expected inflationary pressures in the Canadian economy which may add pressure on BoC to be more hawkish.

US stock markets continue to send mixed signals

US stock market indexes continued to send mixed signals yesterday with Dow Jones gaining, while S&P 500 remained stable and Nasdaq edged lower. We still view the situation in Iran, the market’s expectations for AI technology and worries for inflationary pressures as the key fundamentals surrounding US equities at the current stage. It’s as if stock market participants take a break after the extended rise of US equities and on a fundamental level, are waiting for the fog to clear a bit.  

Gold’s price benefits from weakening USD

Gold edged higher on Monday benefiting from the weakening of the USD in the FX market yesterday. Nevertheless, Gold’s gains seem to be fragile as market worries for inflationary pressures in the US economy (and not only the US) are still high, pushing bond yields higher. Given the market’s expectations for a tighter monetary policy by the Fed, non-interest bearing trading instruments like gold could take a hit from rising yields in the long term.

Oil market is still unconvinced

Oil prices initially remained stable in today’s Asian session, after US President Trump’s announcement. Yet oil prices continued to rise later on. The oil market’s behavior suggests that it’s not convinced for the possibility of a diplomatic resolution. Should we see market worries intensifying further, we may see oil prices gaining. 

Other highlights for today

Late today we get the US API weekly crude oil inventories figure. On a monetary level, we note that BoE’s Breeden, ECB’s Lane and Buch and Fed’s Waller are scheduled to speak. In tomorrow’s Asian session, we get from China, PBoC’s interest rate decision.

Charts to keep an eye out

WTI’s price continued to rise during today’s Asian session, temporarily breaking the 107.00 (S1) resistance line, now turned to support. We continue to maintain a bullish outlook for WTI’s price, given also that the upward trendline guiding it remains intact and the RSI indicator remains above the reading of 50, implying an intensifying bullish market sentiment for WTI. Should the bulls continue to lead WTI’s price action, we may see it aiming for the 112.70 (R1) resistance line. Should the bears take over, we may see WTI’s price breaking the 107.00 (S1) support line, continue to break also the prementioned upward trendline and start aiming for the 100.90 (S2) support level.

Gold’s price hit the floor at the 4500 (S1) support line yesterday and remained close by. We maintain our bias for a sideways motion of gold’s price, yet note the bearish predisposition of the market, given that the RSI indicator remains below the reading of 50. Should the bulls take control over gold’s price, we may see it reversing course and aiming for the 4890 (R1) resistance line. Should the bears take over, we may see gold’s price breaking the 4500 (S1) support line and setting in its sights the 4250 (S2) support level.

WTI daily chart

• Support: 107.00 (S1), 100.90 (S2), 93.80 (S3).
• Resistance: 112.70 (R1), 119.50 (R2), 126.00 (R3). 

 XAU/USD daily chart

• Support: 4500 (S1), 4250 (S2), 3890 (S3).
• Resistance: 4890 (R1), 5260 (R2), 5600 (R3).